Skip to content
Mustahaqqat

End-of-Service Benefits Guide: Saudi Arabia

This guide explains the key end-of-service rules in Saudi Arabia in plain language, based on Labor Law (Royal Decree No. M/51 of 23/8/1426H). Every figure comes from the official texts listed under Sources below, and the worked example is computed by our own calculator.

Scope: private-sector employees covered by the labour law. Excludes domestic workers, free-zone employees under separate regimes, and workers covered by national pension/social-insurance systems.

Who qualifies?

  • On termination or contract expiry: no statutory minimum service period.
  • On resignation: minimum: 2 years of service.

Watch the exceptions: the full award is due on force majeure, and for a female worker ending her contract after marriage or childbirth — check the official text for details.

How is the award calculated?

The award is based on the "the last wage — basic plus regular allowances", with fractions of a year pro-rated to actual service. The formula:

  • half a month for each year during the first 5 years of service
  • a full month for each year after that

Worked example

An employee on a monthly wage of 10,000 SAR with 6 years of service (termination case):

  • 5 years × half a month of the wage = 25,000 SAR
  • 1 year × a full month of the wage = 10,000 SAR
  • Total: 35,000 SAR
  • Had this been a resignation, the total would be: 23,333.33 SAR.

Resignation vs termination

The law applies reduced rates to resignation depending on length of service:

  • from 2 to 5 years: one-third of the award
  • from 5 to 10 years: two-thirds of the award
  • 10 years or more: the full award

Cap on the award

no statutory cap on the total award

Notice period and annual leave

  • Notice (Indefinite-term contracts (2024 amendments, effective Feb 2025)): employee 30 days / employer 60 days.
  • Annual leave: 21 days — Per year of service; 30 days after five consecutive years with the same employer (Art 109).

Common mistakes

  • Assuming an early resignation earns a partial award — nothing is due before the statutory minimum service is completed.
  • Calculating on basic salary only and ignoring the regular allowances included in the last wage.
  • Assuming a statutory cap exists on the award.

Notes on the figures

  • We follow the administrative reading of the "last wage": basic plus regular allowances (the statute itself does not itemise it).

Official sources

Every figure in this guide comes from the following official sources:

Frequently asked questions

Do allowances count towards the award in Saudi Arabia?
Wages in Saudi Arabia are assessed on the "the last wage — basic plus regular allowances" basis. See "How is the award calculated?" above for details.
Is the award lower if I resign?
Yes — the law applies reduced resignation rates depending on length of service: from 2 to 5 years: one-third of the award; from 5 to 10 years: two-thirds of the award; 10 years or more: the full award
When and how is the award paid?
The employer must pay wages and settle all entitlements within one week of the end of the contractual relation — two weeks if the worker ended the contract (Article 88).
Are fractions of a year counted?
Yes — fractions of a year are pro-rated to the actual period of service.

Related links

Calculate your award

Try the interactive calculator for Saudi Arabia, with every step explained.

Supporting calculators

Other country guides

Compare countries