How to Calculate End of Service Gratuity in Saudi Arabia (2026 Guide)
Calculate Saudi end of service gratuity (EOSB/ESB) under Articles 84 and 85: the formula, basic vs gross wage, resignation rules, final settlement components, and how to check what you are owed.
If you are trying to work out what you are owed when you leave a job in Saudi Arabia, you are dealing with three separate numbers that people constantly mix up:
- The end of service award — the statutory lump sum under Articles 84 and 85.
- The final settlement — the award plus unused leave, unpaid wages, notice pay and any contractual extras.
- What actually lands in your account — the settlement minus deductions, loans and advances.
Most calculators only give you the first number. This guide covers all three, plus the one variable that changes the total more than any other: which definition of “wage” your contract uses.
Direct answer: Saudi end of service gratuity is half a month’s wage for each of the first five years of service, plus one full month’s wage for every year after five. Part-years are paid pro-rata. If you resign rather than being terminated, Article 85 reduces the award based on how long you served.
You can run the numbers immediately in the Saudi end of service calculator, which handles both termination and resignation scenarios. The rest of this guide explains the edge cases a calculator cannot decide for you.
EOSB, ESB, gratuity — these are all the same thing
Search results split across a lot of names for one payment. They are interchangeable:
| Term | Where you will see it |
|---|---|
| End of service award | The Saudi Labor Law text itself |
| EOSB / End of Service Benefits | HR policies, offer letters, multinationals |
| ESB | Common shorthand in the Gulf, especially spoken |
| Gratuity | Indian, Pakistani and Filipino expat communities |
| Severance pay | US-influenced HR documentation (technically different, often used loosely) |
| مكافأة نهاية الخدمة | Arabic contracts, Qiwa, GOSI, court documents |
If your contract uses one term and your HR portal uses another, they still refer to the same Article 84 entitlement.
The Article 84 formula
The Saudi Labor Law sets the award as follows [^1]:
| Years of service | Entitlement per year |
|---|---|
| First 5 years | Half a month’s wage per year |
| Year 6 onwards | One full month’s wage per year |
| Part-years | Pro-rata for the time actually served |
Two details that trip people up:
- It is based on your last wage, not an average across your service. A raise in your final month raises the whole award, including the years you were paid less.
- Part-years count. Seven years and four months is not “seven years”. The four months earn 4/12 of a month’s wage at the post-five-year rate.
Worked example: terminated after 7 years 4 months
Assume a last wage of SAR 10,000.
| Period | Calculation | Amount |
|---|---|---|
| First 5 years | 5 × (10,000 ÷ 2) | SAR 25,000 |
| Years 6–7 | 2 × 10,000 | SAR 20,000 |
| Remaining 4 months | (4 ÷ 12) × 10,000 | SAR 3,333 |
| Total award | SAR 48,333 |
The same service, but you resigned
Article 85 scales the award down when the employee ends the contract:
| Years of service at resignation | Share of the award | On SAR 48,333 |
|---|---|---|
| Under 2 years | Nothing | SAR 0 |
| 2 to under 5 years | One third | — |
| 5 to under 10 years | Two thirds | SAR 32,222 |
| 10 years or more | Full award | SAR 48,333 |
This is why “what is 10 years benefits in Saudi Arabia” is such a common question. Ten years is the cliff where a resigning employee stops losing anything. At nine years and eleven months you forfeit a third of the award; one month later you keep all of it.
When resignation does not reduce the award
Article 85’s reduction does not apply in every case. The award is paid in full regardless of who ended the contract where the employee leaves because of force majeure outside their control, and for a female employee who resigns within six months of marriage or within three months of giving birth. Certain employer breaches also allow an employee to leave without notice while keeping full entitlement.
If any of these apply to you, do not accept a reduced calculation.
Basic wage or gross wage? The question that changes everything
This is the single most consequential variable, and the honest answer is: it depends on your contract.
Saudi Labor Law distinguishes between:
- Basic wage — the core salary figure, excluding allowances.
- Actual wage — the basic wage plus allowances and benefits granted regularly.
Article 84 refers to “the wage”, and whether your housing and transport allowances form part of that wage depends on how your signed contract defines it and whether those allowances are paid as a fixed, regular entitlement rather than a discretionary or variable payment. Disputes on exactly this point end up in the Labour Courts regularly.
What this means in practice:
| Wage structure | Award on 7 years |
|---|---|
| SAR 10,000 basic only | SAR 45,000 |
| SAR 10,000 basic + SAR 2,500 housing + SAR 500 transport, treated as wage | SAR 58,500 |
A 30% difference on identical service. Before you accept a settlement figure, read the wage clause in your contract. If it defines a single consolidated “salary”, that is a stronger position than if it itemises a small basic plus large allowances.
Our end of service calculator defaults to the basic wage, which is the conservative figure. If your contract supports the wider definition, calculate both and raise the difference with HR before signing anything.
Gratuity is not the whole final settlement
“How to calculate final settlement in Saudi Arabia” is a different question from “how to calculate gratuity”. The settlement is the full reconciliation:
| Component | Typically owed? | Notes |
|---|---|---|
| End of service award | Yes | Articles 84 and 85 |
| Unused annual leave | Yes | Cash value of accrued, untaken days |
| Unpaid wages to the last working day | Yes | Including the final part-month |
| Overtime not yet paid | Yes | At the statutory premium rate |
| Notice period pay | If notice was not served | In lieu of the contractual notice |
| Repatriation ticket | Usually, for expatriate workers | Subject to contract and cause of termination |
| Outstanding commissions or bonuses | Depends | Check the contractual trigger and payment date |
| Loans, advances, salary deductions | Deducted | Must be documented |
| Company property not returned | Deducted | Must be documented and valued |
Ask HR for the settlement broken out line by line. A single lump-sum figure with no breakdown is the most common way an under-calculation goes unnoticed.
How to check what you are actually owed
Several of the most common searches are variations of “where do I see my gratuity amount”. There is no single government screen that displays a final figure, but you can assemble it reliably:
- Confirm your service dates in GOSI [^2]. Your registered start date is what an employer’s calculation will be measured against. If the registered date is later than your actual start date, challenge it now — it directly shortens your service.
- Check your registered wage in GOSI and Qiwa [^3]. Employers sometimes register a lower contributory wage than they actually pay. That discrepancy tends to surface exactly when the award is calculated.
- Pull your contract’s wage clause. This decides the basic-versus-actual question above.
- Apply the Article 84 formula, or use the calculator, then apply the Article 85 reduction only if you resigned.
- Add the other settlement components from the table above.
- Compare against HR’s figure and ask for a written breakdown of any gap.
Timing: when the employer must pay
Article 88 sets deadlines that are much shorter than most people expect:
| Who ended the contract | Payment deadline |
|---|---|
| The employee (resignation) | Within one week of the contract ending |
| The employer (termination) | Within two weeks of the contract ending |
An employer cannot make the final settlement conditional on you signing a general waiver, and cannot hold the award hostage to an exit-visa process. If the deadline passes, the dispute route is a labour complaint through the Ministry’s platform, which precedes the Labour Courts.
Is gratuity taxed in Saudi Arabia?
No. Saudi Arabia does not impose personal income tax on employment income for individuals, so the end of service award is not subject to income tax [^4]. GOSI contributions are also not deducted from the award itself, since it is not contributory wage — although your final part-month of salary is still subject to normal GOSI deductions.
If you are moving the money abroad, tax may apply in your country of residence or citizenship. That is a question for your home jurisdiction, not for Saudi payroll.
Where employers get this wrong
From reviewing payroll data, the recurring errors are consistently these:
- Rounding service down to whole years. Part-years are a legal entitlement, not a courtesy.
- Using an older salary rather than the last wage, particularly after a recent promotion.
- Applying the Article 85 reduction to a termination. The reduction only applies when the employee ends the contract.
- Applying the reduction to a resignation that qualifies for full payment under the exceptions above.
- Registering a lower wage with GOSI than is actually paid, then calculating the award on the registered figure.
- Netting off undocumented deductions for damages, shortfalls or property without written substantiation.
- Treating unused leave as forfeited. Accrued annual leave is payable in cash on termination.
Getting the accrual right on the employer side
If you run payroll, the award is a liability that builds every month an employee works — not a cost that appears in the month they leave. Booking it only at termination distorts monthly profit and produces an unpleasant surprise when several long-tenured staff exit in the same period.
Qeemah tracks end of service accrual per employee alongside GOSI, payroll and ZATCA e-invoicing, so the liability sits in the general ledger continuously rather than landing as a one-off hit.
Related tools and reading
- End of service / gratuity calculator — Saudi Articles 84 and 85, with UAE support
- GOSI contribution calculator — employer and employee shares, and the contributory wage cap
- Saudi salary breakdown calculator — total cost of employing someone, including GOSI and accrued end of service
- End of service benefits glossary entry
- GOSI glossary entry
This guide is general information about Saudi Labor Law, not legal advice. For a disputed settlement, consult a licensed Saudi labour lawyer or file through the Ministry’s labour dispute process.