Saudi End-of-service Award Guide 2026

Saudi Arabia End-of-Service Award Guide 2026

Understanding Article 84 and the critical resignation multipliers of Article 85.

1. Introduction to the Saudi Labor Award

In the Kingdom of Saudi Arabia (KSA), the **End-of-Service Award (EOSA)** is a mandatory financial right granted to all employees—both citizens and expatriates—under the **Saudi Labor Law**. As the Kingdom moves towards its Vision 2030 goals, the labor market has become increasingly regulated, with portals like **Qiwa** and **GOSI** ensuring that these rights are protected and calculated transparently.

2. The Base Calculation: Article 84

Article 84 defines the foundation of your award. It is calculated based on your Last Drawn Salary (which includes basic pay plus fixed allowances like housing and transport).

First 5 Years

15 Days' Pay per Year

For the first 60 months of service, you earn half a month's salary for every year worked.

After 5 Years

30 Days' Pay per Year

Every year beyond the 5th anniversary earns you a full month's salary.

3. The Resignation Factor: Article 85

This is where many employees in Saudi Arabia get confused. If you resign (voluntarily leave your job), your award is subjected to a "multiplier" based on your tenure. This does not apply if the employer terminates you.

Less than 2 Years: You are entitled to Zero (0) award if you resign.
2 to 5 Years: You receive one-third (1/3) of the base award.
5 to 10 Years: You receive two-thirds (2/3) of the base award.
Over 10 Years: You receive the Full (100%) award, even if you resign.

4. Calculation Formula: The "Last Salary" Rule

The law requires that the award be calculated using the salary rate at the time of termination. If you joined at AED 5,000 and leave at AED 15,000, your entire tenure is calculated at the AED 15,000 rate.

Base Award = [(Salary × 0.5) × Yrs 1-5] + [Salary × Yrs 6+]

5. Case Study: Resignation vs. Termination

Example: 4 Years of Service

Scenario: Salary: SAR 12,000. Tenure: 4 years.

Base Award: 4 years × 6,000 (half month) = SAR 24,000.
If Terminated: You get the full SAR 24,000.
If You Resigned: You get 1/3 of the base = SAR 8,000.

Example: 7 Years of Service

Scenario: Salary: SAR 12,000. Tenure: 7 years.

Base Award: (5 × 6,000) + (2 × 12,000) = SAR 54,000.
If Terminated: You get the full SAR 54,000.
If You Resigned: You get 2/3 of the base = SAR 36,000.

6. Termination for Cause: Article 80

Be aware of Article 80. If you are dismissed for serious reasons—such as physical assault, forging documents, or failing to perform duties despite written warnings—the employer has the right to terminate you without notice and without any end-of-service award.

7. Digital Protection: Qiwa & GOSI

In 2026, all labor contracts must be registered on the **Qiwa** platform. This portal automatically calculates your settlement when a contract ends, reducing disputes. Additionally, **GOSI (General Organization for Social Insurance)** tracks your years of service and contributions for pension purposes (for Saudis) and occupational hazard insurance (for all).

8. Dispute Resolution: Labour Courts

If your settlement is not paid within **one week** of termination, you can file a case through the **Ministry of Human Resources and Social Development (MHRSD)** portal. Most disputes are settled in the "Amicable Settlement" phase before reaching a judge.

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Frequently Asked Questions

Are commissions included in the calculation?

Yes. According to Article 2 of the Labor Law, any variable payments that are part of your regular remuneration (like commissions) should be averaged over the last year and included in the award calculation.

Can my employer deduct visa fees from my award?

Absolutely not. It is strictly illegal in Saudi Arabia for an employer to charge an employee for recruitment, visa, or sponsorship costs. Any such deduction can be contested in Labor Court.

Does the award apply to domestic workers?

Domestic workers (drivers, maids) are governed by a different set of regulations than private-sector company employees. Their end-of-service benefits are usually equivalent to one month's salary for every 4 years worked.

Editorial Standards & Formula Verification Policy

This guide was developed by employment specialists and software engineers to ensure absolute compliance with global labor regulations. Our formulas are audited regularly against official Ministry of Labor directives and legislative statutory laws. To maintain complete user trust, all mathematical calculation processes run entirely client-side in your local browser window. Absolutely no personal salary, compensation, or demographic data is ever transmitted, processed, or stored on our servers.

Content Creation & Automation Transparency: To ensure our global labor statutory resources remain completely updated and accurate against real-time legislative reforms, our guides compile regulatory references using advanced programmatic systems. Every mathematical model and legal summary is subsequently audited, fact-checked, and approved by our system researchers under strict review to guarantee absolute accuracy.