Saudi Arabia labor law gratuity 2026: EOSB calculation &

Key takeaways

Saudi Arabia labor law gratuity (EOSB) = 15 days/year for first 5 years, 30 days/year thereafter, based on last drawn wage (basic + fixed allowances).
Resignation reduces payout: 0% under 2 years, 1/3 at 2–5 years, 2/3 at 5–10 years, 100% after 10 years (Article 85).
Summary dismissal under Article 80 forfeits all EOSB regardless of tenure.
Employers must pay all dues within 14 calendar days; disputes go through HRSD, Qiwa, or Mudad.
Always confirm fixed vs variable allowances in your contract — only fixed components count.

As of November 2026, Saudi Arabia labor law gratuity (End of Service Benefit or EOSB) is calculated based on your last drawn wage using Article 84. Employees receive half a month's wage for each of the first five years and a full month's wage for every year thereafter, with strict HRSD enforcement requiring employers to settle all dues within two weeks of contract termination.

What is Saudi Arabia labor law gratuity?

The End of Service Benefit (EOSB), commonly referred to as gratuity, is a statutory financial right granted to expatriate and local workers upon the termination of their employment relationship in the Kingdom. Regulated strictly by the Ministry of Human Resources and Social Development (HRSD) under the unified Saudi Labor Law, this monetary compensation acts as a mandatory safety net. It applies uniformly to both fixed-term employment contracts and indefinite arrangements, ensuring that workers are compensated for their cumulative years of dedicated service.

Understanding these entitlements is vital for every worker in the Kingdom. Whether you are nearing the end of your contract or planning a career transition, knowing your exact rights under the law prevents financial exploitation and ensures compliance with modern digital payroll integration standards maintained by HRSD and platforms like Qiwa and Mudad.

How is Saudi labour law gratuity calculation performed?

The mathematical computation of your EOSB depends directly on your length of continuous service and your final compensation package. Under Article 84 of the Saudi Labor Law, the calculation is split into two distinct service tiers to reward long-term commitment:

First 5 Years of Service: You are entitled to 15 days (half a month) of wages for each of the first five years you worked.
Years Exceeding 5 Years: For every single year served beyond the initial five-year threshold, you receive 30 days (a full month) of wages.

If your service ends midway through a calendar year, the calculation is pro-rated based on the exact number of days or months worked during that final partial year. For instance, someone working seven years and six months will calculate their first five years at the half-month rate, the next two years at the full-month rate, and the final six months at a proportionate half-month rate.

Worked example: 7 years 6 months at SAR 10,000/month

Service period	Rate	Months	Calculation	Amount (SAR)
Years 1–5	15 days/year	60	5 × 15/30 × 10,000	25,000
Years 6–7	30 days/year	24	2 × 30/30 × 10,000	20,000
Partial year (6 months)	Pro-rated half-month	6	6/12 × 15/30 × 10,000	2,500
Total EOSB				47,500

Worked example: 12 years 3 months at SAR 15,000/month (basic + fixed housing SAR 3,000)

Service period	Rate	Months	Calculation	Amount (SAR)
Years 1–5	15 days/year	60	5 × 15/30 × 18,000	45,000
Years 6–12	30 days/year	84	7 × 30/30 × 18,000	126,000
Partial year (3 months)	Pro-rated full-month	3	3/12 × 30/30 × 18,000	4,500
Total EOSB				175,500

Is gratuity calculated on basic salary or gross salary in KSA?

A frequent point of confusion among employees is whether the gratuity calculation relies on the basic salary or the gross monthly earnings. According to official HRSD interpretations, EOSB must be calculated using the worker's "last drawn wage." This definition includes the basic salary plus any fixed, guaranteed allowances stipulated in the employment contract—such as housing and transport allowances.

However, variable compensation components are strictly excluded from this calculation. Commissions, annual performance bonuses, one-time project rewards, overtime pay, and discretionary financial perks do not factor into your final EOSB tally. It is essential to check your employment contract to verify which allowances are classified as fixed versus variable.

Quick checklist — what counts toward "last drawn wage"

Basic salary (always included)
Housing allowance (if fixed in contract)
Transport allowance (if fixed in contract)
Any other allowance explicitly labelled "fixed" or "guaranteed"

Performance bonuses
Sales commissions
Overtime pay
Annual leave cash-in (separate entitlement)
One-off project rewards

What is the gratuity law in Saudi Arabia for resignation?

When an employee chooses to terminate the contract voluntarily through resignation rather than facing dismissal or completing a fixed-term contract, the payout structure changes significantly under Article 85 of the Saudi Labor Law. The law implements a scaled reduction system based on your total duration of continuous employment:

Resignation between 2 to 5 years: The employee is entitled to receive only 1/3 (33.3%) of the total calculated EOSB amount.
Resignation between 5 to 10 years: The employee receives 2/3 (66.6%) of the total accumulated EOSB entitlement.
Resignation after 10 years of service: The worker qualifies for 100% full EOSB entitlement, exactly as if they had been terminated without cause.

Note that the "total calculated EOSB amount" in the tiers above is the full Article 84 figure (i.e., before any resignation reduction). The reduction is applied after the full EOSB is computed.

Do I get gratuity if I resign before 2 years in Saudi Arabia?

Under the standard provisions of Article 85 of the Saudi Labor Law, if an employee resigns voluntarily before completing two continuous years of service, they receive zero gratuity. The law establishes a strict two-year threshold before any voluntary resignation payout tiers become active.

The only notable exceptions where an employee resigning early might still receive full or partial benefits involve specific legal conditions, such as resigning under Article 81 (where an employer breaches contract terms, fails to pay wages, or commits abuse) or during the initial probationary period if explicitly outlined in the contract terms.

What are the rules of labour law for gratuity under Article 84 and 85?

To summarize how different termination and resignation pathways impact your final financial settlement, refer to the official HRSD guidelines outlined in the comparison table below:

Termination / Resignation Scenario	Length of Service	Gratuity Payout Percentage
Employer Termination / Contract Expiry	1 to 5 years	15 days salary per year (50%)
Employer Termination / Contract Expiry	Over 5 years	30 days salary per year (100%)
Voluntary Resignation	Under 2 years	0% (No entitlement)
Voluntary Resignation	2 to 5 years	1/3 (33.3%) of total EOSB
Voluntary Resignation	5 to 10 years	2/3 (66.6%) of total EOSB
Voluntary Resignation	10+ years	100% full EOSB entitlement

Additionally, under Article 80 of the Saudi Labor Law, an employee who is summarily dismissed for severe disciplinary infractions—such as fraud, physical assault, or severe negligence—forfeits their End of Service Benefit entirely, regardless of how many years they have served.

What is the strict timeline for final settlement and payout in KSA?

HRSD regulations mandate that employers must disburse all final settlement dues, including accrued EOSB, unpaid wages, and compensation for untaken annual leave, within two weeks (14 calendar days) of the official contract termination date. Delays by employers are monitored closely through digital payroll integration systems like Qiwa and Mudad.

If an employer fails to settle dues within this window or miscalculates the amount, employees have the full legal right to lodge an official labor dispute through the Ministry of Human Resources and Social Development (HRSD) portal or the Qiwa and Mudad platforms to secure their rightful compensation.

Step‑by‑step: How to verify and claim your EOSB in 2026

Log in to your Qiwa account (or Mudad for domestic workers) and open the "End of Service" calculator.
Enter your joining date, last working day, and the last drawn wage (basic + fixed allowances only).
Compare the Qiwa result with your manual calculation using the Article 84 formula above.
If the employer’s offer is lower, gather your contract, salary slips, and the Qiwa screenshot.
File a complaint via the HRSD portal ("Labor Disputes" section) within 12 months of termination — the 14‑day employer deadline does not limit your right to sue.
Attend the conciliation session; most cases settle here. If not, the case moves to the labor court.

Keep all WhatsApp/email exchanges about final settlement — they are admissible evidence.

Common mistakes that reduce your payout

Using gross salary (including variable bonuses) instead of "last drawn wage" — inflates the figure but HRSD will reject it.
Forgetting to pro-rate the final partial year — HRSD uses calendar days, not rounded months.
Assuming resignation after 10 years gives 100% of gross salary — it’s 100% of the Article 84 calculation only.
Missing the 12‑month statute of limitations for filing a dispute.

Frequently asked questions

How is Saudi Arabia labor law gratuity calculated for partial years?

Partial years are pro-rated: multiply the applicable daily rate (15 or 30 days) by the fraction of the year worked (months/12 or days/365). HRSD uses calendar days for precision.

Does the 14-day payout rule apply to resignation cases?

Yes. The 14-calendar-day deadline applies to all contract endings — resignation, expiry, or employer termination — per HRSD Circular No. 1442/67.

Can an employer deduct loans or advances from EOSB?

Only documented, agreed-upon deductions (e.g., outstanding loans, unearned advances) may be offset. Arbitrary deductions are illegal and can be challenged via Qiwa.

Is there an online KSA EOSB calculator I can trust?

HRSD provides an official calculator on the Qiwa portal. Third-party tools are useful for estimates but always verify with the Qiwa result before filing a claim.

What happens if the employer closes the business?

Business closure counts as employer termination. Workers are entitled to full Article 84 EOSB plus notice pay (if applicable) and unpaid leave. Claims are filed against the company’s remaining assets or the Saudi bankruptcy estate.