Saudi End-of-Service Award: 2026 Guide
How the Saudi end-of-service benefit (ESB) is built under the Labor Law — the half-month and full-month bands, the last-wage basis, and how resignation changes the figure.
→ Open the Saudi End-of-Service Calculator
The Saudi end-of-service benefit (ESB), sometimes called mukafaʼat nihayat al-khidma, is the lump sum an employer pays when a contract ends. It is set by the Saudi Labor Law and is calculated differently from the UAE — notably, it uses your last wage including regular allowances, not basic pay only.
The core formula
| Service period | Entitlement |
|---|---|
| First 5 years | Half a month's wage per year |
| Beyond 5 years | One month's wage per year |
So five years earns 2.5 months' wage, and every year after that adds a full month. Part-years are paid pro-rata. The wage used is your last wage — basic plus regular allowances — which is broader than the UAE's basic-only rule.
How resignation changes the award
Unlike the current UAE rules, in Saudi Arabia resignation still reduces the ESB, on a sliding scale by length of service:
| Reason for leaving | Share of the award |
|---|---|
| Resign, under 2 years | Nothing |
| Resign, 2–5 years | One third (⅓) |
| Resign, 5–10 years | Two thirds (⅔) |
| Resign, 10+ years | Full award |
| Any termination by employer | Full award |
In other words, if your employer ends the contract you receive the full calculation regardless of tenure; if you resign, you receive a reduced share until you pass ten years.
Worked example
Last wage SAR 8,000, 7 years of service, contract ended by the employer (full award). First five years = 2.5 months; years six and seven = 2 months; total 4.5 months × 8,000 = SAR 36,000. Had the same person resigned at seven years (the 5–10 band), they would receive two thirds: 36,000 × ⅔ = SAR 24,000.
Who is covered
The Labor Law ESB covers private-sector employees in the Kingdom. Government employees have a separate pension system. Confirm your status and any contractual enhancements with HRSD/Qiwa. The ESB is normally paid together with any unused-leave encashment at the end of service.
Saudi ESB versus UAE gratuity at a glance
The two headline GCC end-of-service systems look similar but differ in three ways that change the number materially. Saudi uses your last wage including regular allowances, while the UAE uses basic salary only — so the Saudi wage base is usually higher. Saudi accrues half a month for the first five years and a full month after; the UAE uses 21 then 30 days. And crucially, Saudi still reduces the award on resignation below ten years, whereas the UAE removed that reduction in 2022. An employee with the same tenure and package can therefore receive a very different figure depending on which country — and whether they resigned or were terminated.
Key takeaways
- Half a month's wage per year for the first 5 years, a full month after.
- Calculated on last wage — basic plus regular allowances.
- Resignation pays ⅓ (2–5 yrs), ⅔ (5–10 yrs), full (10+ yrs), nothing under 2 yrs.
- Employer termination always pays the full award.
- Unused leave is encashed separately from the ESB.
Frequently asked questions
How is end of service calculated in Saudi Arabia?
Half a month's wage for each of the first five years and a full month's wage for each year beyond five, based on your last wage. Resignation reduces the award unless you have 10+ years.
Is Saudi ESB based on basic or total salary?
On the last wage including regular allowances, which is broader than the UAE's basic-only rule.
Does resigning reduce my Saudi end-of-service benefit?
Yes. Under 2 years you get nothing, 2–5 years one third, 5–10 years two thirds, and only 10+ years or an employer termination gives the full award.
What if my employer ends the contract?
You receive the full award regardless of how many years you have served.
Related calculators & guides
More Saudi Arabia employment calculators
Calcnate keeps a full set of Saudi Labor Law tools — all updated for the 2025 amendments — so you can check every part of an exit or contract in one place:
- Saudi End-of-Service Calculator — the half-month/full-month award with resignation tiers.
- Saudi Notice Period Calculator — the 30/60-day rule and pay in lieu.
- Saudi Probation Period Calculator — the 180-day contract rules.
- Saudi Maternity Leave Calculator — 12 weeks at full pay.
- Saudi Leave Encashment Calculator — cash value of unused annual leave.
Browse everything on the Saudi Arabia hub.