Saudi end-of-service award: how it is calculated on the last wage
Half a month for each of the first five years and a full month after that, on the last actual wage, not on the basic alone. When resignation cuts it, and when it does not.
The end-of-service award is not a gift the manager decides on the last day. Article 84 of the Labour Law makes it due when the employment relationship ends: half a month of wage for each of the first five years, a full month for each year after that, and a proportion for a part of a year. The text uses the last wage, not the figure you were told on the first phone call.
Which number goes into the sum
Wage in the Law is the actual wage: the basic wage plus the increments that are due, including fixed allowances the contract states for the work, such as a fixed monthly housing or transport allowance. That is the opposite of the UAE, where the gratuity uses the basic wage alone. The point that should change the contract before you sign is in the housing-allowance guide.
What you normally leave out: overtime, a bonus that is paid once and then stops, and commission that rises and falls. Article 86 allows an agreement to keep commissions, sales percentages and similar variable items out of the award, because they move by nature. If that agreement is not written, do not drop them yourself as a favour before you ask. A day’s wage in the method used here is the monthly wage divided by 30, and a year is 360 days, so a part year uses the same rule.
An example with numbers we chose, not a statistic
Last wage 4,000 riyals, two years and six months, and the contract expired or the employer ended it. Inside the first five years each year is half a month, and half a month here is 2,000. The two years are 4,000. The six months are half a year of that same band, so 1,000. The total is 5,000 riyals. Six years on the same wage: the first five years are 10,000 (five halves) and the sixth year is a full month, 4,000, so 14,000. Use your own length in the end-of-service calculator. The method is written under the fields.
Resignation cuts the award. Dismissal does not, by itself
Article 85 is only about resignation. Under two consecutive years: no award. From two years up to and including five: one third. More than five and under ten: two thirds. Ten years or more: the full award. Expiry, or the employer ending the contract other than under Article 80, keeps the full award even if you have not completed two years. Mixing the two paths is how people sign a release for a third when they are owed the whole, or the reverse.
Article 87 restores the full award even though you ended the contract, in two cases: you left because of a force majeure you did not control, or a woman ends her contract within six months of the date of her marriage or three months of the date she gave birth. That is not an ordinary resignation, so the Article 85 fractions do not apply.
Article 80 is the path on which the award, notice and indemnity all fall away, and it is a closed list: assault, failure in the essential obligations, a long absence after a warning, and the other cases the article names. Its condition is that the worker is given a chance to state why he objects. “You are fired, so you get nothing” is not Article 80. If the case does not fit, the sum is Article 84.
When it is paid, and what to read before a release
Article 88: if the employer ends the contract, wages and entitlements are settled within a week at most. If you end it, within two weeks. Do not sign that you received “all dues” before you see the transfer and see the award as its own figure, not mixed into the days you worked. If the figure is short, the Qiwa contract and the bank statement beat a spoken argument. How the UAE sum differs, and why an “all-in” offer flips between the two countries, is in the UAE gratuity guide.
This explains Articles 84 and 85 and what sits next to them in the Labour Law. It is not a view on your case. Read the text on the Bureau of Experts site or the ministry site before you build a release on it.
A part of a year: do not round to the nearest year
Someone who worked four years and three months is not counted as four years and not as five. The three months are a quarter of a year inside the first-five band, so a quarter of half a month of wage. Rounding to the nearest year in the establishment’s favour is a cut the text does not allow, and rounding in your favour without an agreement is not a right either. The calculator on this site splits a year into 360 days and a month into 30 so the part is not dropped. If your contract counts a month as 31 or 28, write the days as they are and show the method. Do not let the figure be shortened in a release meeting.
The last wage means the last wage before the relationship ended, not the average of your early years if the pay has risen. If the wage was cut on paper in the final month without actually falling in the transfer, keep the Mudad statement. A paper cut designed to shrink the award is answered with the transfers, not with a new table.
Sources
Rules and fees change and differ by country and employer. Always check with the official authorities before paying or signing anything.