End of Service Benefit Calculator — Saudi Arabia
Calculate the end-of-service benefit (EOSB) — also called gratuity — an employee is entitled to under Saudi labour law. The benefit depends on final salary, years of service, and the reason for leaving. Both Saudi nationals and expatriates are entitled to EOSB.
What Is End of Service Benefit?
End-of-service benefit (EOSB) is a lump-sum payment required by Saudi labour law when an employment contract ends. It is calculated on the final salary and length of service. Both Saudi nationals and expatriates are entitled to it, though the calculation differs slightly.
Under Article 84 of the Saudi Labour Law, the EOSB is calculated as:
- First 5 years of service — half a month's wage per year
- After 5 years — one full month's wage per year
The "wage" includes basic salary plus regular allowances (housing, transport) — not bonuses or one-off payments.
End of Service Formula
For years of service ≤ 5:
EOSB = Years × (Monthly Salary ÷ 2)
For years of service > 5:
EOSB = (5 × Monthly Salary ÷ 2) + ((Years − 5) × Monthly Salary)
Adjustment by reason for leaving:
- Termination by employer (not for misconduct): full EOSB
- Retirement / end of contract: full EOSB
- Resignation: reduced benefit, scaled by years of service (see below)
- Termination under Article 80 (misconduct): no EOSB
Resignation — Reduced Benefit
If the employee resigns, the EOSB is reduced according to years of service:
- Less than 2 years — no EOSB
- 2 to 5 years — one-third of the calculated amount
- 5 to 10 years — two-thirds of the calculated amount
- 10 years or more — full calculated amount
Worked Example
5 years of service, SAR 15,000 monthly salary, terminated by employer:
EOSB = 5 × (15,000 ÷ 2) = SAR 37,500
10 years of service, SAR 15,000 monthly salary, terminated by employer:
First 5 years = 5 × 7,500 = SAR 37,500
After 5 years = 5 × 15,000 = SAR 75,000
Total EOSB = SAR 112,500
Same employee resigns after 10 years:
Full amount would be SAR 112,500, but resignation after 10+ years gives full benefit (10 years threshold met).
Same employee resigns after 7 years:
First 5 years = SAR 37,500
After 5 years = 2 × 15,000 = SAR 30,000
Full EOSB = SAR 67,500
Resignation after 5-10 years = 2/3 × 67,500 = SAR 45,000
Frequently Asked Questions
What is included in the "salary" for EOSB calculation?
The EOSB is calculated on the "wage" — which includes basic salary plus regular allowances (housing, transport, etc.). Bonuses, commissions, overtime, and one-off payments are usually excluded. If an employee receives a significant portion of compensation as regular allowances, those should be included in the final salary figure. Enter the total regular monthly pay in the calculator.
Are expatriates entitled to end-of-service benefits?
Yes. Under Saudi labour law, expatriate employees are entitled to EOSB on the same basis as Saudi nationals (Article 84 of the Labour Law). The benefit is calculated on final salary and years of service. Expatriates do not participate in the GOSI pension scheme (they receive EOSB instead), which is why the EOSB is the primary retirement savings for many expats working in Saudi Arabia.
What happens if I am terminated for misconduct?
Under Article 80 of the Saudi Labour Law, an employer can terminate an employee without notice or EOSB if the termination is for specific serious reasons (e.g., fraud, assault, absence without leave, disclosure of confidential information). If terminated under Article 80, the employee forfeits the EOSB. This calculator shows $0 for Article 80 terminations. The employee can contest the termination through the labour courts if they believe it was unjustified.
Is EOSB taxable?
Saudi Arabia has no personal income tax, so EOSB is not subject to income tax. The full amount is paid to the employee. When transferring the EOSB to another country, local tax rules of the employee's home country may apply — check with a tax advisor if you are repatriating the funds.
What about partial years of service?
Partial years are counted proportionally. For example, 3 years and 6 months is treated as 3.5 years. This is calculated using the fraction of the year completed. The Saudi Labour Law allows proportional EOSB for fractional years. Some employers round to the nearest year; this is negotiable and may favour the employee in some cases.
Can my employer pay EOSB monthly instead of at the end?
No — under Saudi labour law, EOSB is a lump sum paid when employment ends. However, some employers offer "monthly gratuity" schemes as an additional benefit, but these do not replace the statutory EOSB. If the employer offers a savings scheme with monthly contributions, the employee's statutory EOSB is still due on top. Employees should verify their contracts and the labour law.