End-of-service benefit for workers in Saudi Arabia
The end-of-service award is one of the largest costs that builds up quietly in a contracting company. Knowing how it is calculated avoids surprises when a worker leaves and lets you keep a provision in the books.
The basic rule (Article 84)
- Half a month's wage for each of the first five years
- A full month's wage for each year after that
- Part years count pro rata
- Based on the last actual wage
A simplified summary for planning. Check the current Labour Law, its regulations and the Ministry of Human Resources platforms, or a legal adviser, before any final settlement.
On resignation (Article 85)
| Service | Share of the award |
|---|---|
| Under 2 years | Nothing |
| 2 to under 5 years | One third |
| 5 to under 10 years | Two thirds |
| 10 years or more | Full award |
Examples
Seven years, contract ended, last wage SAR 3,000: 5 × 0.5 × 3,000 + 2 × 3,000 = SAR 13,500. Same worker resigning: two thirds = SAR 9,000. Three and a half years, contract ended, wage SAR 2,400: 3.5 × 0.5 × 2,400 = SAR 4,200.
Why a monthly provision
Booking the whole award when the worker leaves makes earlier projects look more profitable than they were. A monthly provision per worker, charged to the project they work on, keeps project profit honest.
How Muqawil helps
Muqawil keeps each worker's joining date, wage, payroll and advances, and puts the final settlement — dues, advances, deductions and end-of-service — on one statement.
Questions
Does a worker who resigns before two years get anything?
Under Article 85, no end-of-service award on resignation before two years, unless a special case in the law or the contract applies.