Saudi Arabia End of Service Benefits Guide 2026 — Article 84 Explained
Last updated: May 2026 · Legal reference: Saudi Labour Law, Article 84
Quick Summary
Saudi Arabia EOSB is governed by Article 84 of the Saudi Labour Law. You need a minimum of 2 years service to qualify. The formula uses 15 days/year for years 1–5 and 30 days/year after that, based on basic salary only. Unlike Kuwait and UAE, voluntary resignation is penalised — you receive only ⅓ of your entitlement for 2–5 years service and ⅔ for 5–10 years. Full amount applies from 10+ years or on termination.
End of service benefits in Saudi Arabia — often called EOSB or gratuity — is the lump sum payment every private sector employee is legally entitled to when their employment ends. Saudi Arabia's system is more complex than Kuwait or UAE because the amount you receive depends not just on your years of service, but on whether you resigned or were terminated. This guide explains exactly how Article 84 works, the resignation reduction rules most employees don't know about, and how to make sure your employer calculates it correctly.
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Calculate my Saudi Arabia EOSBWhat Article 84 of the Saudi Labour Law says
Saudi Arabia end of service benefits are governed by Article 84 of the Saudi Labour Law. The law applies to all private sector employees regardless of nationality. To qualify, you must have completed at least two full years of continuous employment — unlike Kuwait and UAE where one year is sufficient. The law sets a minimum entitlement. Your contract can specify more, but your employer cannot legally pay you less than what Article 84 requires.
The exact Saudi Arabia EOSB formula
Step 1 — Calculate your daily rate:
Daily rate = Basic salary × 12 ÷ 365
Step 2 — Calculate days earned:
- Years 1 to 5: 15 days of basic pay per year
- After 5 years: 30 days of basic pay per year
Step 3 — Apply resignation reductions (if applicable):
- Resigned, 2–5 years: receive ⅓ of calculated amount
- Resigned, 5–10 years: receive ⅔ of calculated amount
- Resigned, 10+ years: receive full amount
- Terminated at any length: receive full amount
Step 4 — Apply the cap:
Total cannot exceed 24 months of basic salary.
Resignation vs termination — the critical difference
This is the most important thing to understand about Saudi EOSB — and the most commonly misunderstood. In Kuwait and UAE, it makes no difference whether you resign or are terminated. In Saudi Arabia, it makes a significant financial difference, especially in your early years of service.
| Years of service | If resigned | If terminated |
|---|---|---|
| Less than 2 years | No entitlement | No entitlement |
| 2–5 years | ⅓ of full amount | Full amount |
| 5–10 years | ⅔ of full amount | Full amount |
| 10+ years | Full amount | Full amount |
Worked examples
Example 1 — Resigned after 3 years
Basic salary of SAR 5,000/month, resigned after 3 years:
Daily rate = 5,000 × 12 ÷ 365 = SAR 164.38/day
3 years × 15 days × 164.38 = SAR 7,397.26
Resignation reduction (2–5 years) = × ⅓ = SAR 2,465.75
Total EOSB = SAR 2,465.75
Example 2 — Terminated after 7 years
Basic salary of SAR 5,000/month, terminated after 7 years:
Daily rate = 5,000 × 12 ÷ 365 = SAR 164.38/day
First 5 years = 5 × 15 days × 164.38 = SAR 12,328.77
Next 2 years = 2 × 30 days × 164.38 = SAR 9,863.01
Termination = no reduction
Total EOSB = SAR 22,191.78
Example 3 — Resigned after 12 years
Basic salary of SAR 5,000/month, resigned after 12 years:
Daily rate = 5,000 × 12 ÷ 365 = SAR 164.38/day
First 5 years = 5 × 15 days × 164.38 = SAR 12,328.77
Next 7 years = 7 × 30 days × 164.38 = SAR 34,520.55
Subtotal = SAR 46,849.32 — within 24-month cap
10+ years resignation = no reduction
Total EOSB = SAR 46,849.32
Common mistakes employers make
1. Using total salary instead of basic salary
Only your contractual basic salary counts. If your total package is SAR 8,000 but your basic is SAR 5,000, the calculation uses SAR 5,000. Housing and transport allowances are excluded.
2. Using 30-day months instead of the annual formula
The correct daily rate is basic × 12 ÷ 365, not basic ÷ 30. This difference compounds significantly over long service periods and commonly results in underpayment.
3. Applying wrong resignation reductions
Some employers apply a flat reduction for all resignations regardless of service length. The reduction only applies for under 10 years. After 10 years of service, resignation receives the same full amount as termination.
4. Ignoring the 2-year minimum
Unlike Kuwait and UAE where one year qualifies you, Saudi law requires two full years of continuous service. Employees with less than 2 years receive nothing regardless of circumstances.
5. Not calculating partial years
If you worked 6 years and 4 months, you are entitled to EOSB for the full 6 years plus a proportional amount for the 4 months. Rounding down to the nearest full year is not permitted under Article 84.
Frequently asked questions
How many years do I need to work to get end of service in Saudi Arabia?
You need at least two complete years of continuous service to be eligible for end of service benefits in Saudi Arabia under Article 84 of the Saudi Labour Law.
Does Saudi Arabia EOSB change if I resign?
Yes. Unlike Kuwait and UAE, Saudi Arabia reduces your end of service benefit if you resign voluntarily. For 2–5 years service you receive one third of the full amount. For 5–10 years you receive two thirds. Only after 10 years do you receive the full amount on resignation.
What is the maximum EOSB in Saudi Arabia?
The maximum end of service benefit in Saudi Arabia is 24 months of basic salary, regardless of how many years you have worked.
Are allowances included in Saudi Arabia EOSB calculation?
No. Only your basic salary is used to calculate end of service benefits under Article 84. Housing allowance, transport allowance, and all other allowances are excluded.
What is the daily rate formula for Saudi Arabia EOSB?
The daily rate is calculated as basic salary multiplied by 12, divided by 365. This is then multiplied by the number of days earned based on years of service.
What happens to my EOSB if I am terminated in Saudi Arabia?
If you are terminated by your employer, you receive the full end of service benefit at all service lengths — 15 days per year for the first 5 years and 30 days per year after that, up to the 24-month cap.
When must my employer pay EOSB in Saudi Arabia?
Your employer must pay your end of service benefit as part of your final settlement when your employment contract ends. Delays beyond the final working day can be challenged at the Ministry of Human Resources.
Does the Saudi EOSB cap of 24 months apply to termination and resignation?
Yes. The 24-month cap applies regardless of whether you resigned or were terminated, and regardless of how many years you have worked beyond the threshold.
Key Takeaways
- ✓ Minimum 2 years service required — not 1 year like Kuwait/UAE
- ✓ Based on basic salary only — allowances excluded
- ✓ Resignation penalty: ⅓ for 2–5 yrs, ⅔ for 5–10 yrs, full for 10+ yrs
- ✓ Termination always receives full amount regardless of years
- ✓ Maximum cap is 24 months of basic salary
- ✓ Partial years are included proportionally — not rounded down
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This guide is for informational purposes only and does not constitute legal advice. Always verify your entitlement with your HR department or a qualified Saudi labour lawyer. Legal reference: Saudi Labour Law, Article 84.