End of Service Benefit Calculator (KSA)
Calculate your End of Service Benefit (EOSB) under Saudi Labor Law. Applies Articles 84, 85, and 87 for accurate estimates based on your wage, service duration, and reason for separation.
🏢 End of Service Benefit Calculator (KSA)
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Step‑by‑Step Breakdown
What Is End of Service Benefit (EOSB)?
The End of Service Benefit (مكافأة نهاية الخدمة), also known as EOSB or gratuity, is a mandatory lump-sum payment that employers in Saudi Arabia must pay to workers upon the termination of their employment relationship. It is governed by Articles 84–88 of the Saudi Labor Law (Royal Decree No. M/51, dated 23/08/1426H).
EOSB serves as a form of financial security for workers — similar to a retirement benefit. Unlike pension systems in many Western countries, Saudi Arabia's private sector does not have a mandatory pension scheme for expatriate workers. Instead, EOSB acts as the primary end-of-employment financial protection for the approximately 11 million expatriate workers in KSA.
For Saudi nationals, EOSB exists alongside the GOSI (General Organization for Social Insurance) retirement pension. Both benefits are separate and do not replace each other.
Article 84 — The EOSB Formula
Article 84 of the Saudi Labor Law establishes the core formula for calculating EOSB:
After 5 years: A full month's wage for each additional year
Partial years: Pro-rated proportionally
The formula uses progressive rates — the per-year benefit increases after the 5-year mark, rewarding long-term employees with higher payouts.
| Service Period | Rate Per Year | Example (SAR 10,000/month) |
|---|---|---|
| Year 1 through Year 5 | ½ month's wage | SAR 5,000 per year |
| Year 6 onward | 1 full month's wage | SAR 10,000 per year |
Worked Example 1: SAR 10,000 Wage, 7 Years Service (Termination)
- First 5 years: 5 × (SAR 10,000 / 2) = 5 × SAR 5,000 = SAR 25,000
- Remaining 2 years: 2 × SAR 10,000 = SAR 20,000
- Total EOSB: SAR 25,000 + SAR 20,000 = SAR 45,000
Worked Example 2: SAR 15,000 Wage, 12 Years Service (Termination)
- First 5 years: 5 × (SAR 15,000 / 2) = 5 × SAR 7,500 = SAR 37,500
- Remaining 7 years: 7 × SAR 15,000 = SAR 105,000
- Total EOSB: SAR 37,500 + SAR 105,000 = SAR 142,500
Worked Example 3: SAR 8,000 Wage, 3 Years 6 Months (Resignation)
- Service: 3.5 years (within first 5, so all at half-month rate)
- Full EOSB: 3.5 × (SAR 8,000 / 2) = 3.5 × SAR 4,000 = SAR 14,000
- Resignation tier: 2–5 years = ⅓ entitlement
- Final Payout: SAR 14,000 × ⅓ = SAR 4,667
What Counts as "Actual Wage"?
The EOSB calculation is based on the employee's Actual Wage (الأجر الفعلي) — the last wage received before separation. This includes:
| Included ✅ | Excluded ❌ |
|---|---|
| Basic Salary | Overtime pay |
| Housing Allowance | One-time bonuses |
| Transportation Allowance | Commissions (unless agreed) |
| Other fixed monthly allowances | Irregular incentives |
| Cost of living allowance | In-kind benefits (car, housing provided) |
Article 85 — Resignation Entitlement Tiers
When a worker resigns voluntarily, the EOSB entitlement is reduced according to the length of service:
| Service Duration | Entitlement | Payout |
|---|---|---|
| Less than 2 years | 0% | No EOSB — worker forfeits the benefit |
| 2 to less than 5 years | ⅓ (33.3%) | One-third of the full Article 84 amount |
| 5 to less than 10 years | ⅔ (66.7%) | Two-thirds of the full Article 84 amount |
| 10 years or more | 100% | Full EOSB — same as employer termination |
This tiered system incentivizes workers to remain in employment longer. A worker who resigns after 10 years receives the same payout as one who is terminated.
Article 87 — Special Cases for Full Entitlement
Certain situations grant the worker full EOSB regardless of service length or reason for separation:
| Situation | Entitlement | Article |
|---|---|---|
| Force Majeure — beyond the worker's control | Full (100%) | Article 87 |
| Marriage — female worker resigns within 6 months of marriage | Full (100%) | Article 87 |
| Childbirth — female worker resigns within 3 months of giving birth | Full (100%) | Article 87 |
| Worker's death or disability | Full (100%) | Article 84 |
Article 80 — Forfeiture for Gross Misconduct
An employer may terminate a worker without notice, award, or compensation under Article 80 if the worker:
- Assaults the employer, manager, or any superior during or because of work
- Fails to perform essential obligations under the employment contract
- Disobeys legitimate orders or fails to observe work instructions
- Is found guilty of misconduct or dishonesty
- Commits a deliberate act causing material loss to the employer
- Resorts to forgery to obtain the employment
- Is absent without valid cause for more than 30 days in one year or 15 consecutive days
- Exploits his position for personal gain
- Discloses trade or industrial secrets
Final Settlement Timeline (Article 88)
The Saudi Labor Law specifies strict timelines for EOSB payment:
| Scenario | Payment Deadline |
|---|---|
| Employer termination or contract expiry | Within 7 days |
| Worker resignation | Within 14 days |
The employer may deduct any amounts owed by the worker from the EOSB (e.g., outstanding loans, penalties, or damages). However, the deduction must be documented and lawful.
EOSB for Different Contract Types
| Contract Type | End Scenario | EOSB Entitlement |
|---|---|---|
| Fixed-term — expires naturally | Contract not renewed | Full EOSB (Article 84) |
| Fixed-term — worker resigns early | Resignation before term | Article 85 tiers apply |
| Fixed-term — employer terminates early | Without cause | Full EOSB + remaining contract compensation |
| Unlimited-term — employer terminates | With notice | Full EOSB |
| Unlimited-term — worker resigns | With notice | Article 85 tiers apply |
Note: Under the 2019 Saudi Labor Law amendments, for non-Saudi workers, fixed-term contracts are the default. If the contract does not specify a term, the duration of the work permit/iqama is considered the contract term.
EOSB vs GOSI — Understanding the Difference
| Feature | EOSB | GOSI Pension |
|---|---|---|
| Applicability | All workers (Saudi & non-Saudi) | Saudi nationals only (pension), all for hazards |
| Funding | 100% employer-funded | Employee (10%) + Employer (12%) for Saudis |
| Payment Type | Lump sum at end of service | Monthly pension after retirement |
| Legal Basis | Saudi Labor Law (Art 84-88) | Social Insurance Law |
| Non-Saudi Workers | ✅ Fully eligible | ❌ No pension (only 2% hazards) |
For Saudi nationals, both EOSB and GOSI pension are separate entitlements. Receiving GOSI pension does not reduce EOSB. For non-Saudi (expatriate) workers, EOSB is the only end-of-service financial protection — making it critically important.
EOSB in the Context of Vision 2030
Saudi Arabia's Vision 2030 economic transformation program has brought significant changes to labor regulations. The Ministry of Human Resources and Social Development (HRSD) has been working on reforms including:
- Labor Market reforms — improved worker mobility through the Labor Reform Initiative
- GOSI modernization — expanded coverage and digital services
- Wage Protection System (WPS) — ensures timely salary payments
- Musaned platform — digital dispute resolution for labor complaints
These reforms aim to make Saudi Arabia more attractive to skilled workers while strengthening worker protections. EOSB remains a cornerstone of worker rights under these modernized regulations.