Saudi Arabia End of Service Benefits Calculator 2025 - EOSB Calculator

What is End of Service Benefits (EOSB) in Saudi Arabia?

End of Service Benefits, commonly referred to as EOSB, end of service award, or gratuity, is a mandatory financial compensation provided to employees working in the private sector of Saudi Arabia upon termination of their employment contract. This lump-sum payment is calculated based on the employee's last wage and total length of continuous service with the employer, serving as a form of retirement savings and acknowledgment of the employee's contributions to the organization.

Under Saudi Labour Law Article 84 and regulations enforced by the Ministry of Human Resources and Social Development (HRSD), employers are legally obligated to pay EOSB to eligible employees when their employment relationship ends, whether through resignation, termination, contract expiry, or retirement. The EOSB system applies to both Saudi nationals and expatriate workers employed in the private sector, ensuring fair compensation regardless of nationality.

Saudi Arabia EOSB Calculation Formula

Mathematical Expression of EOSB Formula

For employees with service duration exceeding 5 years, the complete EOSB formula can be expressed mathematically as:

Eligibility Criteria for EOSB

To qualify for end of service benefits in Saudi Arabia, employees must meet specific eligibility requirements as established under Saudi Labour Law:

• Minimum Service Requirement: For termination by employer, employees need at least one year of continuous service. For resignation, employees must complete at least two years of continuous service with the same employer to qualify for any EOSB entitlement.
• Employment Sector: EOSB provisions apply to employees in the private sector. Government and public sector employees have different retirement and pension schemes governed by separate regulations.
• Contract Coverage: Both unlimited-term contracts (open-ended) and limited-term contracts (fixed duration) are eligible for EOSB, with calculations following the same base formula but different entitlement rules based on separation reason.
• Nationality: EOSB eligibility applies equally to Saudi nationals and expatriate workers. Nationality does not affect the calculation or entitlement to end of service benefits.
• Continuous Service: The service period must be continuous with the same employer. Breaks in employment or unpaid leave periods may affect the total service calculation.
• Termination Reason: Employees terminated for gross misconduct as defined in Saudi Labour Law Article 80 may forfeit their EOSB rights entirely. Valid reasons include resignation, employer termination without cause, contract completion, retirement, or mutual agreement.

How to Calculate EOSB in Saudi Arabia

Step-by-Step EOSB Calculation Process

Follow these detailed steps to accurately calculate your end of service benefits in Saudi Arabia:

1. Determine Your Last Monthly Wage: Identify your final monthly wage including basic salary and all fixed allowances. For example, if your basic salary is SAR 6,000 with SAR 2,000 housing allowance and SAR 500 transportation allowance, your last wage is SAR 8,500.
2. Calculate Total Service Duration: Count the complete years, months, and days from your employment start date to your separation date. Ensure you account for any unpaid leave periods that may be excluded.
3. Calculate First 5 Years EOSB: Multiply your last monthly wage by 0.5 (half-month), then multiply by the number of years served in the first 5 years (maximum 5 years). Formula: \( W \times 0.5 \times \min(Y, 5) \)
4. Calculate Additional Years EOSB: If you worked more than 5 years, multiply your last monthly wage by 1.0 (full-month), then multiply by the number of complete years beyond 5 years. Formula: \( W \times 1.0 \times (Y - 5) \) where \( Y > 5 \)
5. Calculate Partial Year EOSB: For any additional months and days beyond complete years, calculate the prorated amount using the applicable multiplier (0.5 for first 5 years period, 1.0 for beyond 5 years).
6. Sum Gross EOSB: Add together the amounts from steps 3, 4, and 5 to get your gross calculated EOSB before applying any resignation-based reductions.
7. Apply Entitlement Percentage: If you resigned voluntarily, apply the appropriate percentage based on your service duration according to Saudi Labour Law Article 85.
8. Determine Final EOSB: The result from step 7 is your final end of service benefits amount that your employer must pay.

Detailed EOSB Calculation Example

EOSB Entitlement by Separation Reason

Resignation (Employee-Initiated Separation)

When an employee voluntarily resigns from their position, EOSB entitlement follows a graduated scale based on the total length of continuous service with the employer. This structure, outlined in Saudi Labour Law Article 85, encourages longer tenure and rewards employee loyalty:

Termination by Employer (Without Misconduct)

When an employer terminates an employee's contract without cause or misconduct, the employee is entitled to receive 100% of the calculated EOSB regardless of the length of service, provided they have completed at least one year of continuous employment. This provision protects employees from unjust dismissal and ensures they receive full compensation for their service contributions.

Termination for Misconduct

Employees terminated for gross misconduct as defined in Saudi Labour Law Article 80 forfeit all rights to end of service benefits. Gross misconduct includes assault, fraud, breach of trust, disclosure of confidential company information, intoxication at work, repeated violations of employment regulations, and other serious offenses. Employers must properly document misconduct cases and follow due process to justify EOSB forfeiture.

Contract Expiry and Retirement

Employees whose limited-term contracts reach their natural expiry date are entitled to full EOSB (100%) calculated using the standard formula. Similarly, employees retiring after reaching retirement age qualify for 100% EOSB entitlement regardless of contract type, as retirement is considered a natural and honorable end to the employment relationship.

Mutual Agreement

When both employer and employee mutually agree to terminate the employment relationship, EOSB entitlement is typically 100% of the calculated amount. However, the specific terms should be clearly documented in the separation agreement to avoid disputes. Mutual agreements provide flexibility for both parties while ensuring fair compensation.

Saudi Arabia EOSB Calculation Chart

The following table demonstrates EOSB amounts for different service durations based on a last monthly wage of SAR 8,000:

End of Service Benefits for Household Workers

Domestic workers, including maids, drivers, cooks, nannies, gardeners, and other household employees, are covered under separate regulations from the standard Saudi Labour Law. The Domestic Workers Regulation (Ministerial Decision No. 40676) establishes specific EOSB provisions for household workers:

Domestic Workers EOSB Formula

Unlike regular employees, domestic workers do not follow the half-month/full-month progressive calculation. Instead, they receive one full month of salary for each completed 4-year period of continuous service with the same employer. This simplified structure makes EOSB calculations straightforward for household employment relationships.

Domestic Worker EOSB Examples

Special Cases in EOSB Calculation

Female Employees - Marriage and Childbirth

Saudi Labour Law provides special EOSB protections for female employees who resign due to marriage or childbirth. According to Article 85, female employees who resign within six months of their marriage or within three months after giving birth are entitled to their full calculated EOSB (100%), regardless of their total service duration. This provision recognizes significant life events and protects women's financial interests during major transitions.

Unlimited vs Limited-Term Contracts

The EOSB calculation formula remains the same for both unlimited-term and limited-term contracts. The primary difference lies in resignation entitlements: both contract types follow the same graduated scale (0%, 33.33%, 66.67%, 100%) based on service duration when the employee resigns voluntarily. Contract type does not affect EOSB amounts for employer termination, retirement, or contract expiry scenarios.

Unpaid Leave and Service Breaks

Periods of unpaid leave or authorized service breaks may be excluded from the total service calculation depending on the circumstances and employment contract terms. Employers should maintain accurate records of all leave periods, and employees should verify that their service duration calculations properly account for only periods of active employment or paid leave.

Partial Years and Prorated Calculations

EOSB entitlements include prorated amounts for incomplete years of service. Additional months beyond complete years are calculated as fractions of a year (months ÷ 12), and additional days are calculated as (days ÷ 365). The appropriate multiplier (0.5 for first 5 years, 1.0 for beyond 5 years) is then applied to determine the partial year EOSB amount.

Change in Wage During Employment

EOSB calculations always use the employee's last monthly wage before separation, regardless of wage changes during the employment period. If an employee received raises or wage adjustments throughout their tenure, only the final wage amount is relevant for EOSB purposes. This ensures calculations reflect the most recent compensation level.

EOSB Payment Timeline and Process

Saudi Labour Law establishes strict requirements for the payment of end of service benefits to ensure employees receive their entitled compensation promptly:

• Payment Deadline: Employers must pay EOSB as part of the final settlement upon termination of employment. The payment should be made within a reasonable timeframe, typically within one week of the employee's last working day.
• Final Settlement Components: The final settlement includes EOSB, any outstanding salary for worked days, compensation for unused annual leave, and any other contractually agreed benefits or allowances.
• Payment Method: EOSB is typically paid via bank transfer to the employee's salary account. In some cases, certified cheques may be issued, but bank transfers are preferred for documentation and traceability.
• Payment Currency: All EOSB payments are made in Saudi Riyals (SAR). For expatriate workers, currency conversion (if needed) occurs at the prevailing exchange rate at the time of payment.
• Documentation Requirements: Employers must provide detailed calculation breakdowns showing the wage used, service duration, calculation steps, entitlement percentage, and final EOSB amount. Employees should request and retain this documentation.
• Receipt and Acknowledgment: Employees typically sign a final settlement receipt acknowledging payment of all end-of-service entitlements. Review all calculations carefully before signing to ensure accuracy.

Common Mistakes in EOSB Calculation

Avoid these frequent errors when calculating or verifying your Saudi Arabia end of service benefits:

1. Using Basic Salary Only: Many employees mistakenly calculate EOSB using only basic salary. The correct wage base includes basic salary plus all fixed and regular allowances such as housing, transportation, and other consistent monthly payments specified in the contract.
2. Applying Wrong Resignation Percentages: Resignation entitlements follow specific thresholds (2 years, 5 years, 10 years). Ensure you apply the correct percentage based on your exact service duration at resignation.
3. Forgetting Partial Years: EOSB calculations must include prorated amounts for additional months and days beyond complete years. Neglecting partial periods results in undercalculation of benefits.
4. Confusing Termination with Resignation Rules: Employer-initiated termination (without misconduct) entitles employees to 100% EOSB regardless of service duration. Don't apply resignation percentages to termination scenarios.
5. Using Average Wage Instead of Last Wage: EOSB is calculated based on your last monthly wage before separation, not an average of wages throughout employment. Always use the most recent wage figure.
6. Miscounting Service Duration: Accurately calculate service from contract start date to separation date. Include all continuous service periods but exclude unpaid leave if contractually specified.
7. Overlooking Special Provisions: Female employees resigning due to marriage (within 6 months) or childbirth (within 3 months) qualify for 100% EOSB. Don't apply standard resignation percentages to these situations.
8. Domestic Worker Calculation Errors: Household workers follow a completely different formula (1 month per 4 years). Don't apply the regular employee half-month/full-month calculation to domestic workers.

Tips for Employees Regarding EOSB

• Maintain Employment Documentation: Keep copies of your employment contract, salary certificates, contract amendments, and all documents showing your wage history and service duration.
• Understand Your Contract Type: Know whether you have an unlimited-term or limited-term contract, as this affects your rights and obligations regarding resignation and termination.
• Track Your Service Duration: Maintain personal records of your start date, any unpaid leave periods, and expected separation date for accurate EOSB calculations.
• Calculate Before Resigning: Use EOSB calculators to estimate your entitlement before submitting resignation, especially if you're close to service milestones (2, 5, or 10 years).
• Verify Employer Calculations: When receiving your final settlement, carefully review the EOSB calculation breakdown and verify it matches the legal formula and your service records.
• Know Your Special Rights: Female employees have additional protections for marriage and childbirth-related resignations. Understand these provisions if applicable to your situation.
• Consider Timing Strategically: If you're approaching a service milestone (like 5 or 10 years), consider whether continuing employment until the milestone would significantly increase your EOSB entitlement.
• Document Final Settlement: Obtain written documentation of all final settlement payments including EOSB, outstanding salary, and unused leave compensation.
• Seek Professional Guidance: For complex situations or EOSB disputes, consult with labour law specialists or use HRSD resources for clarification and assistance.
• Use Official Calculators: The Ministry of Human Resources and Social Development provides an official EOSB calculator through the Qiwa platform. Use this tool for verification.

Employer Obligations and Compliance

Saudi employers must adhere to strict legal obligations regarding end of service benefits to ensure compliance with labour law and avoid penalties:

• Timely Payment: Pay EOSB and all final settlement components within the legally mandated timeframe. Delays can result in penalties and labour complaints.
• Accurate Calculation: Use the correct formula, wage base, and service duration. Underpayment of EOSB violates labour law and exposes employers to legal action.
• Proper Documentation: Maintain complete employment records including contracts, wage histories, service durations, and EOSB calculation documentation for all employees.
• Contract Registration: Register all employment contracts through the Qiwa platform as required by Saudi authorities. This includes contracts for domestic workers.
• Clear Wage Definition: Employment contracts should clearly specify basic salary and fixed allowances to avoid disputes about the wage base for EOSB calculations.
• Fair Treatment: Apply EOSB rules consistently and fairly to all employees regardless of nationality, position, or circumstances of separation.
• Misconduct Documentation: If terminating for misconduct and withholding EOSB, maintain thorough documentation of the misconduct, warnings, and due process followed.
• Training and Awareness: Ensure HR personnel understand EOSB calculation rules, entitlement percentages, and special provisions to avoid errors.
• Dispute Resolution: Address employee concerns about EOSB calculations promptly and professionally. Use mediation services if disputes arise.
• Regular Audits: Periodically audit EOSB calculation practices and final settlement procedures to ensure compliance with current labour law provisions.

Frequently Asked Questions (FAQ)

How is end of service calculated in Saudi Arabia?

End of service benefits in Saudi Arabia are calculated using the half-month and full-month salary rule. For the first five years of service, employees receive half a month's wage for each year. For years beyond five, employees receive one full month's wage for each year. The calculation uses your last monthly wage including fixed allowances. Partial years are prorated proportionally.

What is the EOSB calculator formula?

The EOSB calculator formula is: EOSB = (Last Wage × 0.5 × First 5 Years) + (Last Wage × 1.0 × Additional Years) + Prorated Partial Year. For resignation, multiply the result by the applicable percentage: 0% for less than 2 years, 33.33% for 2-5 years, 66.67% for 5-10 years, or 100% for 10+ years.

What is the end of service benefit for household workers in Saudi Arabia?

Household workers including maids, drivers, and other domestic employees are entitled to one month's salary for every four consecutive years of service with the same employer. This is calculated and prorated for partial periods. For example, 8 years of service equals 2 months' salary as EOSB. Domestic workers follow different rules than regular private sector employees.

What is the Saudi labor law for end of service resignation?

Under Saudi labor law, employees who resign receive graduated EOSB entitlements: no benefit for less than 2 years of service, one-third (33.33%) for 2-5 years, two-thirds (66.67%) for 5-10 years, and full benefit (100%) for 10 or more years. Female employees resigning within 6 months of marriage or 3 months after childbirth receive 100% regardless of service duration.

What is Article 84 of Saudi labor law?

Article 84 of Saudi Labour Law establishes the fundamental EOSB calculation method. It states that upon termination of employment, the employer must pay the employee an end-of-service award of half a month's wage for each of the first five years and one full month's wage for each subsequent year. The award is calculated based on the last wage and includes prorated amounts for partial years.

Do I get EOSB if I resign before 2 years?

No, employees who resign voluntarily before completing 2 consecutive years of service are not entitled to any end of service benefits under Saudi labor law. The 2-year minimum applies specifically to resignation scenarios. However, if the employer terminates your contract after 1 year of service (without misconduct), you are entitled to full EOSB.

How do I calculate EOSB for 7 years of service?

For 7 years of service with a last wage of SAR 10,000: First 5 years = 10,000 × 0.5 × 5 = SAR 25,000. Next 2 years = 10,000 × 1.0 × 2 = SAR 20,000. Total gross EOSB = SAR 45,000. If resigned, apply 66.67% (5-10 years range) = SAR 30,000. If terminated by employer, receive full SAR 45,000.

What is the end of service award under Saudi labor law?

The end of service award (EOSB) is a mandatory lump-sum payment that employers must provide to employees upon termination of employment. It serves as a form of retirement savings and compensation for years of service. The award amount depends on the employee's last wage, length of continuous service, and reason for separation. It is a legal right protected under Saudi Labour Law.

Can my employer refuse to pay EOSB?

Employers can only legally refuse EOSB if the employee is terminated for gross misconduct as defined in Article 80 of Saudi Labour Law or if the employee resigns before completing 2 years of service. For all other separation scenarios, EOSB payment is mandatory. If your employer wrongfully withholds EOSB, file a complaint through the HRSD Qiwa platform.

Is EOSB calculated on basic salary or total salary?

EOSB is calculated on your last total wage, which includes your basic salary plus all fixed and regular allowances such as housing allowance, transportation allowance, and other consistent monthly payments specified in your employment contract. Variable elements like bonuses, commissions, or one-time incentives are typically excluded unless explicitly stated in your contract.