Your end of service benefit (EOSB) — commonly called gratuity or mukafaa — is the single largest sum most expatriates ever receive from an employer in Saudi Arabia. The rule is fixed by Article 84 of the Saudi Labour Law: half a month’s wage for each of the first five years, and a full month’s wage for every year after that, calculated on your last wage, with no cap.
But how the job ends changes everything. Resign and Article 85 cuts your entitlement — sometimes to nothing. Get terminated, or let a fixed-term contract expire, and you receive the full amount. This guide gives you the formula, the resignation table, five worked examples, and the mistakes that cost people years of money.
The Base Formula (Article 84)
| Service period | Entitlement per year | In days of wage |
|---|---|---|
| First 1 to 5 years | Half a month’s wage | 15 days |
| Year 6 onwards | One full month’s wage | 30 days |
| Partial final year | Pro-rated for the days worked | In proportion |
Resignation — The Article 85 Reduction
| Service completed | You receive |
|---|---|
| Less than 2 years | Nothing |
| 2 to under 5 years | One-third of the full award |
| 5 to under 10 years | Two-thirds of the full award |
| 10 years or more | Full award |
Critical distinction: this reduction applies only to resignation. If the employer terminates you, or a fixed-term contract simply runs out, you receive the full Article 84 amount regardless of years served. The same is true where you leave under Article 81 because the employer breached the contract — unpaid wages, for example.
Five Worked Examples
Assume a last wage of SAR 10,000 per month (basic + fixed allowances). Daily wage = 10,000 ÷ 30 = SAR 333.33.
| Service | Full award (Article 84) | If you resign |
|---|---|---|
| 1 year | SAR 5,000 | SAR 0 (under 2 years) |
| 3 years | SAR 15,000 | SAR 5,000 (⅓) |
| 5 years | SAR 25,000 | SAR 8,333 (⅓ — still under 5 complete years) |
| 7 years | SAR 45,000 | SAR 30,000 (⅔) |
| 10 years | SAR 75,000 | SAR 75,000 (full) |
Notice the pattern: at 5 years the award is 2.5 months’ wages for every year of the first five. At 10 years it is 7.5 months’ wages total. Every year beyond the fifth adds a full month, which is why long-serving staff see the number jump sharply.
Six Mistakes That Cost Real Money
- Resigning one month before a milestone. Resigning at 4 years 11 months gives you one-third. Waiting one month pushes you past five years and into two-thirds. On a SAR 45,000 award that is SAR 15,000 for thirty days of patience.
- Accepting “basic only” calculations. Ask for the calculation in writing, showing basic plus every fixed allowance.
- Signing a resignation letter when you were pushed. If the employer wanted you out, the correct instrument is termination, not your resignation. Once you sign a resignation, Article 85 applies.
- Not registering the contract on Qiwa. An unregistered contract weakens your position in a labour dispute.
- Leaving before settling. A final exit without a settlement makes recovery dramatically harder from abroad.
- Ignoring unpaid dues. Unpaid salary, accrued leave and air ticket entitlements are separate from EOSB and are owed in addition.
How to Claim It
- Request a written settlement statement from HR before your last working day.
- Verify the last wage figure includes all fixed allowances.
- Check your total service period against your Iqama history — service normally runs from your first entry date, not your contract start.
- Confirm how the employment ended. Termination or contract expiry means the full award.
- If the employer refuses or underpays, file a complaint through the Qiwa platform or the Ministry of Human Resources’ labour office. Wage Protection System records support unpaid-wage claims.
For the rest of your Saudi paperwork, see our Iqama fees guide, the exit re-entry visa fees and the Iqama transfer (naql kafala) rules.
Frequently Asked Questions
How is end of service benefit calculated in Saudi Arabia?
Half a month’s wage for each of the first five years, then a full month’s wage for every year after, based on your last wage including fixed allowances, with no maximum cap.
Do I get gratuity if I resign?
Yes, but reduced: nothing under two years, one-third between two and five years, two-thirds between five and ten, and the full amount at ten years or more.
Is gratuity paid if my contract simply expires?
Yes, in full. A fixed-term contract expiring is not a resignation, so Article 85 does not reduce it.
Is EOSB calculated on basic salary or total salary?
On the last actual wage — basic salary plus all fixed entitlements such as housing and transport allowance. Calculating on basic alone understates what you are owed.
Is there a maximum limit on end of service benefit?
No. Article 84 sets no cap, which is why long-serving employees can accumulate very large awards.
Bottom Line
Half a month per year for five years, then a full month per year after that — on your last wage including fixed allowances, with no cap. Resigning under two years pays nothing, so never resign at 23 months. And always get the calculation in writing before you sign anything. Your gratuity is not a favour from the employer; it is a statutory entitlement you can enforce through Qiwa.
