How to Calculate Saudi End-of-Service Benefits: Worked Examples

Start with the Article 84 base award

For Saudi private-sector employment, Article 84 provides half a month's wage for each of the first five years and one month's wage for each later year. The last wage is the basis, and partial years are included proportionally. This is the base award before any resignation factor or relevant exception. This article is general Saudi information, not legal advice for an individual case.

• Confirm the start date and final service day.
• Identify the last eligible wage.
• Split service into the first five years, later years, and any partial year.
• Document the termination reason before applying a factor.

Example 1: termination after 7 years and 6 months

A fictional company, Nakheel Technology, ends an employee's service after 7.5 years. The last eligible wage is SAR 12,000, and we assume no exception changes entitlement. First five years: 5 × half a month = 2.5 months = SAR 30,000. Next 2.5 years: 2.5 × one month = SAR 30,000. Illustrative base award = SAR 60,000. No resignation factor is applied because this example is termination, but the employer must still review the facts, contract and any other applicable provision.

Example 2: resignation at exactly five years

In a second fictional example, the last eligible wage is SAR 9,000 and service is exactly five years. Base award: 5 × SAR 4,500 = SAR 22,500. Article 85 awards one third when service is at least two years and no more than five, so exactly five years uses the one-third factor: an illustrative SAR 7,500. The two-thirds factor begins only above five years and below ten—not at the five-year boundary itself.

Read the termination reason before you calculate

Article 85 governs ordinary resignation: no award before two years, one third from two through five years inclusive, two thirds above five and below ten, and the full award at ten years or more. Article 87 lists specified exceptions for full entitlement, while Article 88 sets settlement deadlines. Do not turn a spreadsheet field into a legal conclusion; classify the reason from evidence and escalate unclear facts to qualified counsel.

Which wage belongs in the base?

Article 84 refers to the last wage, but identifying eligible wage elements requires the statutory definitions, contract and payroll record. Article 86 permits a valid agreement to exclude some naturally variable commissions or percentages from the settlement base. Do not default automatically to basic salary or include every payment automatically; keep an assumptions sheet listing each component and the reason for including or excluding it.

Pre-approval checklist

Recalculate manually or with an independent tool and retain the inputs and verification date. Keep EOSB separate from unpaid wage, leave encashment and any other compensation; they are different items. Review the result with the accountable approver and give the employee an intelligible breakdown rather than a bare number.

• Dates are evidenced and the proration method is stated.
• The termination reason is supported by documents.
• Wage components are included or excluded for a recorded reason.
• The resignation factor matches the exact service boundary.
• The calculation was reperformed and separated from other dues.