Saudi End-of-Service: Resignation vs Employer Termination

The end reason is a legal classification, not a shorthand label

Before opening a calculator, document the instrument and facts that ended employment: ordinary resignation, fixed-term expiry, mutual agreement, employer termination, an Article 80 case, or a worker leaving while retaining rights under Article 81. This article explains Saudi private-sector Labour Law as displayed by the official source when checked on 20 October 2026. It is general information, not legal advice on an employee file.

• Do not infer the reason from the HR form title alone.
• Tie the classification to the contract, notice, dates and facts.
• Keep EOSB separate from unpaid wages, leave encashment and other compensation.
• Escalate disputed facts to qualified counsel.

Article 84 builds the base award first

When employment ends, Article 84 calculates a base award of half a month's wage for each of the first five years and one month's wage for each later year, using the last wage and prorating fractions of a year. This is the starting point, not an automatic promise that every case receives the full figure; the end reason and other provisions can change the result.

Ordinary resignation applies the Article 85 bands

If employment ends through the worker's ordinary resignation, the general Article 85 rule gives no award before two completed years; one third of the base award from two through five years inclusive; two thirds when service exceeds five years but is below ten; and the full award at ten years or more. The boundary matters: exactly five years is one third, while two thirds starts only above five years.

• Below two years: no award under the general Article 85 rule.
• Two through five years inclusive: one third.
• Above five and below ten years: two thirds.
• Ten years or more: the full award.

Employer termination does not always mean the same result

For fixed-term expiry or ordinary employer termination where no disqualifying exception applies, calculation starts from the full Article 84 base without the resignation factor. But “company termination” does not automatically award the full amount: Article 80 lists cases for termination without award, notice or compensation after an opportunity to object, while Article 81 lists cases where a worker may leave and retain statutory rights. Review facts and records, not the label alone.

Two fictional examples show the difference

A fictional employee has a last eligible wage of SAR 10,000 and exactly five years of service. The Article 84 base is SAR 25,000. Ordinary resignation gives one third: SAR 8,333.33. Ordinary employer termination, assuming no exception, uses the SAR 25,000 base. A second employee at the same wage has seven years: the base is SAR 45,000; ordinary resignation applies two thirds, or SAR 30,000, while ordinary employer termination starts from SAR 45,000. These are teaching figures, not an actual settlement.

• Reperform the calculation from evidenced dates and wage.
• Show the base and factor, not a bare result.
• Use a stated, consistent rounding method.
• Record assumptions and exceptions.

Exceptions and deadlines belong in separate fields

Article 87 provides full entitlement in specified cases despite Article 85, including force majeure and two cases for women linked to marriage and childbirth. Article 88 requires settlement within one week when the employer ends the relationship and two weeks when the worker ends the contract. These deadlines do not themselves change the formula. Separate reason, base, factor, exception, deadline and approval.

A seven-point exit checklist

HR should not approve the result until a second reviewer can trace it from source documents to the number.

• Dates are evidenced.
• The end reason is supported by records.
• Last wage components are justified.
• The Article 84 base is shown separately.
• Article 85 applies only to ordinary resignation.
• Articles 80, 81 and 87, and disputes, were reviewed.
• Deadline and second reviewer are recorded.