How is the end-of-service award calculated in the private sector?

What the articles say

Five consecutive articles of the Labor Law govern the end-of-service award: Article 84 sets the calculation, Article 85 the shares on resignation, Article 86 the treatment of commissions, Article 87 the cases where the full award is due, and Article 88 the deadline to pay.

Article 84: the calculation

When the employment relationship ends, the employer pays the worker an award for the period of service. Each of the first five years counts at half a month's wage, each later year at a full month's wage, the last wage is the basis, and parts of a year count in proportion to the time worked.

"When the employment relationship ends, the employer must pay the worker an award for the period of service, calculated on the basis of half a month's wage for each of the first five years and one month's wage for each of the following years. The last wage is taken as the basis for calculating the award. The worker is entitled to an award for parts of a year in proportion to the time spent at work."

Article 84, Saudi Labor Law, original text, never amended. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.

"Wage" in the Labor Law means the actual wage, as defined in Article 2: the basic wage plus all other increases due that are set for the worker for effort made or risks faced at work, or for the work under the employment contract or the work regulations, including the commissions and allowances the article lists. The first five years stay at half a month each however long the service lasts; only the years after them count at a full month.

Article 85: the award on resignation

If the relationship ends because the worker resigns from a fixed-term contract, which is resignation as Article 2 defines it since the 2025 amendments (next section), the share depends on the length of service, subject to the Article 87 cases below:

"If the employment relationship ends because of the worker's resignation, the worker is entitled in that case to one third of the award after service of not less than two consecutive years and not more than five years, to two thirds if the service exceeds five consecutive years and has not reached ten years, and to the full award if the service reaches ten years or more."

Article 85, Saudi Labor Law, original text, never amended. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.

The definition of resignation since the 2025 amendments

The text of Article 85 did not change, but Royal Decree M/44 added a definition of resignation to the definitions in Article 2, in force since 19 February 2025:

"Resignation: the worker's written disclosure, without coercion, of the wish to end a fixed-term employment contract, not made subject to any restriction or condition, and the employer's acceptance of it."

Article 2 (definitions), Saudi Labor Law, as added by Royal Decree M/44 dated 8/2/1446H. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.

This definition leads to the following:

• Fixed-term contract: the Article 85 shares (nothing under 2 consecutive years, one third from 2 to 5 years, two thirds above 5 and under 10 years, the full award at 10 years or more) apply to resignation from a fixed-term contract. The steps of a resignation request are in Article 79 bis.
• Open-ended (indefinite-term) contract: when a worker ends an open-ended contract with notice under Article 75, the text does not call this resignation, and paragraph 3 of Article 74 lists it as a separate way a contract ends. For this case the site calculator shows the full Article 84 award, which is what the Qiwa calculator returned in a check on 28 September 2026, and it also shows, for comparison, what the Article 85 shares would give.

This is a reading of the text, not an express rule in it. To confirm, the official references are the Qiwa end-of-service calculator and the Ministry of Human Resources and Social Development (unified number 19911).

Article 86: commissions and sales percentages

As a rule, any condition that contravenes the Law is void (Article 8). Article 86 is an express exception: the parties may agree that all or part of commissions, percentages of the sales price, and similar wage elements that by their nature rise and fall are left out of the wage on which the award is settled. The exception needs an agreement, so it is never presumed, and its text covers only "the wage on which the end-of-service award is settled".

Article 87: the full award despite leaving

As an exception to the resignation shares in Article 85, the full award is due in two cases:

• Force majeure: the worker leaves work as a result of force majeure beyond the worker's control.
• Marriage or childbirth: a female worker ends the contract within six months of the date of her marriage contract, or within three months of the date she gives birth.

"As an exception to Article 85 of this Law, the full award is due if the worker leaves work as a result of force majeure beyond the worker's control. A female worker is also entitled to it if she ends the contract within six months of the date of her marriage contract or three months of the date she gives birth."

Article 87, Saudi Labor Law, original text, never amended. Unofficial working translation for awareness only; the official text is the Arabic published by the Bureau of Experts at the Council of Ministers.

The Women at Work page brings together the other rights of working women under the Labor Law, including maternity leave.

Article 88: when entitlements must be paid

• General rule: the employer pays the wage and settles the worker's entitlements within one week at most from the date the contractual relationship ends.
• If the worker ended the contract: the employer settles the entitlements in full within a period not exceeding two weeks.
• Deductions: the employer may deduct from the amounts due to the worker any debt owed to the employer because of the work.

Who it applies to

The Labor Law applies to every employment contract under which a person works for an employer, under the employer's management or supervision, for a wage (Article 5). That covers private-sector employees, men and women, Saudi and non-Saudi.

It does not cover the groups excluded by Article 7, among them domestic workers and those in a similar position, agricultural workers and private shepherds, and players and coaches of sports clubs and federations; some of these groups have special regulations. This explainer does not cover civil servants or military personnel, who have their own systems.

If the wage is set by piece or production, or consists entirely of commissions or sales percentages, Article 96 sets the average wage used for the calculation.

A hypothetical example with round numbers

The figures below are hypothetical and for illustration only. A worker's last actual wage is SAR 10,000 a month, and the worker completed eight full, continuous years with the same employer.

• First five years: half a month's wage for each year, so two and a half months' wage, SAR 25,000.
• Next three years: one month's wage for each year, SAR 30,000.
• Full award: SAR 55,000.
• If the contract was fixed-term and the relationship ended by resignation: service is above five and below ten years, so two thirds are due, about SAR 36,666.67, unless one of the Article 87 cases applies.
• If the worker had resigned from a fixed-term contract after only three years: the full award for that period would be SAR 15,000, and one third is due, SAR 5,000.
• If the contract was open-ended and the worker ended it with notice under Article 75: the site calculator shows the full award, SAR 55,000, on the reading explained in the definition section above.

Hypothetical example for illustration only; it does not describe any individual case. To estimate an award, use the end-of-service calculator. It gives a guidance estimate only, not a legal opinion. The official reference is the Qiwa end-of-service calculator.

Common misconceptions

• "The 2025 amendments changed the award calculation." Articles 84 to 88 still carry their original text; Royal Decree M/44 did not include them.
• "A worker who resigns gets nothing." A worker who resigns from a fixed-term contract after at least two consecutive years receives one third, two thirds or the full award depending on length of service (Article 85), and the full award may be due in the Article 87 cases.
• "Any ending of the contract by the worker is a resignation." Since the 2025 amendments, Article 2 defines resignation as ending a fixed-term contract. A worker ending an open-ended contract with notice falls under Article 75, and Article 74 lists it as a separate case.
• "The award is calculated on the basic salary only." The text takes the last wage as the basis, and the wage in the Law is the actual wage. Commissions and sales percentages are left out only by agreement under Article 86.
• "After five years, every year counts at a full month." The first five years stay at half a month each; the full month applies only to the years after them.
• "A worker can waive the award while still employed." Article 8 makes void any release or settlement of the worker's rights under the Law made while the contract is in force, unless it is more beneficial to the worker.

Related articles

• Article 74: the cases in which the employment contract ends, including resignation.
• Article 75: the notice period for open-ended contracts, with Article 76 on pay in lieu of notice.
• Article 77: compensation when a contract ends for an illegitimate reason.
• Article 80: the cases in which the employer may terminate without award, notice or compensation.
• Article 81: the cases in which the worker may leave without notice and keep all statutory rights.
• Probation: if the contract ends during probation, the worker is not entitled to an end-of-service award for it (Article 54).
• Article 111: pay for leave days due that the worker did not use before leaving, and leave pay for parts of a year.
• Article 234: a claim about rights under the Law or the employment contract is not accepted before the labor courts after twelve months from the end of the employment relationship, unless the claimant has an excuse the court accepts or the defendant acknowledges the right.

Official source

The full text of the Labor Law and its amendments is published on the Bureau of Experts at the Council of Ministers portal. The Arabic text published there is the official reference. Text checked on 28 September 2026.