CalcKitWhen your job ends in Saudi Arabia, your employer owes you an end-of-service award — the lump sum most workers simply call gratuity. It is a legal entitlement under the Saudi Labor Law (Royal Decree M/51), and the amount is set by a fixed formula in Article 84. The twist that catches many workers out: unlike the UAE or Qatar, where resignation and termination pay the same, in Saudi Arabia how you leave can reduce your payout. Work out both numbers before you hand in your notice.
The gratuity formula (Article 84)
The formula has two tiers. For each of your first five years of service you earn half a month's wage. For every year beyond five you earn one full month's wage. Add the two parts together and you have the full award. Two details matter: the calculation uses your last wage, and any fraction of a year is paid proportionally, not rounded down.
Worked example
Take an employee whose last monthly wage is SAR 6,000 and who completes 7 years of service. First five years: 5 × SAR 3,000 = SAR 15,000. Years six and seven: 2 × SAR 6,000 = SAR 12,000. Full award = SAR 27,000. Now apply the resignation rule: if this employee resigns after 7 years, the award is cut to two-thirds — SAR 18,000. That single decision costs SAR 9,000, which is why you should always run both figures. Try your own numbers in our free Gratuity Calculator — it runs the same formula instantly.
What counts as "wage"?
This is the detail that most often causes disputes. Saudi gratuity is calculated on your last wage, not just your basic salary. In practice that means basic pay plus fixed, regularly paid allowances — most commonly housing and transport allowances. Variable pay such as sales commissions, one-off bonuses and overtime is generally excluded, unless your contract says otherwise. If your contract splits pay into basic plus housing and transport, add those fixed allowances before calculating — using basic salary alone will understate your gratuity. When in doubt, confirm the wage components with your HR department or the Ministry of Human Resources and Social Development (MHRSD).
The resignation scale (Article 85)
If your employer ends the contract, or your fixed-term contract simply expires, you receive the full award regardless of tenure. If you resign voluntarily, a sliding scale applies: less than 2 years of service means no award at all; 2 to under 5 years pays one-third of the award; 5 to under 10 years pays two-thirds; and 10 years or more pays the full award. Note that expatriate contracts in Saudi Arabia are fixed-term by law, so these fractions apply to expats too. One exception to know: an employee dismissed for serious misconduct under Article 80 can lose the award entirely — check current rules before relying on any figure.
Partial years count — proportionally
Article 84 states that the worker is entitled to an award for portions of a year in proportion to the time worked. Six years and six months, for example, is not rounded down to six years: the extra six months earn half a month's wage at the rate that applies after year five. The same applies inside the first five years, where an extra six months earn a quarter of a month's wage. Our calculator handles the pro-rata math for you — just enter years and extra months.
Before you sign anything
Three checks before you accept a final settlement. First, confirm the wage figure your employer used — if fixed allowances were left out, the total is too low. Second, confirm whether your exit counts as a resignation or an employer termination, because that decides which fraction of the award you receive. Third, confirm the settlement timeline and get the breakdown in writing. If the numbers do not match this formula, raise it with your employer first, then with MHRSD or through the Qiwa platform — and treat any calculator figure, including ours, as an estimate, not a legal ruling.