End of Service Saudi: How the Award Is Calculated

The end of service award in Saudi Arabia is calculated from the worker's last wage and years of service: half a month's wage for each of the first five years, then one month's wage for each year after that. If the employer ends the contract, the worker gets this full amount. If the worker resigns, the award can be reduced to a share of it, depending on length of service.

This guide is for owners and HR managers in KSA who need to get the number right before the final settlement. It uses the HRSD-hosted Labor Law text and Qiwa's own calculator.

Check the current text. The HRSD file linked here is the 2005 Labor Law (Royal Decree M/51). Amendments have been in force since February 2025, so article numbers and wording may differ. Confirm against the latest version on HRSD and Qiwa before paying.

How is end of service Saudi calculated under Article 84?

The full award under Article 84 of the Labor Law is half a month's wage for each of the first five years and one month's wage for each year after that. It is based on the last wage. Part years are counted pro rata.

The formula in plain terms:

• Up to 5 years: last monthly wage × 0.5 × years of service.
• More than 5 years: last monthly wage × 2.5, plus last monthly wage × (years − 5).

Qiwa's end-of-service reward calculator applies this to fixed-term and open-ended contracts. It asks for the contract type, the reason the contract ended, total salary (basic plus all cash allowances), and the start and end dates. It returns the amount, the payment date and the calculation method.

Worked example: full award

Say a Riyadh trading company employee earns SAR 8,000 a month and leaves after 7 years.

• First five years: 8,000 × 0.5 × 5 = SAR 20,000.
• Next two years: 8,000 × 2 = SAR 16,000.
• Full award: SAR 36,000.

This is a hypothetical example. Use your own contract and payroll records for real cases.

What changes when the employer ends the contract versus when the worker resigns?

When the employer ends the contract, the worker normally gets the full Article 84 award. When the worker resigns, Article 85 can cut the award to a share, based on years of service.

The resignation ratios come from Article 85. I could not retrieve the Article 85 text from an official page, so the bands above follow the ratios that secondary sources consistently report. Check them in the HRSD Labor Law text and in the Qiwa calculator before you pay.

Where exactly five years falls

Sources read the boundary slightly differently. Several calculators treat exactly five years as still in the one-third band, with two thirds starting after the fifth anniversary. If a resignation lands on or near a threshold, run it through Qiwa and keep a copy of the result.

Worked example: resignation

Take the same SAR 8,000 employee with 7 years of service who resigns.

• Full award: SAR 36,000.
• Two-thirds share: 36,000 × 2/3 = SAR 24,000.

Now a shorter case. A worker earning SAR 6,000 resigns after 3 years.

• Full award: 6,000 × 0.5 × 3 = SAR 9,000.
• One-third share: SAR 3,000.

Timing matters. A worker who resigns at 9 years and 11 months receives two thirds. The same worker staying to 10 years receives the full award. Employers should know this when handling resignation notices.

When is the full award due even if the worker resigns?

Article 87 gives two cases where the full award is owed despite the resignation rules. These are force majeure, and a woman ending her contract within six months of her marriage contract or three months of giving birth. HRSD's Labor Relations page lists this alongside Article 81, which covers cases where the worker may leave without notice, such as the employer assigning fundamentally different work.

In these cases, do not apply the one-third or two-thirds ratio. Record the reason for leaving in writing, because the reason drives the calculation. Qiwa's calculator also asks for it.

How do you calculate the award step by step?

Follow these steps for each leaver:

1. Confirm the contract type and dates. Get the signed contract, the start date and the last working day. Check whether the end falls inside probation (Art. 54).
2. Record the reason the contract ended. Employer termination, expiry, resignation, Art. 80 dismissal, Art. 81 grounds or Art. 87 grounds. Each gives a different result.
3. Take the last wage. Use basic pay plus all cash allowances, as Qiwa's calculator does. Check it against your payroll records and Mudad or WPS submissions.
4. Count service in years, including part years. Convert months and days to a decimal. Six years and six months is 6.5.
5. Apply Article 84. Work out the full award using the half-month and one-month bands.
6. Apply Article 85 if the worker resigned. Multiply by 0, one third, two thirds or one, as the years of service require.
7. Cross-check with the Qiwa calculator. Save the output with the file.
8. Pay on time. Article 88 sets one week from the end of the contract. HRSD's Labor Relations page says it can be up to two weeks if the worker ended the contract.

What mistakes do employers make with end of service?

• Using basic salary only. Qiwa's calculator uses total salary, including cash allowances. Check this before you settle on a base.
• Applying resignation ratios to employer terminations. If the employer ends the contract, the full award applies.
• Treating part years as zero. Part years count pro rata.
• Skipping the reason code. A resignation after childbirth or an Art. 81 exit is not an ordinary resignation. Document it.
• Missing the payment window. Wages and entitlements are due within one week under Article 88. Late payment creates disputes.
• Using an outdated article list. The law was amended in 2025. Confirm article numbers on HRSD and Qiwa.

How can HR keep the inputs ready?

The calculation is simple. The hard part is having clean inputs: start dates, contract type, salary changes, leave balances and exit reasons. If these sit in spreadsheets and chat threads, errors creep in.

Quickship's HR module tracks visa and document expiry, leave and payroll inputs in one place, so the dates and wage figures behind an end-of-service calculation are easier to find. It is software for your HR team. It does not replace the legal calculation, and the final figure should still be checked against the Labor Law and Qiwa.

For anything unusual, such as disputed dismissals or contract changes, speak to a Saudi labour law adviser or HRSD.