End of Service Benefits (EOS) in Saudi Arabia: How to Calculate Gratuity Under Saudi Labor Law

Key Takeaway

• ⚖️ The Article 84 formula, from the Ministry’s own English text: the end of service award = half a month’s wage for each of the first five years, one full month’s wage for each year after, pro-rated for part years — computed on the last wage received (MHRSD’s own labor-relations page — the primary source).
• 🪤 The resignation ladder — Article 85’s thirds: resign between 2 and 5 years = one-third of the award; above 5, under 10 = two-thirds; from 10 years = the full award; and under 2 years’ service = no entitlement at all.
• 👩 Article 87’s full-award cases most people never see: the worker leaving for force majeure beyond their control, and the female worker who terminates within six months of marriage or three months of delivery — both get the FULL award regardless of Article 85.
• 🧮 The worked check (10,000 SAR wage, 7 years 4 months): terminated = SAR 48,333 (5×5,000 + 2×10,000 + 3,333 pro-rata); the same service resigned = about one-third less per the Article 85 class — the desk’s tables below run both.
• 🧾 The basis trap: “the last wage received” = the wage at termination — the base plus the fixed allowances as your contract defines it; the commission-variable debates are where the disputes live, and the HRSD/Qiwa portal is the official calculation reference.

The end of service benefit is the Saudi corridor’s biggest single payout — and the verified way to compute it lives in the labor law’s own Articles 84, 85 and 87, published in English on the Ministry of Human Resources’ own site. This piece is the OFW’s calculation guide: the Article 84 formula with the pro-rata rule, the Article 85 resignation ladder, the Article 87 full-award exceptions, the worked examples (a terminated case and a resigned case, run to the riyal), the wage-basis traps that start the disputes, and the repayment of the money home — every figure anchored to the Ministry’s own text or the dated worked sources, nothing invented.

End-of-Service Article 84: Half Months, Full Months, Pro-rata

The Ministry’s own text: “the employer shall pay the worker an end of service indemnity calculated on the basis of half a month’s wage for each year of the first five years of service, and one month’s wage for each subsequent year. The last wage received shall be the basis for calculating the award. The worker shall be entitled to a pro-rata award for fractions of a year worked.” Two details trip people up, the dated guides carry both: the “last wage” is the wage at the end — so a raise effective before termination raises the whole award retroactively (the award’s basis, not the year’s basis); and the wage’s composition — the base plus the contract’s fixed allowances — decides far more than employees expect, which is why the disputes’ first evidence is the contract’s own wage clause.

End-of-Service Article 85: What Resignation Costs

The resignation class, verbatim from the Ministry’s text: the worker who resigns earns one-third of the award with continuous service of “not less than two years and not more than five years”; two-thirds when service “exceeds five years but does not reach ten”; the full award from ten years or more — and no entitlement under two years. The practical reading for the OFW planning a return: the resignation’s timing sits on real money — a worker at 9 years 11 months resigning walks to two-thirds; at 10 years even, the full award — a class of months that pays in the tens of thousands of riyals. The fixed-term contract classes and the employer-side termination run the full award (Article 85’s scope = the worker’s own resignation); the non-renewal classes and the contract-end mechanics run their own provisions the law carries beside.

End-of-Service Article 87: the Full-Award Exceptions

The Ministry’s text names the cases where the full award pays “notwithstanding Article 85” — the worker leaving work due to force majeure beyond their control, and — the clause most OFW women never hear about — the female worker who terminates within six months of her marriage contract or within three months of delivery. The desk’s framing: the law’s own exceptions exist precisely for the classes the formula would otherwise penalize; the conditions verify at the labor office or the Qiwa portal when the class applies.

The End-of-Service Worked Examples: to the Riyal

The July 2026 guide’s two runs of the same service — a 10,000 SAR wage, 7 years 4 months served — from the dated calculation guides (Qeemah’s worked tables): terminated: first five years = 5 × (10,000 ÷ 2) = 25,000 SAR; years 6-7 = 2 × 10,000 = 20,000 SAR; the remaining 4 months = (4 ÷ 12) × 10,000 = 3,333 SAR; total: 48,333 SAR. The same service resigned (2-5-year class? no — 7+ years = the two-thirds class): the Article 85 two-thirds of 48,333 = ≈32,222 SAR — a 16,117 SAR difference for the same years, decided by the ending’s class alone. The desk’s honest note: the wage composition and the employer’s own policies (the end of service add-ons some companies run) move the number up; the computation’s shape never changes.

The End-of-Service Payout’s Journey Home

• The payout itself: the award’s settlement runs with the exit process — the final wages, the accrued leave class and the EOS together; the Qiwa portal’s own flows carry the end of service steps (the Ministry’s designated system).
• The return rails: the award remits like any corridor send — the desk’s Saudi remittance guide prices the lanes; at 48,000-SAR class the “recipient gets” test and the spread’s stakes run high (a 1% margin on the payout = a month’s groceries class).
• The savings interplay: the EOS award is the reintegration blueprint’s capital class (the desk’s ₱1M blueprint) — the award lands as the ladder’s seed, not as spending money; the boundary framework prices its course.
• The records layer: the contract’s wage clause + the payslips + the Qiwa records = the evidence pack; the desk’s SSS-Saudi guide covers the parallel SSS-side records (the coverage guide) — the two systems’ paperwork never mixes.

End-of-Service Wage Composition: the Disputes’ Home Ground

The clause that decides thousands of riyals quietly: what “the wage” includes at termination. The base salary always counts; the contract’s fixed allowances (housing, transport classes written into the wage lines) count where the contract’s own wage clause carries them; the variable classes (commissions, performance bonuses, overtime) run the disputes the labor courts see. The desk’s reading of the guides’ shared advice: the contract’s own wage definition is the document that governs — the piece’s instruction for readers mid-deployment: check your contract’s wage clause tonight, note its composition line, and keep the payslips that show the components’ actual payment; the EOS award’s basis is written in those lines years before the payout day. The Qiwa platform and the labor offices run the official calculations on the registered wage data — which is why keeping the Qiwa records current is itself an end of service protection, not just a compliance chore.

The End-of-Service Flow on the Qiwa Screen

The digital-side mechanics the payout actually runs through. The Qiwa platform carries the end of service steps inside the employment relationship’s own records: the contract’s wage data (the registered wage the calculation reads), the end-class selection (resignation class against the employer classes), and the settlement’s own confirmation flow — the desk’s honest description: the exact screens move with the platform’s updates, but the shape holds: the registered wage data is the engine’s input, the ending’s class is the rule’s selector (Article 84’s formula against the 85 ladder), and the confirmation prints the settlement the payout runs on. The practical instruction this piece teaches: keep the Qiwa wage data current — a wage raise not registered in the platform risks the calculation reading the old class; the award’s basis is “the last wage received,” and the platform’s registered version of it is what the system computes from. The records habit: screenshot the settlement screen at confirmation — the paper trail for any later reconciliation.

What Would Change This Reading: the Invalidation Ledger

• A labor-law amendment: the Articles’ classes move together — the Ministry’s own page re-verifies the formula at the next amendment cycle.
• The wage-composition ruling: whether specific allowances count “in the wage” — the disputes’ own resolution classes and the Ministry’s clarifications re-price the award’s basis.
• The Qiwa flows changing: the end of service settlement’s digital steps — the portal’s own screens are the re-verify point.
• The exchange path: the SAR-PHP rate at payout day moves the peso value — the corridor pieces carry the staging rules.

What the Evidence Supports, by Reader Situation

Education desk, not an advisory service — decision inputs, never instructions.

• If you’re planning your return date: the Article 85 ladder’s months are real money — the two-thirds vs full-award boundaries run in years, and the payout’s own size rewards checking your exact service date first.
• If you’re resigning into a new job in-kingdom: the EOS rules at the transfer run their own classes (the law carries the transfer provisions beside) — the calculation’s shape holds, the ending’s class decides.
• If the dispute starts: the wage clause, the payslips and the Qiwa records are the evidence pack — the Ministry’s labor offices and the official portal calculate the entitlement; the desk computes, it never arbitrates.

FAQ

How is end of service gratuity calculated in Saudi Arabia?

By Article 84’s own formula: half a month’s wage per year for the first five years plus one full month’s wage per year after, pro-rated for part years, computed on the last wage received. The Ministry’s English text is the authority.

What happens to the end of service award if I resign?

Article 85’s ladder: one-third of the award with service between 2 and 5 years, two-thirds above five and under ten, the full award from ten years — and nothing under two years’ continuous service. A 7-year-4-month worker at the 10,000 SAR wage class runs 48,333 SAR terminated against ≈32,222 SAR resigned, two-thirds class.

Are there cases where a resigning worker gets the full end of service award?

Yes — Article 87’s classes: the force majeure leaves beyond the worker’s control, and the female worker terminating within six months of marriage or three months of delivery — both draw the full award notwithstanding the resignation ladder.

Which wage is used in the calculation?

“The last wage received” — the wage at termination, per the law’s own text. The composition question (the base plus which fixed allowances) is the disputes’ home ground; the contract’s own wage clause and the payslips carry the evidence, and the MHRSD/Qiwa class runs the official calculation.

Does the pro-rata rule apply to part years?

Yes — the law’s own text: “a pro-rata award for fractions of a year worked” — the 4-months class computes (4 ÷ 12) × the month’s wage class, exactly the worked example’s 3,333 SAR line.

What should I do with the award when I return home?

The desk’s framing, no advice: the award remits through the corridor’s verified rails (the “recipient gets” test and the spread stakes run high at that size), and the reintegration blueprint treats the award as the savings ladder’s seed class — the boundary framework decides the rest.

Does the end of service award survive a transfer between employers?

The law carries the transfer classes beside the resignation ones: a service transfer that preserves continuity (the registered move the Qiwa records carry) runs its own treatment, and the new-employer class restarts what it restarts — the honest answer is that the continuity question reads the registered records, not the verbal assurances. The desk’s teaching: verify the continuity treatment at the transfer’s own moment, because the EOS clock’s meaning in ten years depends on how that switch was recorded today.

Do I pay tax on the end of service award?

The two-jurisdiction answer: Saudi Arabia runs no personal income tax on the award; Philippine-side taxation runs its own rules on the OFW’s returns class — the desk’s OFW-tax lane carries the exemption classes and the filing reality. The desk’s honest note: treat this as a records question (keep the settlement’s documents) and verify with your own BIR-side counsel before assuming any class.

Financial Disclaimer

This article is for general information and education only. It is not financial, investment, legal or tax advice, and it does not recommend any legal decision or course of action. Laws, wage-composition rules and portal flows change by instrument without notice; every figure was verified against the cited sources (the Ministry’s own published text and the dated calculation guides) as of November 2026 and must be re-confirmed with the MHRSD, the Qiwa portal and your own contract before any decision or action. WorldNgayon is not affiliated with any agency or employer named, and no content on this site should be acted upon without independent verification and, where appropriate, advice from licensed professionals.

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  author       = {Agron, Edmon},
  title        = {{End of Service Benefits (EOS) in Saudi Arabia: How to Calculate Gratuity Under Saudi Labor Law}},
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  date         = {2026-11-02},
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