How is the end-of-service award calculated in Saudi Arabia?
Half a month's wage for each of the first five years and one month's wage for each later year, with the last wage as the basis (Article 84 of the Labour Law).
Example: a last wage of SAR 10,000 and seven and a half years of service = 10,000 × (2.5 + 2.5) = SAR 50,000.[1]
How much is the award on resignation?
One third of the award after at least two consecutive years and not more than five, two thirds after more than five consecutive years and less than ten, and the full award after ten years or more (Article 85).[1]
Is the award calculated on basic salary only?
No. The Law takes the last wage as the basis and defines wage as the actual wage: the basic wage plus all other due additions.
The parties may agree to exclude commissions, sales percentages and the like from the wage on which the award is settled (Article 86).[1]
What if the employer does not pay the award?
The claim starts with an amicable settlement request at the Ministry of Human Resources and Social Development; if no settlement is reached it goes to the labour court, before twelve months have passed since the employment ended.
The employer must settle dues within one week at most of the end of the contract, and within two weeks if the worker ended it (Article 88).[2][1]