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End-of-Service Benefits in Saudi Arabia 2026: The Comprehensive Guide

📅 2026-09-29 ✍️ Hasibha Team ⏱️ 10 min read

End-of-Service Benefits in Saudi Arabia 2026: The Comprehensive Guide

End-of-service benefits are among the most important labor rights guaranteed by the Saudi Labor Law to every worker in the Kingdom of Saudi Arabia, whether Saudi or expatriate. With the arrival of 2026, the Saudi labor landscape has witnessed significant developments in the application of Labor Law provisions, particularly following updates to certain executive regulations and related systems, such as the social insurance regulations issued by the General Organization for Social Insurance (GOSI), the Saudi Central Bank (SAMA) regulations concerning payroll accounts, and the requirements of the Zakat, Tax and Customs Authority (ZATCA) regarding financial documentation.

This comprehensive guide aims to provide a clear and detailed picture of end-of-service benefits in Saudi Arabia for 2026, starting from its definition, through the cases in which it is due, methods of calculation in cases of resignation and termination, to practical examples with figures, the worker's rights upon contract termination, and benefits for public sector employees. We will also address how to use the end-of-service calculator to obtain an accurate estimate of your entitlements without the need for complex manual calculations.

Whether you are a worker seeking to know your rights, an employer striving to comply with regulations, or a researcher in labor affairs, this article will provide you with reliable answers based on the texts of the Saudi Labor Law and relevant regulations. Let us begin our journey in understanding this fundamental labor right.

Table of Contents

What Are End-of-Service Benefits?

End-of-service benefits are a monetary amount to which a worker is entitled upon the termination of their employment relationship with the employer, whether this termination is due to resignation, dismissal, contract expiry, retirement, or any other reason for ending the employment relationship stipulated in the Saudi Labor Law. This benefit is an acquired right of the worker and not a favor from the employer, as Article (Eighty-Four) of the Saudi Labor Law stipulates that it must be paid.

The benefit is calculated based on the worker's length of service and last wage, with percentages varying according to the reason for terminating the employment relationship. The benefit serves as a form of mandatory savings that provides the worker with a financial safety net upon the end of their service, helping them cope with the transition period between jobs or prepare for retirement.

It is worth noting that the benefit is paid in Saudi Riyals and must be disbursed within a period not exceeding two weeks from the date of termination of the employment relationship in accordance with the provisions of the Law. Establishments are also obligated to financially document these entitlements in accordance with the requirements of the Zakat, Tax and Customs Authority (ZATCA) and the Saudi Central Bank (SAMA) when transferring them through official banking channels.

When Is a Worker Entitled to the Benefit?

A worker is entitled to end-of-service benefits in several cases specified by the Saudi Labor Law, the most prominent of which are:

  • Contract Expiry: If the contract is for a fixed term and expires without renewal, the worker is entitled to the full benefit.
  • Resignation: If the worker submits their resignation after completing at least two years of service, they are entitled to a benefit at graduated rates.
  • Dismissal from Work: If the employer terminates the contract without a legitimate reason, the worker is entitled to the full benefit in addition to compensation for damages.
  • Retirement: Upon reaching retirement age or being referred for early retirement in accordance with social insurance (GOSI) regulations.
  • Death: In the event of the worker's death, the benefit is paid to their legal heirs.
  • Total Disability: If the worker becomes unable to perform their work due to a work injury or occupational disease.
  • Contract Termination Due to Force Majeure: In accordance with Article (Seventy-Four) of the Labor Law.

It should be noted that the worker is not entitled to the benefit if the employment relationship ends due to a serious breach of their contractual obligations in accordance with Article (Eighty) of the Law, or if they leave work without notice before the end of the statutory notice period.

Calculating Benefits Upon Resignation

When a worker submits their resignation, the calculation of end-of-service benefits varies based on their length of service. According to the Saudi Labor Law, the benefit is calculated as follows:

  • Less than two years: The worker is not entitled to any benefit.
  • Two to five years: The worker is entitled to one-third of the due benefit.
  • Five to ten years: The worker is entitled to two-thirds of the due benefit.
  • More than ten years: The worker is entitled to the full benefit.

The basic benefit is calculated on the basis of half a month's wage for each of the first five years, and a full month's wage for each subsequent year. The worker's last wage is adopted when calculating the benefit, including the basic wage and fixed allowances in accordance with the practice of the General Organization for Social Insurance.

It is important for the worker to realize that submitting a resignation before completing two years means losing the right to the benefit entirely, so careful planning is advised before making the decision to resign.

Calculating Benefits Upon Termination

In the case of dismissal from work, a distinction must be made between two types of termination:

Lawful Termination (Under Article Eighty)

If the employer dismisses the worker for legitimate reasons stipulated in Article (Eighty) of the Labor Law, such as forgery, absence without excuse, or disclosure of work secrets, the worker may lose their right to end-of-service benefits in full or in part, as determined by the competent labor judicial authority.

Unlawful Termination

If the employer dismisses the worker without a legitimate reason, the worker is entitled to:

  • Full end-of-service benefits without any deduction.
  • Compensation for the statutory notice period (30 days).
  • Compensation for damages suffered as a result of arbitrary dismissal, typically estimated at two months' wage for each year of service according to labor court precedents.

Unlawful termination is one of the most common labor cases heard by Saudi labor courts, and workers are advised to retain all documents proving the employer's arbitrary conduct.

The New Saudi Labor Law 2026

The Saudi Labor Law has witnessed fundamental updates in recent years aimed at improving the work environment and increasing the attractiveness of the Saudi market for local and international talent. Among the most notable developments regarding end-of-service benefits in 2026:

  • Linking Benefits to Social Insurance: An increasing trend toward linking end-of-service benefits to the social insurance system, whereby they are calculated within monthly contributions in some major establishments, ensuring greater protection for the worker in the event of the establishment's bankruptcy.
  • Digital Transformation: Obligating establishments to document employment contracts and end-of-service entitlements through the "Qiwa" platform of the Ministry of Human Resources and Social Development.
  • Financial Transparency: Strengthening financial disclosure requirements for end-of-service entitlements in the financial statements of establishments in accordance with the standards of the Zakat, Tax and Customs Authority.
  • Wage Protection: Tightening oversight of benefit transfers through the banking system in accordance with SAMA requirements, to ensure entitlements reach workers on time.

The Ministry of Human Resources and Social Development has also issued several ministerial decisions aimed at facilitating the procedures for claiming benefits through the "Wedi" and "Qiwa" platforms, reducing the need for litigation.

Practical Examples with Real Figures

To illustrate how end-of-service benefits are calculated, we present the following examples with realistic figures from the Saudi market for 2026:

Example One: Resignation After 7 Years

A worker with a basic salary of 8,000 Riyals and a housing allowance of 2,000 Riyals, totaling 10,000 Riyals. They served 7 years and then resigned.

  • First five years: 5 × 5,000 = 25,000 Riyals (half a month's wage per year).
  • Next two years: 2 × 10,000 = 20,000 Riyals (full month's wage per year).
  • Total basic benefit: 45,000 Riyals.
  • Entitlement ratio (5-10 years): two-thirds.
  • Due benefit: 45,000 × 2/3 = 30,000 Riyals.

Example Two: Termination After 12 Years

A female worker with a salary of 15,000 Riyals (basic 12,000 + allowances 3,000), dismissed without legitimate reason after 12 years.

  • First five years: 5 × 7,500 = 37,500 Riyals.
  • Next seven years: 7 × 15,000 = 105,000 Riyals.
  • Full benefit: 142,500 Riyals.
  • Notice compensation: 15,000 Riyals.
  • Arbitrary dismissal compensation (estimated): 24 × 15,000 = 360,000 Riyals (according to court precedents).

Example Three: Contract Expiry After 3 Years

A worker with a salary of 6,000 Riyals whose contract expired after 3 years.

  • Benefit: 3 × 3,000 = 9,000 Riyals (half a month's wage per year).

Worker's Rights Upon Contract Termination

Upon the termination of the employment relationship, the worker is entitled to a set of rights guaranteed by the Saudi Labor Law, including:

  • End-of-Service Benefits: In accordance with the statutorily specified ratios.
  • Outstanding Wages: All unpaid salaries and allowances up to the termination date.
  • Leave Balance: Cash compensation for unused annual leave days.
  • Notice Compensation: If the terminating party did not comply with the statutory notice period.
  • Experience Certificate: The worker is entitled to obtain an experience certificate stating their length of service and type of work.
  • Settlement of Insurance Entitlements: In coordination with the General Organization for Social Insurance (GOSI).
  • Transfer of Sponsorship: An expatriate worker has the right to transfer their sponsorship in accordance with statutory conditions.

These entitlements must be paid within a period not exceeding two weeks from the date of termination of the employment relationship; otherwise, the worker has the right to file a complaint with the competent Labor Office.

Benefits for Public Sector Employees

Public sector employees in Saudi Arabia are subject to different regulations from the Labor Law, as they are governed by the Civil Service Law and its executive regulations. End-of-service benefits for government employees are calculated as follows:

  • Civilian Employee: Entitled to a benefit equivalent to one month's salary for each year of service upon retirement or end of service, in accordance with the Civil Retirement Law.
  • Military Personnel: Their benefits are calculated in accordance with military retirement regulations, with ratios varying by rank and length of service.
  • Contract Employees: Subject to the provisions of their contracts, and the benefit is often determined at ratios similar to the Labor Law.

Some government entities also benefit from the services of the General Organization for Social Insurance in managing end-of-service entitlements, particularly for employees on the wage scale or temporary contracts.

How to Calculate Your Benefit in Simple Steps

You can easily calculate your end-of-service benefit through the following steps:

  1. Determine your length of service: Calculate the number of complete years of service, considering fractions of a year as a full year if they reach 6 months or more.
  2. Determine your last wage: This includes the basic wage and fixed allowances (housing, transportation, nature of work).
  3. Apply the statutory ratios: Half a month's wage for each of the first five years, and a full month's wage for each subsequent year.

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