Does gratuity include housing allowance or other allowances?

No. Under Article 84, gratuity is calculated exclusively on the last drawn basic salary. Housing, transport, food allowances, overtime, and bonuses are excluded.

When must my employer pay my gratuity in Saudi Arabia?

Employers are expected to pay within two weeks of the last working day. Delays can be reported through the MHRSD portal. Excessive delays may result in financial penalties.

Is Saudi Arabia gratuity taxable?

Saudi Arabia does not impose personal income tax. Gratuity received in Saudi Arabia is not taxed locally. However, if you return to a country that taxes worldwide income, consult a tax advisor.

Can my employer deduct from my gratuity in Saudi Arabia?

Yes, only for legally permitted reasons — salary advances, employer loans, or proven damage to property. Disputes can be raised through the MHRSD Labor Court.

🇸🇦 Free Tool · Updated 2026

Saudi Arabia End of Service Calculator 2026

Q: Is gratuity mandatory for all employees in Saudi Arabia?

Yes. Under the Saudi Labor Law (Royal Decree No. M/51), gratuity is a legal right for all private-sector employees — Saudi nationals and expatriates alike — who complete at least one full year of continuous service.

Instantly compute your end‑of‑service benefit. Based on the Saudi Labor Law (Royal Decree No. M/51), with 2026 rules. Full, pro‑rated and capped calculation.

End‑of‑Service Benefit Estimator Labor Law · 2026

Basic Monthly Salary (SAR)

SAR

Years of Service

Months (0‑11)

Reason for Leaving

Deductions / Loans owed to Employer (SAR)

SAR

Daily Wage

—

Basic ÷ 30

Service Period

—

Full Gratuity

—

Before factor & cap

Deductions

—

Loans / advances

Eligibility Factor

—

Gross Gratuity

—

Capped & scaled

Net Gratuity

—

Final payable

■ Gross Gratuity■ Deductions

📋 Table of Contents

What Is End-of-Service Gratuity in Saudi Arabia?
End of Service Calculation Formula 2026
How to Use This Saudi Arabia End of Service Calculator
Gratuity for Resignation (Labor Law Rules)
Gratuity for Termination & End of Contract
The 2-Year Salary Cap Explained
Worked Examples: 2026 Calculations
Frequently Asked Questions

What Is End-of-Service Gratuity in Saudi Arabia?

The end-of-service benefit — commonly called gratuity — is a mandatory lump-sum payment that every private-sector employer in Saudi Arabia must pay when an employee leaves. Using a Saudi Arabia End of Service Calculator for 2026 lets you know exactly what you are owed before you resign or are terminated.

The benefit is governed by the Saudi Labor Law under Royal Decree No. M/51, last significantly amended in 2024. Both Saudi nationals and expatriate employees working in the private sector qualify for gratuity after completing at least one continuous year of service. Employees in government (public sector) roles receive retirement pensions instead and are not covered by this law.

Key point: Gratuity is calculated on your last drawn basic salary only — housing allowances, transport allowances, food allowances, commissions, and other benefits are excluded from the calculation base under Article 84 of the Saudi Labor Law.

Whether you are an expat on a work visa or a Saudi national, understanding your gratuity entitlement is essential before making any career decision. This free calculator — and the guide below — will help you estimate your end-of-service benefit accurately for 2026.

Saudi Arabia End of Service Calculation Formula 2026

The Saudi Labor Law prescribes a two-tier formula based on your total years of service. The formula has remained unchanged for 2026 and applies to all private sector employees:

Saudi Gratuity Formula — Royal Decree M/51 First 5 years:   Gratuity = (Basic Salary ÷ 2) × Years of Service
Beyond 5 years: Gratuity = (Basic Salary ÷ 2) × 5 + Basic Salary × (Years − 5)

Maximum cap:   2 × Annual Basic Salary (24 months)
Daily wage:      Basic Monthly Salary ÷ 30

In plain terms: for each of your first five years, you earn half a month's basic salary as gratuity. For every year beyond five, you earn a full month's basic salary. The total gratuity payable can never exceed the equivalent of two full years of your basic salary, regardless of how long you have worked.

Pro-rated months count too

If you have served for, say, 6 years and 8 months, the fraction of the year (8 months = 0.667 years) is also included in the calculation. Our Saudi Arabia End of Service Calculator automatically handles fractional years, so you get an accurate number rather than a rounded figure.

How to Use This Saudi Arabia End of Service Calculator

Enter your Basic Monthly Salary in SAR
Use only your base salary — do not include housing allowance, transport, or any other allowance. Check your employment contract or pay slip for the "basic salary" line item.
Enter your Years and Months of Service
Count from your official start date to your last working day. Even partial months matter — a few months can shift you from one eligibility bracket to the next, significantly affecting your payout.
Select your Reason for Leaving
This is the single most important input. Whether you resigned, were terminated without cause, reached the end of a fixed-term contract, or were dismissed for cause (Article 80) determines your eligibility factor — from 0% to 100%.
Add any Deductions (optional)
If you owe your employer money — such as salary advances, loans, or penalties — enter the total here. Saudi Labor Law permits employers to deduct outstanding amounts from your gratuity before payment.
Review your results instantly
The calculator shows your Daily Wage, Full Gratuity (before factor), Eligibility Factor, Gross Gratuity (capped and scaled), and Net Gratuity (after deductions) — all updated in real time as you type.

Gratuity for Resignation — Saudi Labor Law 2026

If you choose to resign from your job in Saudi Arabia, your gratuity is scaled down based on how long you have worked. The Saudi Labor Law applies the following eligibility factors for resignation:

Service Duration at Resignation	Eligibility Factor	Effective Gratuity	Status
Less than 2 years	0%	Nothing payable	No Benefit
2 years to less than 5 years	⅓ (33.33%)	One-third of computed gratuity	Partial
5 years to less than 10 years	⅔ (66.67%)	Two-thirds of computed gratuity	Partial
10 years or more	100%	Full gratuity as computed	Full Benefit

⚠️ Important for expats planning to resign: Many workers resign just before completing 2 years and forfeit all gratuity. If you are close to the 2-year or 5-year or 10-year mark, it may be financially worthwhile to delay resignation by a few weeks to move into the next bracket.

Gratuity for Termination and End of Fixed-Term Contract

When an employee is terminated without cause, or when a fixed-term contract reaches its natural end without renewal, Saudi Labor Law awards full gratuity from the first year onward. There is no eligibility scaling — you receive 100% of the computed and capped gratuity amount.

Reason for Leaving	Minimum Service	Eligibility
Termination without cause	1 year	100% Full Benefit
End of fixed-term contract	1 year	100% Full Benefit
Termination for cause (Article 80)	Any	No Benefit
Employee resignation — ≥ 10 years	10 years	100% Full Benefit
Employee resignation — 5–10 years	5 years	⅔ (66.67%)
Employee resignation — 2–5 years	2 years	⅓ (33.33%)

Article 80 — Termination for Cause

Under Article 80 of the Saudi Labor Law, an employer may dismiss an employee without any gratuity if the employee commits certain serious violations — such as assault on a supervisor, significant damage to company property, disclosure of confidential information, or working for a competitor without permission. If you believe you have been wrongfully dismissed under Article 80, you can file a complaint with the Ministry of Human Resources and Social Development (MHRSD).

The 2-Year Salary Cap: Maximum Gratuity in Saudi Arabia

No matter how long you have worked, the Saudi Labor Law caps your total gratuity at the equivalent of two years' basic salary (24 months). This cap becomes relevant for employees with very long service periods or very high salaries.

Example: An employee with a basic salary of SAR 20,000/month who has worked for 20 years would theoretically earn: (20,000 ÷ 2 × 5) + (20,000 × 15) = SAR 350,000. But the cap is 2 × (20,000 × 12) = SAR 480,000 — in this case, the uncapped figure is below the cap, so the cap does not apply. Our calculator automatically applies the cap and flags when it takes effect.

Worked Examples — Saudi Arabia Gratuity 2026

Example 1: Resignation after 7 years (SAR 8,000 basic salary)

Calculation Breakdown First 5 years: (8,000 ÷ 2) × 5 = SAR 20,000
Next 2 years: 8,000 × 2 = SAR 16,000
Total (uncapped): SAR 36,000
Eligibility factor (5–10 yr resign): ⅔ = 66.67%
Gross Gratuity: 36,000 × 0.6667 = SAR 24,000

Example 2: Termination without cause after 3 years (SAR 12,000 basic salary)

Calculation Breakdown First 3 years: (12,000 ÷ 2) × 3 = SAR 18,000
Eligibility factor (termination): 100%
Gross Gratuity: SAR 18,000

Example 3: Resignation after 1 year 6 months (SAR 6,000 basic salary)

Calculation Breakdown Total service: 1.5 years — resignation < 2 years → Factor = 0%
Gross Gratuity: SAR 0.00
No benefit payable for resignation before 2 years.

Frequently Asked Questions — Saudi Arabia Gratuity 2026

Yes. Under the Saudi Labor Law (Royal Decree No. M/51), gratuity is a legal right for all private-sector employees — Saudi nationals and expatriates alike — who complete at least one full year of continuous service. Employers who fail to pay gratuity can be reported to the Ministry of Human Resources and Social Development (MHRSD) and may face fines and penalties.

No. Under Article 84 of the Saudi Labor Law, end-of-service gratuity is calculated exclusively on the employee's last drawn basic salary. Housing allowances, transport allowances, food allowances, overtime payments, bonuses, and commissions are all excluded from the gratuity base. Check your pay slip or employment contract for the precise basic salary figure.

Saudi Labor Law requires employers to settle all end-of-service entitlements — including gratuity, any outstanding salary, and accrued vacation pay — within a reasonable period after the termination of the employment contract. In practice, employers are expected to pay within two weeks of the last working day. Delays can be reported through the Musaned platform or the MHRSD portal. Excessive delays may result in financial penalties for the employer.

Yes, but only for specific reasons permitted by law — such as outstanding salary advances, loans taken from the employer, or penalties for proven damage to company property. However, the employer cannot deduct more than the total gratuity owed, nor can they deduct for reasons not recognized under the Saudi Labor Law. If you disagree with the deductions, you have the right to dispute them through the MHRSD Labor Court.

Saudi Arabia does not impose personal income tax on individuals. Accordingly, end-of-service gratuity received in Saudi Arabia is not subject to income tax for either Saudi nationals or expatriates. However, if you return to a home country that taxes worldwide income (such as the United States or the UK), your gratuity may be subject to tax there. Always consult a tax advisor in your home country for guidance on your specific situation.

End-of-service gratuity is classified as a priority debt under Saudi law. This means that in the event of company insolvency or bankruptcy, employees' gratuity claims take precedence over other unsecured creditors. Employees can file claims through the MHRSD or the Saudi courts to recover their entitlements. Saudi Arabia's Wage Protection System (WPS) also helps track and enforce wage obligations.

If an employee is transferred between companies within the same group under a formal written transfer agreement — and the service is deemed continuous — the total years of service may carry over for gratuity purposes. However, if the original company pays out gratuity at the point of transfer and you start fresh, the clock resets. The terms depend on the transfer agreement. Always get any transfer arrangement in writing and confirmed by both HR departments.

Part-time employees in Saudi Arabia are entitled to end-of-service gratuity proportional to the hours they work relative to a full-time employee. The calculation uses the same formula — half a month's basic salary per year for the first 5 years, and a full month per year thereafter — but applied to the pro-rated basic salary. The same resignation scaling (⅓, ⅔, full) applies based on total service duration.

Disclaimer: This Saudi Arabia End of Service Calculator and the information on this page are for estimation and educational purposes only. Results are based on the Saudi Labor Law (Royal Decree No. M/51) as publicly available at the time of publication (2026). Individual circumstances may vary. This does not constitute legal or financial advice. Always verify your entitlement with the Ministry of Human Resources and Social Development (MHRSD) or a qualified Saudi labor lawyer.