How do I calculate end of service in KSA?

Multiply half your monthly wage by your years of service up to 5 years, then add a full month's wage for each year beyond 5. Scale the total by your eligibility factor based on resignation tenure, or apply 100% for termination without cause or end of a fixed-term contract.

Is there a maximum limit on end of service benefits in Saudi Arabia?

No. Unlike the UAE's two-year salary cap, Saudi Labor Law sets no maximum ceiling on end-of-service gratuity.

Does gratuity include housing allowance in Saudi Arabia?

This is debated. Many professionals interpret the law's basis on wage to include fixed allowances like housing and transport, while variable pay such as commissions is excluded either way. Confirm specific wage components with HR or MHRSD.

Can my employer deduct from my gratuity in Saudi Arabia?

Yes, only for documented reasons such as salary advances, employer loans, or proven property damage, and never more than the gratuity owed.

Is Saudi Arabia gratuity taxable?

No. Saudi Arabia has no personal income tax, so gratuity is not taxed locally for Saudi nationals or expatriates.

🇸🇦 Free Tool · Updated 2026

Saudi Arabia End of Service Calculator 2026

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?
How to Calculate End of Service in Saudi Arabia
What Counts as "Wage" for Gratuity?
How to Use This End of Service Calculator
Gratuity for Resignation
Termination & End of Contract
Is There a Maximum Cap? (Correcting a Common Mix-Up)
Worked Examples: 2026
Frequently Asked Questions

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

The end-of-service benefit — usually just called gratuity — is a mandatory lump-sum payment every private-sector employer in Saudi Arabia owes an employee when the job ends. Use an end of service calculator before you resign or get terminated, and you'll know the number before HR tells you, not after.

The benefit sits in the Saudi Labor Law under Royal Decree No. M/51, specifically Articles 84, 85, and 87. Both Saudi nationals and expatriates in the private sector qualify after completing at least one continuous year of service. Public-sector government employees are covered by a separate pension system, not this law.

This end of service benefits calculator and the guide below walk through exactly how that number gets built.

How to Calculate End of Service in Saudi Arabia (2026)

The law uses a two-tier formula based on total years of service. It hasn't changed for 2026:

Saudi Gratuity Formula — Royal Decree M/51, Article 84 First 5 years: Gratuity = (Wage ÷ 2) × Years of Service
Beyond 5 years: Gratuity = (Wage ÷ 2) × 5 + Wage × (Years − 5)

Daily wage: Monthly Wage ÷ 30

In plain terms: for each of your first five years, you earn half a month's wage as gratuity. For every year beyond five, you earn a full month's wage. Partial years count too — 6 years and 8 months includes that 8-month fraction (0.667 of a year) in the calculation, not a rounded-down 6.

What Counts as "Wage" for Gratuity — A Detail Most Calculators Skip

Here's where a lot of online tools quietly cut a corner. Saudi Labor Law calculates gratuity on your "last wage" — not your "last basic wage." That word choice matters, because Saudi law defines wage more broadly than just the base salary line on your contract.

The professional consensus: "Wage" for gratuity purposes generally includes your basic salary plus fixed, regularly-paid cash allowances — most commonly housing and transportation allowances. Variable or discretionary pay — sales commissions, one-off bonuses, overtime — is excluded because it isn't a guaranteed, recurring part of your pay.

Some simplified calculators (and some articles) use "basic salary only" as a shortcut, which understates gratuity for anyone whose contract splits pay into basic + housing + transport — a very common structure for expat packages in Saudi Arabia. If your contract lists a separate fixed housing allowance, add it (and any fixed transport allowance) to your basic salary before you enter a figure into the calculator above — that combined number is closer to your true "wage" under the law than basic salary alone.

Because this point genuinely varies by interpretation and by what's written into your specific contract, confirm the exact wage components with your HR department or the Ministry of Human Resources and Social Development (MHRSD) before relying on any calculator for a final number.

How to Use This End of Service Calculator

Enter your Monthly Wage in SAR
Use your basic salary plus any fixed housing and transport allowances (see the wage-base note above). Check your contract or pay slip for the exact figures.
Enter your Years and Months of Service
Count from your official start date to your last working day. A few extra months can shift you into a better resignation bracket — worth getting exact.
Select your Reason for Leaving
Resignation, termination without cause, end of a fixed-term contract, or termination for cause under Article 80 each carry a different eligibility factor, from 0% to 100%.
Add any Deductions (optional)
If you owe your employer money — salary advances, loans, documented penalties — enter the total. Saudi Labor Law allows employers to deduct these from your final gratuity payment.
Review your results instantly
The calculator shows your Daily Wage, Full Gratuity, Eligibility Factor, Gross Gratuity, and Net Gratuity after deductions — updated live as you type.

Gratuity for Resignation — Saudi Labor Law 2026

Resign, and your gratuity is scaled down based on how long you've worked. Article 85 sets these brackets:

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

⚠️ Worth checking your date: Resigning a few weeks before hitting the 2-year, 5-year, or 10-year mark can cost a full bracket's worth of gratuity. If you're close to one of these thresholds, it's worth checking whether delaying your resignation date changes your payout meaningfully.

Gratuity for Termination and End of Fixed-Term Contract

Terminated without cause, or your fixed-term contract simply ends without renewal? You get full gratuity from the first year onward — no scaling, 100% of the computed 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
Resignation — ≥ 10 years	10 years	100% Full Benefit
Resignation — 5–10 years	5 years	⅔ (66.67%)
Resignation — 2–5 years	2 years	⅓ (33.33%)

Article 80 — Termination for Cause

Under Article 80, an employer may dismiss an employee with no gratuity for serious violations — assault on a supervisor, significant damage to company property, disclosing confidential information, or working for a competitor without permission, among others. If you believe you were wrongly dismissed under Article 80, you can file a complaint with the MHRSD.

Is There a Maximum Cap on Saudi Gratuity? (Correcting a Common Mix-Up)

Correction worth knowing: Several calculators online apply a "2-year salary cap" to Saudi gratuity. That cap is a UAE rule (UAE gratuity is capped at two years' salary under its own labor law), not a Saudi one. Saudi Arabia's Labor Law describes the accrual formula and the resignation brackets above, but sets no maximum ceiling on the total amount. If your service is long enough and your wage high enough, your gratuity keeps accruing without an upper limit.

But this means any calculator applying a UAE-style cap to a Saudi employee's gratuity will understate the payout for long-tenured staff. A worker with 30 years of service on a modest wage can lose thousands of riyals to a cap that was never supposed to apply to them.

Worked Examples — Saudi Arabia Gratuity 2026

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

Calculation Breakdown First 5 years: (8,000 ÷ 2) × 5 = SAR 20,000
Next 2 years: 8,000 × 2 = SAR 16,000
Total: 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 wage)

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 30 years (SAR 5,000 wage) — where the cap myth matters

Calculation Breakdown First 5 years: (5,000 ÷ 2) × 5 = SAR 12,500
Next 25 years: 5,000 × 25 = SAR 125,000
Total: SAR 137,500
Eligibility factor (≥10 yr resign): 100%
Correct gratuity: SAR 137,500 — with no cap applied.
A calculator wrongly using a UAE-style 24-month cap (5,000 × 24 = SAR 120,000) would underpay this employee by SAR 17,500.

Frequently Asked Questions — End of Service Calculator Saudi Arabia

Multiply half your monthly wage by your years of service, up to 5 years. For every year beyond 5, add a full month's wage instead of half. If you resigned, then scale the total by your eligibility factor: 0% under 2 years, one-third from 2–5 years, two-thirds from 5–10 years, and 100% at 10 years or more. Termination without cause or end of a fixed-term contract pays 100% regardless of tenure.

No. Unlike the UAE, which caps gratuity at two years' salary, Saudi Labor Law sets no maximum ceiling on end-of-service gratuity. The half-month/full-month formula continues to accrue for as long as the employee remains in service, with no upper limit.

This is genuinely debated. Saudi law bases the calculation on your "wage," which many professionals interpret to include fixed, regularly-paid allowances like housing and transport — not just basic salary. Variable pay such as commissions and bonuses is excluded either way. Because interpretations vary by contract and employer, confirm your specific wage components with HR or the MHRSD.

Saudi Labor Law requires your final settlement — gratuity, outstanding salary, and accrued leave — to be paid promptly after your last working day. Sources vary on the exact number of days, so if payment is significantly delayed, raise it with HR first and escalate to the MHRSD if unresolved.

Yes, but only for specific, documented reasons — outstanding salary advances, employer loans, or proven damage to company property. An employer cannot deduct more than the gratuity owed or invent reasons not recognized under the Labor Law. Disputed deductions can be raised through the MHRSD Labor Court.

No. Saudi Arabia does not impose personal income tax, so gratuity is not taxed locally regardless of nationality. If you relocate to a country that taxes worldwide income, your gratuity may be taxable there — check with a tax advisor in that country.

Part-time employees are entitled to gratuity proportional to their working hours relative to a full-time role, using the same half-month/full-month formula applied to their pro-rated wage. The same resignation scaling (⅓, ⅔, full) applies based on total service duration.

Disclaimer: This End of Service Calculator and the information on this page are for estimation and educational purposes only, based on the Saudi Labor Law (Royal Decree No. M/51) as publicly available at the time of publication. Individual circumstances, contract terms, and interpretations of "wage" may vary. This is not legal or financial advice. Verify your specific entitlement with the Ministry of Human Resources and Social Development (MHRSD) or a qualified Saudi labor lawyer. Last updated: August 2026.

Written by Shivam

Software Engineer · 4+ Years Experience

Shivam built both the End of Service Calculator and this guide, cross-checking every formula against official sources like the Saudi MHRSD before publishing. [Add 1–2 sentences on his specific background — e.g. prior HR/payroll role, years covering GCC employment law, or credentials.]

Was this calculator helpful? Rate it!

Rated by 2 users · Average: 5 / 5