End of service on resignation Saudi Arabia: what the employee gets

When an employee resigns, the end-of-service award (مكافأة نهاية الخدمة) is not lost, but it is reduced unless the service is long enough or one of the exceptions applies. This guide explains the resignation rules in the Saudi Labour Law as commonly applied, with worked examples. For the full method behind the award, see the end-of-service guide.

Start with the full award (Article 84)

The resignation rule does not have its own formula. You calculate the full award first and then apply a fraction to it. Under Article 84, the full award is:

• Half a month's wage for each of the first five years of service.
• A full month's wage for each year after the fifth.

The wage is the last actual wage: the basic wage plus allowances such as housing and transport (Article 2). Part-years count in proportion, so 3 years and 6 months is 3.5 years.

The resignation fractions (Article 85)

Article 85 reduces the award when the worker resigns, according to consecutive years of service:

Two details cause most mistakes. First, exactly five years is still one third, because the law says "not more than five years". Second, the fraction applies to the whole award, not only to the years in the current band.

When the full award is kept

Article 87. Even though the worker chose to leave, the full award is due when:

• the worker leaves because of force majeure beyond their control; or
• a female worker ends her contract within six months of marriage or within three months of giving birth.

Article 81. The worker may leave without notice and keep all their statutory rights in the situations listed in Article 81, for example when the employer fails to meet essential contractual or legal obligations, assigns work essentially different from what was agreed without consent, or treats the worker abusively. These cases are often disputed, so the worker's reason and the evidence should be documented in writing.

Worked examples

All three use a last actual wage of 10,000 SAR a month (basic 7,500, housing 1,875, transport 625).

Resignation after 3 years.

• Full award: 3 × 0.5 × 10,000 = 15,000 SAR
• One third (2 to 5 years): 15,000 ÷ 3 = 5,000 SAR

Resignation after 7 years.

• First 5 years: 5 × 0.5 × 10,000 = 25,000 SAR
• Next 2 years: 2 × 1 × 10,000 = 20,000 SAR
• Full award: 45,000 SAR
• Two thirds (over 5 and under 10): 45,000 × 2 ÷ 3 = 30,000 SAR

Resignation after 12 years.

• First 5 years: 25,000 SAR
• Next 7 years: 7 × 1 × 10,000 = 70,000 SAR
• Full award, because service is 10 years or more: 95,000 SAR

For comparison, a resignation after 1 year and 11 months gives no award, and a resignation at exactly 5 years gives one third of 25,000, which is 8,333.33 SAR.

Notice and final pay

On an open-ended contract, a monthly-paid worker who resigns gives at least 30 days' notice (Article 75). If the notice is not worked, the wage for the notice period is owed unless a larger amount was agreed (Article 76). When the worker ends the contract, the employer pays the final dues within two weeks (Article 88).

The resignation fraction applies only to the award. Wages up to the last day and the cash value of unused annual leave (Article 111) are paid in full. See end of service with unused leave.

Checklist for HR

1. Get the resignation in writing, with the date and the last working day.
2. Ask whether an Article 87 or Article 81 reason applies, and keep the evidence on file.
3. Confirm consecutive service and any periods that do not count.
4. Calculate the full award on the last actual wage, then apply the fraction.
5. Add wages and leave pay, deduct lawful debts, and pay within two weeks.
6. End the contract on Qiwa and keep the signed final settlement.

Work out the figures with the end-of-service calculator.

How RafiqHR helps

RafiqHR records the reason for leaving on the employee file, applies the Article 85 fraction or the full award automatically, and shows each step of the arithmetic on the final settlement, together with wages to the last day and the leave balance.