End of service with unused leave in Saudi Arabia: how to calculate

At the end of employment, two amounts are often confused: the end-of-service award and the payment for unused annual leave. They come from different articles of the Labour Law, they are calculated differently, and a resignation affects only one of them. This guide explains both and puts them together in worked examples.

Two separate amounts

Leave days do not extend the service. If an employee leaves on 30 June with 20 unused days, the service ends on 30 June and the 20 days are paid in cash.

How much leave has accrued

Under Article 109, annual leave is 21 days a year, rising to 30 days after five consecutive years with the employer. Leave accrues through the year, so the final part-year counts:

• 21 days a year = 1.75 days a month
• 30 days a year = 2.5 days a month

Unused leave is the days carried over from earlier years, plus the days accrued in the final year, minus the days taken. Check the leave record against the attendance and payroll history before the settlement is approved; leave taken years ago but never recorded is a frequent source of dispute. The Saudi leave calculator works out the entitlement for any length of service.

The daily rate

The common method is the last actual wage ÷ 30, where the actual wage is the basic wage plus allowances such as housing and transport. Some contracts or work regulations use another basis; apply it if it is stated and does not give the employee less than the law.

Worked examples

Example 1: termination by the employer after 4 years, 18 unused days. Last actual wage 9,000 SAR.

• Award: 4 × 0.5 × 9,000 = 18,000 SAR
• Daily wage: 9,000 ÷ 30 = 300 SAR
• Leave pay: 300 × 18 = 5,400 SAR
• Award plus leave: 23,400 SAR, plus wages to the last day

Example 2: resignation after 6 years, 25 unused days. Last actual wage 12,000 SAR.

• Full award: 5 × 0.5 × 12,000 + 1 × 12,000 = 30,000 + 12,000 = 42,000 SAR
• Two thirds for a resignation after more than 5 and under 10 years: 28,000 SAR
• Leave pay: 12,000 ÷ 30 × 25 = 400 × 25 = 10,000 SAR, not reduced
• Award plus leave: 38,000 SAR

Example 3: the final part-year. An employee in their seventh year (30 days a year) leaves 4 months into the leave year, with no leave taken that year and nothing carried over. Last actual wage 15,000 SAR.

• Accrued leave: 30 × 4 ÷ 12 = 10 days
• Leave pay: 15,000 ÷ 30 × 10 = 500 × 10 = 5,000 SAR

Common mistakes

• Pricing leave on the basic wage. On 12,000 SAR actual and 9,000 basic, 25 days would be paid at 7,500 SAR instead of 10,000 SAR.
• Applying the resignation fraction to the leave. Article 85 reduces the award only.
• Forgetting the final part-year of accrual.
• Adding the leave days to the service and so overstating the award.

The rest of the final settlement

Add wages to the last day and any notice pay, deduct lawful debts, and pay within one week, or two weeks when the employee ended the contract (Article 88). Use the end-of-service calculator for the award and the unused leave.

How RafiqHR helps

RafiqHR keeps leave balances on the same employee record as the contract and salary history, so the final settlement shows the end-of-service award and the unused leave as separate lines, each with its arithmetic, ready for HR and finance to approve.