Saudi Labour Law Article 84: calculating the end-of-service award
Not changed by the 2025 amendments
Article 84 of the Saudi Labour Law requires the employer to pay an end-of-service award when employment ends: half a month’s wage for each of the first five years of service and a full month’s wage for each later year, calculated on the last wage, with parts of a year paid in proportion.
This is general information to help you understand the topic. It is not legal advice. Rules and rates change: always check the official text on the relevant authority’s platform and consult a qualified adviser before acting.
What Article 84 says
When the employment relationship ends, the employer pays the worker an end-of-service award:
- 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 last wage is the basis of the calculation.
- Parts of a year earn a proportional share.
The wage here is the actual wage, basic plus allowances. Article 86 lets the parties agree that commissions, sales percentages and similar variable items are not counted.
Was it changed in 2025?
No. Article 84 is not among the articles the 2025 amendments changed, according to the ministry’s summary of the amendments.
Worked example
A worker leaves after 8 years and 3 months, with a last actual wage of 12,000 SAR (basic 8,000 plus housing 3,000 and transport 1,000), and the contract was not ended by resignation.
- First five years: 5 × (12,000 ÷ 2) = 5 × 6,000 = 30,000 SAR
- Remaining 3 years and 3 months: 3.25 × 12,000 = 39,000 SAR
- Award: 30,000 + 39,000 = 69,000 SAR
Using the basic wage alone would give 46,000 SAR, which is why the wage basis matters.
When the award is reduced or not due
- Resignation: Article 85 reduces it by length of service.
- Full award despite resignation: Article 87, for force majeure, and for a woman who ends her contract within six months of marriage or three months of giving birth.
- No award: dismissal for one of the reasons in Article 80, or the end of the contract during probation (Article 54).
What HR should do
- Calculate on the last actual wage, with the agreed exclusions under Article 86 if the contract has them.
- Count service to the day, and pay the fraction of the last year.
- Record how the contract ended; it decides whether Article 85, 87 or 80 applies.
- Pay within the Article 88 deadlines: one week when the employer ends the contract, two weeks when the worker does.
Check any case with the end-of-service calculator. This page is a general explanation, not legal advice.
Official sources
Frequently asked questions
Is the end-of-service award calculated on the basic salary or the total salary?
On the wage, which the law defines as the actual wage: the basic wage plus the allowances and other increases paid for the work, such as housing and transport. Article 86 allows the parties to agree that commissions and similar variable items are left out, wholly or partly.
Is an award due for less than a full year of service?
Under Article 84, parts of a year are paid in proportion to the time worked. On resignation, though, Article 85 gives nothing for service under two years.
Did the 2025 amendments change the end-of-service formula?
No. Articles 84 and 85 are not among the articles the 2025 amendments changed, according to the ministry’s summary.
