Final settlement template for Saudi Arabia (itemised)
A final settlement is the statement and receipt that settles everything owed when employment ends: wages to the last day, unused annual leave, the end-of-service award, any notice pay or compensation, less lawful deductions. It is due within one week when the employer ends the contract and two weeks when the worker does. Use this final settlement template.
Replace everything in [square brackets] with your details.
[Company name]
[Commercial registration number] · [Address] · [Phone]
Final Settlement
Date: [DD/MM/YYYY]
Reference: [Reference number]
Employee details
Name: [Employee full name]
Nationality: [Nationality]
National ID / Iqama number: [Number]
Employee number: [Employee number]
Job title: [Job title]
Start date: [DD/MM/YYYY]
Last working day: [DD/MM/YYYY]
Length of service: [years, months and days]
Reason the contract ended: [Resignation / Ending by the employer / End of fixed term / Mutual agreement / Other]
Last basic wage: [Amount] SAR
Last actual wage (basic plus allowances): [Amount] SAR
Amounts due to the employee
1. Wages from [DD/MM/YYYY] to [DD/MM/YYYY] ([number] days): [Amount] SAR
2. Unused annual leave ([number] days): [Amount] SAR
3. End-of-service award (Article [84 / 85]): [Amount] SAR
4. Notice pay ([number] days): [Amount] SAR
5. Compensation under Article 77, if applicable: [Amount] SAR
6. Overtime or other amounts due: [Description and amount] SAR
Total due: [Amount] SAR
Deductions
1. Outstanding loan or advance: [Amount] SAR
2. [Other lawful deduction and its basis]: [Amount] SAR
Total deductions: [Amount] SAR
Net amount payable: [Amount] SAR
Payment method: bank transfer to [Bank name], IBAN [IBAN], on [DD/MM/YYYY]
Employee’s acknowledgement
I, [Employee full name], acknowledge that I have received the net amount above, which settles the amounts listed in this statement for my employment with [Company name] from [Start date] to [Last working day].
Employee signature: [Signature]
Date: [DD/MM/YYYY]
Prepared by: [Name and title]
Approved by: [Name and title]
[Signature and company stamp]
When to use it
Prepare it for every employee who leaves, whatever the reason. It shows the employee how each amount was worked out and gives the employer a signed receipt once payment is made.
What goes into it
- Wages to the last day actually worked.
- Unused annual leave. Every day due and not taken is paid (Article 111). Work it out with the Saudi leave calculator.
- The end-of-service award. Half a month’s last actual wage for each of the first five years and a full month for each year after the fifth, with part-years pro rata (Article 84). On resignation, the share depends on service under Article 85; Article 80 lists the cases with no award. Use the end-of-service calculator.
- Notice pay, when the party ending an open-ended contract did not observe the notice period of Article 75: the wage for the notice period (Article 76).
- Article 77 compensation, when the contract was ended without a valid reason.
- Deductions. Work-related debts owed to the employer, such as a loan (Article 88), each on its own line.
Worked example
The employer ends an open-ended contract for a valid reason without giving the 60 days’ notice. The employee is paid monthly, has 6 years and 3 months of service, a last actual wage of 12,000 SAR, 10 days of unpaid wages for the last month, 15 days of unused leave and a loan balance of 3,000 SAR. Daily wage: 12,000 ÷ 30 = 400 SAR.
| Item | Calculation | Amount (SAR) |
|---|---|---|
| Wages for the last 10 days | 10 × 400 | 4,000 |
| Unused leave | 15 × 400 | 6,000 |
| End-of-service award | 5 × 0.5 × 12,000 + 1.25 × 12,000 | 45,000 |
| Notice pay (60 days) | 60 × 400 | 24,000 |
| Less loan balance | −3,000 | |
| Net payable | 76,000 |
Because the employer ended the contract, this is due within one week (Article 88).
Common mistakes
- Calculating the award on the basic wage instead of the last actual wage.
- Holding back payment beyond the Article 88 deadline until clearance is finished.
- Asking the employee to sign a waiver of rights the law grants.
In RafiqHR, the final settlement brings together the end-of-service award for the reason for leaving, pay for unused annual leave and the recovery of outstanding loans; it is approved and paid through payroll and tied to clearance.
Official sources
Frequently asked questions
When must the final settlement be paid?
Within one week of the end of the employment relationship when the employer ends the contract, and within two weeks when the worker ends it (Article 88).
What can be deducted from a final settlement?
Article 88 lets the employer deduct work-related debts owed to it, such as an outstanding loan or advance. Other deductions need a legal basis, such as those listed in Article 92, and should each be shown as a separate line.
Is unused annual leave paid in the final settlement?
Yes. Article 111 entitles the worker to pay for every leave day due and not taken, and for leave in proportion to the part of the year worked.
Can the employee sign a settlement that gives less than the law?
A release or settlement of rights arising from the Labour Law made while the contract is in force is void unless it is more favourable to the worker (Article 8). Pay the statutory amounts in full and show how each was worked out.
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.
