Calculate your ESB gratuity under Article 84 and 85 of Saudi Labour Law. Resignation and termination scenarios with automatic deduction factor applied - instant, accurate results.
Articles 84 and 85 of the Saudi Labour Law apply to the end-of-service benefit in Saudi Arabia. The benefit is calculated only on the basic salary; other allowances, such as housing allowances, transport, and food, are not included. The calculation method is quite different for terminators vs. voluntary resigners.
| Years of Service | Rate | Formula | Example (SAR 5,000 basic) |
|---|---|---|---|
| Less than 2 years | No benefit | SAR 0 | SAR 0 |
| 2 to 5 years | 21 days per year | (Basic ÷ 30) × 21 × Years | 3 yrs = SAR 10,500 |
| More than 5 years | 30 days per year | (Basic ÷ 30) × 30 × Years | 7 yrs = SAR 35,000 |
| Years of Service | Entitlement | Factor Applied | Example (SAR 5,000 basic, 4 yrs) |
|---|---|---|---|
| Less than 2 years | No benefit | × 0 | SAR 0 |
| 2 to 5 years | 1/3 of full termination benefit | × 0.333 | Full = SAR 14,000 → SAR 4,667 |
| 5 to 10 years | 2/3 of full termination benefit | × 0.667 | Full = SAR 35,000 → SAR 23,333 |
| 10 years or more | Full benefit (same as termination) | × 1.0 | Full benefit paid |
Step 1 — Daily wage: Daily = Monthly Basic Salary ÷ 30
Step 2 — Full termination benefit:
If 2–5 years: Daily × 21 × Total Years of Service
If 5+ years: Daily × 30 × Total Years of Service
Step 3 — Resignation factor (if resigned):
Final Amount = Full Benefit × Factor (0, 1/3, 2/3, or 1)
⚠️ Important: Saudi Arabia does not have a statutory maximum cap on total ESB unlike UAE (2-year cap) and Kuwait (18-month cap). Long-serving employees can accumulate very large entitlements. The calculation must be based on your basic salary only — not your total monthly package.
These examples show how the Saudi ESB formula works for different service lengths and departure reasons. All examples use SAR 5,000 as the monthly basic salary.
The basic salary you will use for ESB purposes is the fixed monthly salary amount that is listed in your employment contract under the “basic salary” or “base pay” heading. The following are always excluded (no matter how regularly they are paid):
In particular, this is an important rule in Saudi Arabia, as many employment packages include significant allowances that far exceed the base salary, especially in the oil and gas, hospitality, construction, and retail industries. If an employee earns SAR 12,000 per month which includes SAR 8,000 in allowances, then ESB will be calculated based on SAR 4,000.
Saudi Labour Law allows the calculation to be done on a pro rata basis if the year of service is not completed. If you have been working for 4 years and 8 months, your ESB will be calculated for 4.67 years, not 4 years. The 8 months are written as a fraction of a year (8/12) and then the number of years is added together. Our calculator does this for you based on your start and end dates.
Days of approved unpaid leave (personal, extended medical leave or home country leave) shall be subtracted from your total continuous service days prior to the ESB calculation. For instance, if you have served for 5 years but have taken 45 days of unpaid leave, your calculation service will be 4 years, 11 months, and 15 days. Please use the unpaid leave field in our calculator above to make up for this.
There have been multiple changes to the Saudi Labor Law. The existing provisions contained in Articles 84 and 85 of the rules cover the entire period of continuous service with the same employer for most employees. But if your job began before major changes and your contract wasn't renewed or renegotiated, there could be transitional issues. In this instance, it is best to seek advice from the MHRSD itself or to hire a qualified Saudi labour attorney.
Saudi Labour Law stipulates that employers must resolve all outstanding employee rights, such as ESB, at the end of the employment contract. Any delay that is not a reasonable processing time is actionable. The employees may submit a complaint to the Ministry of Human Resources and Social Development (MHRSD) via hrsd.gov.sa or the Musaned portal for domestic workers. Unresolved conflicts are arbitrated by the labour courts system.
Saudi Labour Law allows the employer to withhold certain amounts from the employee's settlement, including unpaid advances, advances given to the employee that are repayable to the employer or amounts attributable to damage caused by the employee. The deductions, however, must be written, agreed upon in the employment contract or separately, and not made for disputed or unverified claims. Any deduction an employee believes is unjustified can be disputed through the Ministry's complaints process.
Articles 84 and 85 of the ESB contain the same rules for indefinite (unlimited) contracts, as well as for limited (fixed-term) contracts in Saudi Arabia. In the case of a fixed-term contract that expires at the end of the fixed term, the employee is entitled to ESB as if terminated. In case of resignation without cause, prior to the expiration of the contract, resignation rules with deductions as applicable will be applicable.
The employee must have worked for at least 2 years without interruption for termination cases to be eligible for any ESB. In the case of resignation, the same minimum of 2 years applies. Resigning before 2 years will result in no benefits, no matter how close to the 2-year mark. Saudi Arabia's 2-year minimum requirement, compared to UAE and Kuwait, is a hard limit: there are no exceptions under the standard labour law.
Yes. In the event your employer’s activities discontinue, the bankruptcy or closing down of the company for any reason, you are still legally entitled to your full end-of-service benefit per the termination formula and NOT the resignation formula. To start recovery proceedings, a claim can be filed with the Ministry of Human Resources and Social Development (MHRSD) via hrsd.gov.sa. In the bankruptcy under Saudi law, ESB claims are given priority.
Any income, such as end-of-service benefits, received by employees employed in Saudi Arabia is not subject to personal income tax in the Kingdom. You will receive a gross payment on your ESB, with Saudi tax not deducted. If you are a citizen or national of a country that taxes your worldwide income, however (like the United States), you may find that you have reporting or tax requirements in your home country if you receive a large lump sum. Please seek advice from a tax adviser in your home country as to what you can do in your situation.
Saudi Labor Law allows termination of employees without ESB when dismissed for serious disciplinary reasons, as defined in Article 80 of the Labor Law, such as serious misconduct, repeated violations of workplace rules, or criminal acts. But it's a legal exception and it has to be documented and have the process. If you think that you have been terminated without proper cause or denied ESB, complain to MHRSD right away. In any case where there is ambiguity, courts tend to favor the employee.
Saudi Labor Law, like the UAE and Kuwait, uses your last basic salary for the entire ESB calculation, regardless of what it was in previous years. For example, although your salary may have been substantially lower when you began, your ESB is based on your basic salary at your final point of employment or upon termination of services. This is, in fact, helpful for the long-serving employees whose salary has increased considerably throughout their duration at the workplace.
In general, Saudi nationals working in the private sector have the right to ESB on the same basis as expatriates, namely under Articles 84 and 85. But numerous Saudi individuals who have signed up with the GOSI (General Organization for Social Insurance) are receiving social insurance payments that could affect their entitlement to ESB. Some Saudi employees receive ESB from the employer and pension-related benefits via GOSI. Saudi nationals: please verify your GOSI registration status and its impact on your total end-of-service settlement.
Under Articles 84-85, your employer makes a one-time payment based on years of service and your basic salary, known as the ESB (End of Service Benefit). The General Organization for Social Insurance (GOSI) is Saudi Arabia's social insurance scheme. It is based on monthly contributions by both the employer and the employee and offers pension, disability, and other social protection benefits, mainly to Saudi nationals. In the normal sense, it is not common for an expatriate employee to contribute to, or benefit from, GOSI, although it is an ongoing process of reform as per Vision 2030 agenda.