Saudi End of Service Benefits (EOS)

Legal Foundation

End-of-service benefits in Saudi Arabia are governed by Articles 84, 85, and 86 of the Saudi Labor Law (Royal Decree No. M/51). These articles establish the calculation formula, entitlement conditions, and payment timelines. The EOS award is a mandatory right for all employees who have completed at least two years of service (for resignation cases) or any period of service (for employer-initiated termination).

Calculation Basis: Basic Salary + Housing

Saudi EOS is calculated on the last drawn wage, which includes basic salary plus housing allowance (whether paid in cash or provided as accommodation). Unlike UAE gratuity which uses basic salary only, Saudi EOS includes housing. Other allowances such as transport, food, commissions, and bonuses are generally excluded unless they are fixed and contractually stipulated as part of the wage.

Resignation Pro-Ration Rules

When an employee resigns voluntarily, the EOS entitlement is pro-rated based on service length: no entitlement for less than 2 years of service, one-third for 2-5 years, two-thirds for 5-10 years, and full entitlement after 10 or more years of service. An important exception applies to women who resign within 6 months of marriage or 3 months of childbirth: they receive full EOS regardless of service length.

Article 80 Exclusions

Under Article 80 of the Saudi Labor Law, an employer may terminate an employee without paying EOS in cases of gross misconduct, including: assault on the employer or supervisor, failure to perform essential duties, deliberate misconduct causing material loss, fraud or forgery, unjustified absence for 20+ non-consecutive days or 10+ consecutive days in a year, or exploitation of position for personal gain. The employer bears the burden of proof.