How the Saudi award works

Set by Articles 84 to 88 of the Labor Law. The 2025 amendments did not change them.

  • Half a month's wage a year for the first five years, one month a year after that, on your last wage (Article 84).
  • Wage means basic plus the allowances your contract gives you (Article 2). Part years count pro rata. There is no cap.
  • If you resign (Article 85): nothing under 2 years, one third for 2 to 5 years, two thirds for over 5 and under 10, the full award from 10.
  • Full award despite resigning for force majeure, or a woman leaving within 6 months of marriage or 3 months of giving birth (Article 87).
  • No award on dismissal under Article 80 or if the job ends in probation (Article 54).
  • Paid within one week, or two weeks if you resigned (Article 88).

Examples

8 years, contract ended by the employer

  1. Last wage SAR 10,000 a month, 8 years of service.
  2. First five years: 5 × half a month = 5 × SAR 5,000 = SAR 25,000.
  3. Next three years: 3 × one month = 3 × SAR 10,000 = SAR 30,000.
  4. Total: SAR 25,000 + SAR 30,000.

Estimate: SAR 55,000

4 years, resigned

  1. Last wage SAR 9,000 a month, 4 years of service.
  2. Full award: 4 × half a month = 4 × SAR 4,500 = SAR 18,000.
  3. Resigned with between 2 and 5 years, so one third is due (Article 85).
  4. Total: SAR 18,000 ÷ 3.

Estimate: SAR 6,000

Who is covered

Covered

  • Private-sector employees under the Labor Law, Saudi and non-Saudi (Article 5).

Not covered

  • Domestic workers: covered by their own regulation.
  • Agricultural workers, herdsmen, sports players and coaches, and family members who are a firm's only staff (Article 7).
  • Government employees: not under the Labor Law.

Questions

Do I get end-of-service if I resign?

Only after two years: one third for 2 to 5 years, two thirds for over 5 and under 10, the full award from 10 (Article 85).

Is housing allowance included?

The award uses your actual wage: basic plus the allowances your contract gives you (Article 2). The law does not name housing, so check how your contract lists it.

Is there a maximum award?

No. The Labor Law sets no cap.

Did the 2025 amendments change end-of-service?

No. Royal Decree M/44, in force since 19 February 2025, left Articles 84 to 88 unchanged.

When must my employer pay?

Within one week of the contract ending, or two weeks if you ended it. Work-related debts may be deducted (Article 88).

Related Saudi guides

Sources