Saudi Labor Law Articles 84 and 85 explained: your end-of-service award

Article 84 of the Saudi Labor Law sets your end-of-service award: half a month’s wage for each of the first five years of service, then one month’s wage for each year after that, calculated on your last wage. Article 85 then decides how much of that award you keep if you resign: nothing under two years, one third up to five years, two thirds up to ten, and all of it from ten years.

You can run your own dates through the Saudi gratuity calculator, which applies both articles line by line. Below is what each article says, which wage counts, and worked examples you can check against your own case.

What Article 84 says

Article 84 applies whenever a work relationship ends, whoever ends it. In plain English it says:

• The employer pays the worker an end-of-service award.
• The award is half a month’s wage for each of the first five years and one month’s wage for each following year.
• It is calculated on the last wage the worker received.
• The worker is entitled to the award for parts of a year in proportion to the time worked.

There is no minimum period in Article 84 itself. If your employer ends your contract after ten months, you are owed ten months’ share of the half-month rate. The minimums only appear in Article 85, and only when you resign.

The official consolidated text, with every amendment marked, is published by the Bureau of Experts at the Council of Ministers: Saudi Labor Law on laws.boe.gov.sa.

The formula in one line

So ten full years on a monthly wage of SAR 10,000 gives 5 × 5,000 + 5 × 10,000 = SAR 75,000 if the employer ends the contract.

Article 85: what changes if you resign

Article 85 reduces the award when the worker is the one who resigns. The official wording gives one third for service “لا تقل مدتها عن سنتين متتاليتين، ولا تزيد على خمس سنوات” (not less than two consecutive years and not more than five years), and two thirds only where service is more than five years.

Two details are worth noticing:

• The two years must be consecutive. A break in service restarts the count.
• Exactly five years falls in the one-third band. The text says “not more than five years” for one third, and the two-thirds band starts only once service exceeds five years. If you are close to the five-year mark, a few extra weeks can double what you keep.

Article 85 only applies to resignation. If your employer ends your contract, or a fixed-term contract simply expires, you receive the full Article 84 award regardless of length of service. Our article on resigning versus being terminated compares this with the other Gulf countries.

Which wage is used: “last wage” and the actual-wage definition

Article 84 uses the last wage. Article 2 of the Labor Law defines “wage” as the actual wage: the basic wage plus the allowances paid to the worker, such as housing and transport allowances. That is why Saudi Arabia sits with Kuwait among the Gulf countries that do not limit gratuity to basic pay.

In practice:

• Use the wage on your last payslip, not an average.
• Include fixed allowances paid with your salary every month.
• Commissions and percentage-based pay can be excluded from the calculation if your contract says so (Article 86).

If your contract splits a large housing allowance from a small basic wage, that split matters in the UAE and Qatar, but much less in Saudi Arabia. See basic or total salary for gratuity for the full country comparison.

Article 87: when a resignation still gets the full award

Article 87 is the exception to Article 85. You receive the full award even though you ended the contract when:

• you leave because of force majeure beyond your control; or
• a woman ends her contract within six months of marriage, or within three months of giving birth.

Leaving under Article 81, which lets a worker quit without notice when the employer has breached its obligations, also keeps the full award, because the law treats the employer as the cause of the departure.

Worked examples: 3, 5, 7 and 12 years

All examples use a last actual wage of SAR 10,000 a month and a last working day of 31 March 2026. These are the exact figures our calculator returns for the same inputs. Service is measured in days and divided by 365, so leap days add a tiny fraction of a year.

Step by step: 7 years, terminated

Step by step: 5 years, terminated

For service of 1 April 2021 to 31 March 2026, the first five years give 5 × 5,000 = SAR 25,000. The leap day in 2024 adds about 0.0027 of a year at the full-month rate, so the total is SAR 25,027.40.

If you resign right around the five-year mark, remember that the law’s one-third band runs up to and including five years. Check your exact day count before you hand in your notice.

Under one year

Terminated after 10 months (1 June 2025 to 31 March 2026), you receive 0.833 × 5,000 = SAR 4,164.38. Had you resigned, Article 85 gives nothing, because you have not reached two years.

Did the 2025 amendments change Articles 84 to 88?

The amendments issued by Royal Decree M/44 came into force on 19 February 2025 and changed a long list of articles, including notice periods (Article 75), overtime (Article 107), special leave (Article 113) and the new resignation procedure in Article 79-bis.

The consolidated text on the Bureau of Experts site marks every 2025 change against the article it touched. Articles 84, 85, 87 and 88 carry no 2025 amendment note. The formula, the resignation shares and the payment deadlines are the same as before.

What did change around them is the resignation procedure. Under Article 79-bis, a resignation is treated as accepted 30 days after you submit it, unless the employer defers it, and you can withdraw it within seven days. Our final settlement checklist covers the practical steps. For wider context, see the Saudi labour law guide.

Payment deadline: Article 88

Once the contract ends, the employer must pay your wages and your award:

• within one week if the employer ended the contract;
• within two weeks if you ended it.

The employer may deduct amounts you owe under the contract, such as an outstanding loan, but cannot hold back the award without a legal basis.

Calculate your award

Enter your last actual wage, your start date and your last working day in the Saudi end-of-service calculator. Choose whether you resigned, were terminated or your contract ended, and it shows each band of Article 84, the Article 85 share and the total, ready to compare with your final settlement.

Frequently asked questions