End of service Gratuity calculator
If you’re working in Saudi Arabia and planning to leave your job, whether due to resignation, termination, or simply for a better understanding of your rights, it’s crucial to know how your end-of-service gratuity (EOSG), also known as indemnity, will be calculated. This benefit is an important part of your legal rights, and knowing how it works ensures you can plan accordingly.
In this guide, we’ll break down how to calculate your EOSG, explain the factors that affect the amount you’ll receive, and show you where to find more reliable information. We’ll also discuss recent updates to Saudi Labor Law that might influence your gratuity amount.
Understanding End-of-Service Gratuity and Its Importance in Saudi Arabia
End-of-service gratuity (EOSG) is a one-time payment that employers in Saudi Arabia must give to eligible employees when their job ends. It’s a way to reward the employee’s hard work and contribution during their time at the company.
Understanding EOSG matters for three main reasons:
1. Financial Support During Job Changes – EOSG gives you money when you’re between jobs. Whether you’re searching for a new role or returning home, it acts as a safety net. This payment can reduce the stress of unemployment and give you more financial security during the transition.
2. Your Legal Right – Under Saudi labor law, EOSG is your right. Knowing the rules ensures you receive the full amount you’re entitled to. When you understand your rights, you can confidently claim your gratuity and avoid losing any benefits.
3. Better Financial Planning – Knowing your expected EOSG amount helps you plan ahead. With a clear estimate, you can make smarter choices for your savings, investments, and long-term goals. It gives you more control over your financial future.
Determining Your Eligibility for End-of-Service Gratuity in Saudi Arabia
Your eligibility for end-of-service gratuity (EOSG) in Saudi Arabia depends mainly on how long you’ve worked for your employer and the terms of your employment contract. Knowing the key rules helps you understand if you qualify for this benefit.
The One-Year Rule
To receive EOSG, you must complete at least one full year of continuous service with the same employer. This rule encourages long-term employment and is the basic requirement under Saudi labor law.
Who Qualifies for EOSG?
Most employees with a valid employment contract can qualify, including:
- Full-time employees
- Part-time employees
- Both Saudi nationals and expatriates working in the Kingdom
Factors That May Affect Your EOSG Eligibility
While many employees qualify for EOSG, certain circumstances may impact eligibility or reduce the amount you receive:
- Termination Due to Misconduct: If your employer dismisses you for serious misconduct or violations of Saudi labor laws, you may lose your EOSG entitlement. Maintaining good workplace behavior and following company policies is crucial to securing this benefit.
- Resigning Before Completing One Year: If you resign before completing a full year of service, you generally won’t qualify for EOSG. Staying employed for at least one year is essential to become eligible for this financial benefit.
To qualify for EOSG in Saudi Arabia, you
Benefits After Termination in Saudi Arabia
When your employment ends in Saudi Arabia, you may be entitled to more than just your end-of-service gratuity (EOSG). Knowing these benefits ensures you receive everything you are owed under Saudi labor law.
- Unpaid Salary – Your employer must pay any outstanding wages for work you have already completed before your last day.
- Payment for Unused Vacation Days – If you have unused annual leave, you are entitled to cash compensation based on your daily salary rate.
- Repatriation Flight for Expatriates – If you are an expatriate, your employer may need to pay for your ticket back to your home country, depending on your employment contract and labor regulations.
- Visa Cancellation – Your employer is responsible for canceling your work visa promptly after termination, as required by Saudi labor law.
Before you leave your job, review your employment contract and confirm these entitlements with your employer. Understanding your rights helps you claim all benefits you are legally entitled to after termination.
Calculation Formulas for End-of-Service Gratuity (EOSG)
If you prefer to calculate your end-of-service gratuity (EOSG) manually, here are the formulas you can use:
Termination by Employer
The formula is:
- (0.5 x Last Drawn Salary x First 5 Years of Service) + (1 x Last Drawn Salary x Years of Service After 5)
Example:
Let’s say your Last Drawn Salary is 10,000 SAR and you have worked for 7 years. The calculation would be: (0.5 x 10,000 x 5) + (1 x 10,000 x 2) = 25,000 + 20,000 = 45,000 SAR
Factors That May Affect Your EOSG Eligibility
The calculation varies depending on how long you’ve worked for the company.
- Less Than 2 Years of Service: No EOSG
- 2 to 5 Years of Service: (1/3) x (0.5 x Last Drawn Salary x Total Years of Service)
- 5 to 10 Years of Service: (2/3) x (0.5 x Last Drawn Salary x Total Years of Service)
- More Than 10 Years of Service: (0.5 x Last Drawn Salary x First 5 Years of Service) + (1 x Last Drawn Salary x Years of Service After 5)
Example:
If your Last Drawn Salary is 10,000 SAR and you have worked for 6 years, the calculation would be:
(2/3) x (0.5 x 10,000 x 6) = (2/3) x 30,000 = 20,000 SAR
Factors That Affect Your End-of-Service Gratuity (EOSG) Calculation
While an EOSG calculator can give you an estimate, several factors influence the final amount you receive. Understanding these key variables will help you get a more accurate calculation.
Understanding "Last Drawn Salary"
Your last drawn salary is the main basis for calculating your end-of-service gratuity (EOSG) in Saudi Arabia. It usually includes:
Allowances
Some employment contracts add certain allowances, such as housing or transportation, to the EOSG calculation. Others may exclude them. Always review your contract to know exactly what counts toward your gratuity.
Basic Salary
This is the fixed monthly amount used in most EOSG calculations.
The Role of Bonuses
If your contract includes guaranteed bonuses, they may be factored into your EOSG. However, this depends on the contract terms and may require legal clarification.
How Employment Termination Affects EOSG in Saudi Arabia
The way your job ends can directly change the amount of end-of-service gratuity (EOSG) you receive.
Resignation
If you resign, especially with only a few years of service, your EOSG amount is usually lower. The payout depends on your total years worked.
Employer Termination
If your employer ends your contract, your EOSG can be higher—particularly if you have a longer service period.
Years of Service and Partial Years
EOSG calculations include both full and partial years. For example, if you worked 1 year and 6 months, the payment is calculated proportionally for 1.5 years of service.
Possible Deductions from EOSG
Your employer can deduct certain amounts from your gratuity, such as:
- Unpaid loans or debts owed to the company
- Other deductions allowed under Saudi labor law
Employers must give you clear documentation explaining any deductions.
Your EOSG calculation depends on multiple factors, including salary components, bonuses, service duration, and the way your employment ends. Reviewing your contract carefully ensures you understand what to expect in your final payout.
Termination for Cause: Your Rights and What to Do Next
Termination for cause happens when an employer fires an employee due to serious misconduct or a violation of Saudi labor laws. In such cases, the employer has the legal right to end the contract immediately without providing end-of-service gratuity (EOSG). However, termination for cause must be backed by clear evidence and legal procedures.
Certain actions can lead to termination for cause, including theft, fraud, leaking confidential company information, repeated unapproved absences, or refusal to follow company policies. If your employer dismisses you for any of these reasons, they must have documented proof to justify their decision. If you are terminated for cause, you may lose your right to EOSG. However, Saudi labor laws require employers to follow legal steps and properly document the misconduct before taking such action.
If you believe your termination was unfair, you should take immediate action. First, gather all employment records, including your employment contract, salary slips, termination letter, and any written communication related to your case. Next, try to resolve the matter directly with your employer by sending a formal written request explaining why you believe the termination was unjust. If your employer does not respond or refuses to negotiate, you can file a complaint with the Ministry of Human Resources and Social Development (MHRSD). This government body enforces labor laws and helps resolve disputes between employees and employers. If the issue remains unresolved, consulting a labor law expert is highly recommended. A lawyer specializing in Saudi labor law can review your case, provide legal guidance, and represent you in court if necessary.
How to Protect Your EOSG Rights
if you believe you are entitled to a higher EOSG payout, taking the right steps can help you secure your benefits. The first step is to keep all employment records that support your claim. Essential documents include:
- Employment contract
- Salary slips
- Termination letter
- Emails or written communication related to EOSG
These records serve as proof in case of a dispute.
Next, communicate with your employer in writing. Send a formal request explaining why you believe you deserve a higher EOSG amount and include supporting documentation. Employers are required to follow labor laws, and presenting your case clearly increases your chances of resolving the issue without legal action.
If your employer refuses to cooperate, you can file a complaint with MHRSD, which enforces Saudi labor regulations and can mediate disputes between employees and employers. If the dispute remains unresolved, you should consult a labor law expert. A lawyer can:
- Assess your case
- Provide legal advice
- Represent you in legal proceedings if necessary
Taking these steps improves your chances of securing the EOSG payout you rightfully deserve.
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Meet Our Legal Experts
Team Behind ESB calculator
At ESBCalculator.com, we are committed to providing accurate and up-to-date insights on End-of-Service Benefits (ESB), labor laws, and employee rights across the Gulf region. Our team of experts ensures that businesses and employees fully understand their entitlements.
Ahmed Al-Farsi
Senior Legal Consultant
With over 15 years of experience in Saudi labor law and corporate legal advisory, Ahmed Al-Farsi is a recognized authority on employment regulations, contract disputes, and compensation structures. He has advised multinational companies and SMEs on compliance with end-of-service benefit calculations and labor settlements.
Fatima Al-Suwaidi
HR & Payroll Specialist
A certified HR and payroll expert, Fatima Al-Suwaidi specializes in salary structuring, ESB calculations, and employee compensation policies. With a strong background in GCC labor laws, she assists businesses in ensuring legal compliance and fair employee settlements.
Khalid Al-Dhaheri
Labor Law Researcher
With a deep understanding of Gulf labor laws and employee rights, Khalid Al-Dhaheri contributes valuable insights on termination benefits, gratuity laws, and wage protection systems. His expertise in policy analysis and legal documentation makes him a key resource for both employers and employees seeking clarity on ESB entitlements.
Frequently Asked Questions
What is End-of-Service Benefits (ESB) in Saudi Arabia?
ESB is a gratuity payment given to employees when they leave a company, as per Saudi labor law. It is calculated based on the employee’s last salary and years of service.
How is ESB calculated in Saudi Arabia?
1: For the first 5 years, an employee receives half a month's salary per year.
2: After 5 years, they receive one full month's salary per year.
3: The total amount depends on whether the employee resigned or was terminated.
Do I qualify for ESB if I resign?
Yes, but the amount depends on your years of service:
Less than 2 years: No ESB.
2 to 5 years: 1/3 of the calculated ESB.
5 to 10 years: 2/3 of the calculated ESB.
More than 10 years: Full ESB.
Is ESB applicable to all employees in Saudi Arabia?
Yes, all employees under the Saudi Labor Law are entitled to ESB, except for temporary workers, freelancers, or those on a special contract that excludes ESB benefits.
Does ESB include allowances?
No, ESB is calculated only on the basic salary, not including housing, transportation, or other allowances unless stated in the contract.
How can I use the ESB calculator on ESBCalculator.com?
Simply enter your monthly salary, years of service, and employment status (resigned or terminated), and the calculator will provide an accurate estimate of your ESB.
What happens if an employee is terminated?
Employees terminated without valid reasons are entitled to full ESB. However, if they are dismissed for misconduct, they may lose their ESB entitlement.
Is ESB taxable in Saudi Arabia?
No, ESB is not taxable under Saudi labor laws. Employees receive the full entitled amount.
Can I claim ESB if I switch jobs within Saudi Arabia?
Yes, but only if your previous employer fully settles your ESB before transferring your sponsorship to a new employer.
Where can I get legal advice about ESB disputes?
If you have a dispute regarding your ESB, you can contact Saudi Arabia’s Ministry of Human Resources and Social Development (HRSD) or seek legal consultation.
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