If you’re leaving your job in Saudi Arabia, you might be wondering if you’re entitled to End of Service Gratuity (EOSG). This one-time payment is given to employees after their contract ends, as required by Saudi Labor Law. But who qualifies for it? How is it calculated?
Saudi Gratuity After 10 Years of Service: What to Expect
In this guide, we’ll explain everything in simple terms, so you can easily understand your eligibility and rights. Whether you’re an expatriate, a Saudi national, or an HR professional, this guide will help you navigate the rules without confusion.
What is End of Service Gratuity?
End of Service Gratuity (EOSG) is a mandatory payment that employers must give to employees when their contract ends. It serves as financial compensation for the time they have worked. Saudi Labor Law ensures that all eligible employees receive this benefit, making it a key part of worker rights in the country.
If you qualify for EOSG, your employer must pay it—this is not a bonus or a favor. It is a legal obligation that applies to both expatriate and local workers.
Who is Eligible for End of Service Gratuity?
To qualify for End of Service Gratuity, you need to meet certain conditions. Let’s break them down:
Expat Gratuity Rights in Saudi Arabia: Resignation vs. Termination
1. Minimum Service Requirement
- You must complete at least two years of continuous service with the same employer to be eligible for EOSG.
- There may be exceptions depending on specific industries or employment contracts.
2. Type of Employment Contract
Your EOSG eligibility depends on whether you have a fixed-term or indefinite-term contract:
Fixed-Term Contracts (Limited Contracts)
- If you complete your contract, you qualify for full EOSG.
- If your employer terminates the contract early without a valid reason, you still qualify for EOSG.
- If your employer terminates you with just cause (e.g., misconduct), you may lose your EOSG.
- If you resign before completing the contract, your EOSG may be reduced or forfeited based on labor law rules.
Indefinite-Term Contracts (Unlimited Contracts)
- If your employer terminates you unfairly, you get full EOSG.
- If you resign, your EOSG amount depends on your total years of service:
- Less than 2 years → No EOSG.
- 2 to 5 years → Reduced EOSG.
- More than 5 years → Higher EOSG.
Key takeaway: The longer you work, the higher your gratuity payout.
How Your EOSG is Affected by Termination or Resignation
The reason your job ends plays a big role in your EOSG eligibility.
1. Resignation
- If you resign before completing 2 years, you do not qualify for EOSG.
- If you resign after 2-5 years, you get a partial payout.
- If you resign after 5 years, you get a higher payout.
2. Employer Termination
- If your employer terminates you unfairly, you get full EOSG.
- If your employer terminates you for just cause (e.g., fraud, theft, policy violation), you lose EOSG.
3. Mutual Agreement
If you and your employer agree to end your contract, EOSG terms should be clearly stated in writing. Always review agreements before signing.
Situations That Can Disqualify You From EOSG
There are cases where employees lose their right to gratuity:
- Serious Misconduct: Theft, fraud, or violating company policies.
- Unjustified Absence: Long, unexplained absences from work.
- Causing Financial Loss: If your actions cause major financial damage to the company.
In such cases, employers must provide proof before denying EOSG.
How is End of Service Gratuity Calculated?
Your EOSG amount depends on your salary and years of service. The standard formula is: EOSG=(Basic Salary per Month)×(Number of Days per Year)×(Years of Service)\text{EOSG} = \text{(Basic Salary per Month)} \times \text{(Number of Days per Year)} \times \text{(Years of Service)}EOSG=(Basic Salary per Month)×(Number of Days per Year)×(Years of Service)
Basic EOSG Calculation
- First 5 years: You get half a month’s salary for each year.
- After 5 years: You get one full month’s salary for each additional year.
Example Calculation:
- If your salary is SAR 5,000 and you worked 7 years, your EOSG would be:
- First 5 years: (5,000 ÷ 2) × 5 = SAR 12,500
- Next 2 years: (5,000 × 2) = SAR 10,000
- Total EOSG: SAR 22,500
If your job ended due to termination without just cause, you will receive full EOSG. If you resigned, the amount may be reduced.
Conclusion
Understanding End of Service Gratuity is important for both employees and employers in Saudi Arabia. Whether you’re resigning, being terminated, or completing your contract, knowing your eligibility and calculation method can help you plan ahead.
If you want to calculate your EOSG instantly, use our free online calculator at ESBCalculator.com. It’s quick, easy, and based on the latest Saudi Labor Law.
Now that you know your rights, you can ensure you get what you’re entitled to when leaving your job
