Leaving a job is a big decision, whether you are resigning for a better opportunity or your employer has decided to end your contract. If you work in Saudi Arabia, you are entitled to an End-of-Service Benefit (EOSB), commonly known as gratuity, which is a financial payment employers provide when employees leave their jobs.
Saudi Gratuity After 10 Years of Service: What to Expect
However, the amount you receive depends on why you are leaving—whether you resigned or were terminated. Saudi labor laws outline clear rules for calculating gratuity, ensuring employees get their rightful dues.
This guide explains:
- What gratuity is and why it matters
- How gratuity is calculated for resignation vs. termination
- Important factors that affect your payout
- Common questions and answers to help you understand your final pay
By the end of this article, you will have a clear understanding of your end-of-service rights and how much gratuity you can expect.
What is End-of-Service Gratuity?
End-of-Service Gratuity is a financial payment that employers are legally required to provide under the Saudi Labor Law when an employee leaves their job. It is designed to support employees as they transition out of their roles.
The amount of gratuity depends on:
- How long you worked for the company
- Your final salary
- Whether you resigned or were terminated
Understanding these factors will help you estimate your gratuity before leaving your job.
Resignation vs. Termination: How Gratuity is Calculated
Saudi labor law treats resignation and termination differently when calculating gratuity.
1. If Your Employer Terminates Your Contract (Except for Misconduct)
If your employer ends your contract without serious misconduct (as defined in Article 80 of the Saudi Labor Law), you are entitled to:
- Half a month’s wage per year for the first five years of service.
- A full month’s wage per year for each additional year beyond five years.
Example Calculation
If Sarah worked for 7 years, and her last salary was SAR 10,000:
- First 5 years: 5 × (0.5 × SAR 10,000) = SAR 25,000
- Next 2 years: 2 × (1 × SAR 10,000) = SAR 20,000
- Total Gratuity: SAR 25,000 + SAR 20,000 = SAR 45,000
This amount is calculated based on the last actual wage, including basic salary plus regular allowances (like housing and transportation), but excluding overtime or bonuses.
2. If You Resign (Choose to Leave)
If you resign, the gratuity you receive depends on your years of service:
- Less than 2 years: No gratuity.
- 2 to 5 years: One-third (1/3) of the standard gratuity.
- 5 to 10 years: Two-thirds (2/3) of the standard gratuity.
- 10 years or more: Full standard gratuity (same as termination).
Example Calculations
If Ahmed resigns after 3 years with a salary of SAR 8,000:
- Standard gratuity (as if terminated): 3 × (0.5 × SAR 8,000) = SAR 12,000
- Resignation gratuity (1/3): SAR 12,000 ÷ 3 = SAR 4,000
If Ahmed resigns after 7 years:
- First 5 years: 5 × (0.5 × SAR 8,000) = SAR 20,000
- Next 2 years: 2 × (1 × SAR 8,000) = SAR 16,000
- Total Standard Gratuity: SAR 36,000
- Resignation Gratuity (2/3): SAR 36,000 × (2/3) = SAR 24,000
If Ahmed resigns after 11 years:
- First 5 years: 5 × (0.5 × SAR 8,000) = SAR 20,000
- Next 6 years: 6 × (1 × SAR 8,000) = SAR 48,000
- Total Standard Gratuity: SAR 68,000
- Resignation Gratuity (Full Amount): SAR 68,000
Since he completed more than 10 years, he receives the full gratuity as if he were terminated.
Key Rules You Should Know
- Gratuity is based on your last salary
- It includes basic pay + regular allowances but does not include overtime or temporary bonuses.
- Termination for serious misconduct (Article 80)
- If an employee is fired for misconduct, assault, or leaking company secrets, they may not be eligible for gratuity.
- Resignation due to employer fault (Article 81)
- If you leave because your employer violated your contract or created unsafe working conditions, you might still be eligible for the full gratuity.
- Fixed-term contracts
- If your contract ends on its expiry date, gratuity is calculated based on termination rules.
- If you resign before the contract ends, resignation rules apply.
- Notice period
- Gratuity is separate from your notice period pay.
Frequently Asked Questions (FAQs)
1. Who is eligible for gratuity in Saudi Arabia?
Both Saudi nationals and expatriates are covered under the Saudi Labor Law for gratuity payments.
2. Is gratuity taxable in Saudi Arabia?
No, End-of-Service Benefits are not subject to tax in Saudi Arabia.
3. What is meant by ‘last wage’ in gratuity calculation?
It includes your basic salary plus regular allowances (such as housing and transport), but not bonuses or overtime pay.
4. What if my employer refuses to pay my gratuity?
If your employer fails to pay gratuity or calculates it incorrectly, you can:
- Discuss the issue with your HR department.
- File a complaint with the Ministry of Human Resources and Social Development (MHRSD).
5. Do I get gratuity if my contract naturally expires?
Yes. If a fixed-term contract ends, gratuity is calculated based on termination rules under Article 84.
6. What if I worked for less than a year?
Gratuity is typically calculated based on completed years, but partial years may be prorated.
Conclusion: Know Your Rights Before Leaving Your Job
Understanding End-of-Service Benefits is essential before leaving a job in Saudi Arabia. Your gratuity depends on:
- Employer termination: Full standard gratuity (half-month per year for the first 5 years, full-month per year after that).
- Resignation: Gratuity varies (none under 2 years, partial payout for 2-10 years, full after 10 years).
Before resigning or accepting termination, check your employment contract and familiarize yourself with Saudi Labor Law (Articles 84, 85, 80, and 81) to ensure you receive the correct amount.
Disclaimer: This guide is for general information. For legal advice, consult MHRSD or a labor law expert
