Human Resources
End of Service Gratuity Calculator
Calculate gratuity under Article 84 of the Saudi Labor Law
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- Calculated in your browser
Includes fixed allowances (housing, transport).
Fractional year (0 to 11 months).
Contract type
Total years of service
Base gratuity
Full entitlement (100%)
First 5 years
Years after 5
Final gratuity
100%
How does it work?
End-of-service gratuity is an employee right when a labor contract ends. Article 84 of the Saudi Labor Law sets the baseline: half a month's wage for each of the first five years of service, then a full month for each subsequent year, calculated on the last monthly wage (including fixed allowances).
Core formula (Article 84)
Base gratuity multiplies years of service by the tier rate and the monthly wage.
Gratuity = (first 5y × 0.5) + (years after × 1.0) × monthly wage
Resignation tiers (Article 85)
If an employee resigns from an indefinite contract, they get a percentage of the base gratuity based on tenure:
- Under 2 years: nothing (0%).
- From 2 to under 5 years: one third (1/3).
- From 5 to under 10 years: two thirds (2/3).
- 10 years and above: the full gratuity (100%).
Full-entitlement cases
The employee receives 100% of the base gratuity when: a fixed-term contract ends naturally, the employer terminates the contract, retirement, death (paid to heirs), or contract termination by force majeure (Article 81).
Worked example
An employee with 7 years of service and a last monthly wage of SAR 10,000, terminated by the employer:
- First 5 years: 5 × 0.5 × 10,000 = SAR 25,000
- Following 2 years: 2 × 1.0 × 10,000 = SAR 20,000
- Base gratuity = 25,000 + 20,000 = SAR 45,000
- Entitlement = 100% (employer termination)
- Final gratuity = SAR 45,000
Things to remember
- The wage used is the last monthly wage including fixed allowances (housing, transport), but not variable amounts (commissions, bonuses).
- Fractional years are paid pro rata — 6 months = half a year.
- If the employee terminates due to an employer breach (Article 81), they keep the full gratuity.
- Download the formal PDF report — it cites the relevant Labor Law articles.
Frequently Asked Questions
What's the difference between Article 84 and Article 85?
Article 84 sets the base gratuity formula (half-month for the first 5 years, then full month). Article 85 sets the percentage an employee who resigns from an indefinite contract is entitled to (0% / 1/3 / 2/3 / 100%).
Do housing and transport allowances count?
Yes — fixed allowances (housing, transport, nature-of-work) are part of the 'monthly wage' used for the calculation. Variable amounts (commissions, annual bonuses) are excluded.
What if I resign from a fixed-term contract early?
Under recent Labor Law amendments, the employee still receives the full base gratuity even if they resign before the contract ends, although they may owe the employer compensation per the contract's terms.
Is the gratuity subject to income tax or GOSI?
No. End-of-service gratuity is not subject to GOSI or income tax in Saudi Arabia and is paid net to the employee.
How do I calculate gratuity for 12 years and 7 months?
Months are converted to a year fraction (7÷12 = 0.583). Total service = 12.583 years. First 5 years at half-month, then 7.583 years at full month, multiplied by the wage.
Can I download a report for labor disputes?
Yes — click the download button to generate a PDF with the inputs, calculations, and citations to the relevant Labor Law articles.
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