Saudi Arabia End of Service Gratuity 2026: How to Calculate Your EOSB as an Expat

 

One of the most valuable yet least understood financial benefits for expats in Saudi Arabia is the End of Service Benefit — commonly called gratuity or EOSB. When your employment ends in Saudi Arabia, whether through resignation, termination or contract expiry, you are legally entitled to a lump-sum payment that can amount to several months or even years of your salary. Yet many expats leave Saudi Arabia without receiving their full EOSB because they did not know how to calculate it, did not know their rights or did not follow the correct process to claim it. In this complete guide, we explain exactly how Saudi Arabia end of service gratuity works in 2026 — including the calculation formula, resignation versus termination rules, real SAR examples, what is and is not included in the calculation, and step-by-step guidance on how to claim what you are owed.

What is End of Service Gratuity in Saudi Arabia?

End of Service Benefits (EOSB), also called gratuity, is a payment that every expat worker in Saudi Arabia is entitled to receive when their employment ends. It is governed by Saudi Labour Law Article 84 and applies to all workers on unlimited and fixed-term contracts. EOSB is not a bonus or a goodwill payment from your employer. It is a legally mandated entitlement under Saudi Labour Law. Your employer is required by law to pay it — and failure to do so is a legal violation that can be reported through the Qiwa platform. The calculation and entitlement of End of Service according to Saudi labor law starts from the first day of service till the last day of employment of the worker. Before you understand how gratuity is calculated, it helps to know your salary structure. Your EOSB is directly linked to how your employer structures your pay package. For a full breakdown of typical expat salaries and package structures, see our complete Saudi Arabia Salary Guide 2026.

EOSB Calculation Formula — Saudi Labour Law Article 84

In Saudi Arabia, upon the conclusion of employment, employers are required to pay an end-of-service award calculated based on the employee's last wage. For the first five years of service, the award is equivalent to a half month's wage for each year, and for every year beyond that, it amounts to one full month's wage. The formula in simple terms: Years 1 to 5: Half month salary × number of years Years 6 and above: One full month salary × number of years You are also entitled to a proportional amount for any partial year worked. For example, if you worked 3 years and 8 months, you receive gratuity for 3 full years plus 8/12 of a half-month salary for the partial year.

What Salary is Used to Calculate EOSB?

Only your basic salary is used to calculate EOSB. Housing allowance, transport allowance, food allowance, bonuses and overtime are not included in the EOSB calculation. Always verify your basic salary on your Qiwa contract. This is one of the most important points every expat must understand. If your total package is SAR 15,000 per month but your basic salary is only SAR 6,000, your EOSB is calculated on SAR 6,000 — not SAR 15,000. A common mistake is when many employers calculate EOSB on total package instead of basic salary. Some employers try to use a lower basic figure. Always verify your basic salary on your Qiwa contract. Always check your Qiwa registered contract to confirm what your official basic salary is before your employment ends.

EOSB Calculation Examples in SAR

Example 1: Termination After 7 Years

Basic monthly salary: SAR 10,000 Service: 7 years Reason: Termination by employer First 5 years: 5 × (SAR 10,000 ÷ 2) = SAR 25,000 Remaining 2 years: 2 × SAR 10,000 = SAR 20,000 Total EOSB = SAR 45,000

Example 2: Termination After 5 Years

Basic monthly salary: SAR 8,000 Service: 5 years Reason: Termination First 5 years: 5 × (SAR 8,000 ÷ 2) = SAR 20,000 Total EOSB = SAR 20,000

Example 3: Resignation After 3 Years

Basic monthly salary: SAR 6,000 Service: 3 years Reason: Resignation Full EOSB calculation: 3 × (SAR 6,000 ÷ 2) = SAR 9,000 But because this is resignation between 2 and 5 years, only one-third is payable: SAR 9,000 × (1 ÷ 3) = SAR 3,000 Total EOSB received = SAR 3,000

EOSB Rules for Resignation vs Termination

The most important factor affecting your EOSB is whether you resigned or were terminated. The rules are very different.

EOSB on Termination by Employer

If you are terminated, you always receive full EOSB regardless of service length. The only exception is termination for gross misconduct under Article 80 of the Saudi Labour Law. In cases of serious disciplinary violations, the employer may legally reduce or cancel EOSB. Maintaining good workplace behavior protects your full EOSB entitlement.

EOSB on Resignation

If the work relationship ends due to the worker's resignation, the entitlement is reduced based on years of service as follows: Service of less than 2 years — no gratuity is paid. Service between 2 and 5 years — one-third of the full gratuity is payable. Service between 5 and 10 years — two-thirds of the full gratuity is payable. Service of more than 10 years — the full gratuity is payable. This tiered system means that staying with the same employer for longer before resigning significantly increases your EOSB entitlement as a proportion of what you would receive if terminated.

EOSB on Contract Expiry

When a fixed-term employment contract expires and is not renewed, the employee receives full EOSB as if terminated — regardless of service duration over one year.

Special Rule for Female Employees

Female employees benefit from a specific provision. If a female employee terminates her employment within three months after giving birth or within six months after getting married, she is entitled to receive the full gratuity payment.

EOSB and the Labour Reform Initiative 2026

Saudi Arabia has been overhauling its labor framework since 2021 under the Labour Reform Initiative (LRI). These reforms have eliminated the exit permit requirement, simplified visa transfers, expanded worker complaint channels, and strengthened salary protections through the Wage Protection System (WPS). Key reforms that affect EOSB for expats in 2026 include: Ability to change employers through Qiwa after contract expiry — which now triggers full EOSB rights on contract completion. Stronger enforcement of EOSB payment deadlines through the WPS system. Saudi Labour Law requires employers to pay all final entitlements including EOSB within 7 days of the employment contract ending. If your employer fails to pay within 7 days, you can file a formal complaint through the Qiwa platform.

What Else Are You Entitled to When Your Employment Ends?

EOSB is the largest component of your final settlement but not the only entitlement. When your employment ends in Saudi Arabia, you may be entitled to more than just your end-of-service gratuity. Your employer must pay any outstanding wages for work you have already completed. If you have unused annual leave, you are entitled to cash compensation based on your daily salary rate. 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. Your employer is responsible for canceling your work visa promptly after termination. Complete final settlement checklist: Outstanding unpaid salary EOSB gratuity payment Unused annual leave payout Return flight ticket to home country (if stated in your contract) Iqama cancellation by employer Release letter from employer

Is EOSB Taxed in Saudi Arabia?

Saudi Arabia does not have personal income tax, so EOSB is not taxed in Saudi Arabia. However, depending on your home country's tax laws, you may need to declare EOSB as income when you return home. Consult a tax advisor in your home country for guidance. For Bangladeshi workers, consult the National Board of Revenue (NBR) for guidance on whether overseas gratuity receipts require declaration upon return.

How to Claim Your EOSB — Step by Step

Step 1: Calculate What You Are Owed

Use the official EOSB calculator provided by the Ministry of Human Resources and Social Development at hrsd.gov.sa to get an official estimate of your entitlement.

Step 2: Check Your Qiwa Contract

Log in to qiwa.sa and verify your registered employment contract details including your official basic salary. This is the figure your employer must use for EOSB calculation.

Step 3: Request Your Final Settlement in Writing

Before your last working day, request a written final settlement breakdown from your employer's HR department. This should itemize all components including EOSB, unused leave, outstanding salary and any other entitlements.

Step 4: Verify Payment Within 7 Days

Your employer must pay all final entitlements within 7 days of your contract end date. Confirm that payment has been received in your bank account.

Step 5: File a Complaint if Payment is Withheld

If your employer fails to pay your EOSB or pays an incorrect amount, file a formal complaint through the Qiwa platform at qiwa.sa. The Ministry of Human Resources has strong enforcement mechanisms and most disputes are resolved quickly. For workers who need support filing complaints, the Ministry of Human Resources hotline is available at 19911.

EOSB and Changing Employers in Saudi Arabia

If you transfer your sponsorship to a new employer through the Labour Reform Initiative process, your EOSB from your previous employer must be settled before or at the point of transfer. For a full guide on changing employers and transferring your sponsorship, see our complete How to Find a Job in Saudi Arabia 2026 guide which covers the Qiwa transfer process in detail.

Frequently Asked Questions About EOSB in Saudi Arabia

Does EOSB start accumulating from day one?

EOSB begins accumulating from your first day of employment including probation. However, if employment ends during probation, the first 90 or 180 days, different rules may apply.

Is EOSB calculated on basic salary or total package?

EOSB is calculated on basic salary only. Housing allowance, transport allowance, food allowance and bonuses are excluded unless your employment contract explicitly states otherwise. Always verify your basic salary figure on your Qiwa contract.

What if my employer refuses to pay my EOSB?

File an official complaint through the Qiwa platform at qiwa.sa. The Ministry of Human Resources and Social Development has strong enforcement powers including fines, hiring freezes and legal action against non-compliant employers. You can also call the labor complaints hotline at 19911.

Can a fixed-term contract automatically convert to unlimited?

A limited-term contract automatically converts to an indefinite-term contract if it is renewed twice consecutively or if its total duration including original term plus renewals reaches three years — whichever is shorter — and both parties continue working.

Does housing allowance affect EOSB?

Standard housing allowances are not included in EOSB calculations. Only basic salary counts. However, if your contract specifically states that housing or other allowances are part of the base wage for EOSB purposes, they may be included. Check your Qiwa contract carefully.

Useful Official Resources

Ministry of Human Resources EOSB Calculator Website: hrsd.gov.sa Qiwa Platform (Contract Verification and Complaints) Website: qiwa.sa Saudi Labour Law Article 84 (Full Text) Website: hrsd.gov.sa Ministry of Human Resources Hotline Phone: 19911

Final Thoughts on Saudi Arabia End of Service Gratuity

Your EOSB is one of the most significant financial benefits of working in Saudi Arabia and every expat deserves to receive it in full. Understanding the formula, knowing your basic salary figure and being aware of the resignation versus termination rules gives you the knowledge to protect your rights. Always verify your Qiwa contract details, request a written final settlement before leaving and follow up firmly but professionally if your employer is slow to pay. Saudi labour law is clearly on your side. For more on protecting your financial interests in Saudi Arabia, see our guides on Iqama Renewal and sending money home to Bangladesh to make the most of your Saudi earnings. Have questions about end of service gratuity in Saudi Arabia? Leave a comment below and we will be happy to help!