Gratuity Calculation Saudi Arabia How to Compute Your End of Service Benefits
Gratuity calculation Saudi Arabia is one of the most important things to understand if you work in the Kingdom under a Saudi employment contract. End of service benefits are a legal payment that many employees receive when their job ends. Knowing how it works helps you plan your finances and avoid surprises.
What end of service benefits mean in Saudi Arabia
End of service benefits, also called gratuity, are payments that eligible employees receive when their employment ends.
This applies to most private sector employees covered under Saudi Labor Law.
The gratuity amount depends mainly on
- Your last wage
- Your total years of service
- Whether you resigned or were terminated
Who can receive gratuity payments
In general, employees may qualify for end of service benefits if they have completed at least one year of continuous service.
Gratuity rules can differ based on
- Contract type
- Reason for leaving
- Length of employment
If you are unsure about your case, your employer’s HR department or the official HRSD portal can confirm the exact entitlement.
Gratuity calculation Saudi Arabia rules under labor law
Saudi Labor Law provides a clear structure for calculating gratuity.
The standard calculation is based on your last basic wage.
Basic gratuity formula for most employees
The common formula is
- Half a month wage for each of the first 5 years
- One full month wage for each year after 5 years
Partial years are calculated proportionally.
For Example
If an employee worked 6 years
- First 5 years = 5 × half month wage
- Sixth year = 1 × full month wage
Calculation rules if you resign
Resignation affects gratuity entitlement.
Commonly reported practice under labor law is
- Less than 2 years no gratuity
- 2 to 5 years one third of the total amount
- 5 to 10 years two thirds of the total amount
- More than 10 years full gratuity
These resignation percentages should always be confirmed through official HR channels.
Calculation rules if your employer terminates you
If the employer ends the contract, the employee is generally entitled to the full gratuity amount, as long as they meet the minimum service requirement.
Termination due to serious misconduct may affect eligibility under specific legal provisions.
Step by step how to calculate your gratuity manually
You can estimate your gratuity manually with these steps.
- Confirm your last monthly basic wage
- Calculate your total years of service
- Apply the half month rule for the first 5 years
- Apply the full month rule for years after 5
- Adjust the amount if the case is resignation
This gives you a practical estimate, but the official calculator is more accurate for real cases.
How to use the official HRSD gratuity calculator online
Saudi Arabia provides an official end of service calculator through the Ministry of Human Resources and Social Development.
You can access it through the HRSD end of service benefit calculator
The calculator asks for details such as
- Contract type
- Monthly wage
- Service duration
- Reason for leaving
It then provides an estimated gratuity amount based on current rules.
For more practical Saudi work life guides, you can also visit KSA Buddy for expat friendly resources.
What salary amount is used in the calculation
Gratuity is usually calculated based on the last basic wage, not the total package.
Allowances such as housing or transport may not always be included unless stated in the contract or applied through company policy.
Always check your employment agreement for clarity.
When gratuity is usually paid
End of service benefits are typically paid after the employment relationship officially ends.
Employers often settle gratuity along with the final salary and other dues.
Payment timing may vary depending on company processes.
Common mistakes to avoid
Many employees misunderstand gratuity because of these common issues
- Assuming allowances are always included
- Not accounting for resignation percentage rules
- Using outdated online calculators
- Ignoring partial year calculations
The HRSD calculator is the safest starting point.
