How To Compute Your End of Service Benefits in Saudi Arabia

End of Service Benefits (ESB) or a gratuity check have been historically given to employees in the Kingdom. People who worked for the same company for years were given a huge sum of money when they leave.

The law provides for the payment of this benefit after completing years of service.This mechanism was designed to help people save when they leave a company.

Since the amount is not too big for 2 to 3 years of service, workers should be responsible enough as adults not to spend this on consumer items and save it up for their future.

Assume that the information for an employee, Ali, is as follows:
Criterion
Value in SAR
Current Salary (basic salary + housing allowance)
10,000
Service Years
8
Annual Leave Days Balance
4
Daily Rate of Pay
333.33

Scenario 1: If Ali resigns

Based on the above information, if an employee resigns, the EOS and leave encashment calculation is made as follows:
Years and Allowance Balances
Reckonable Salary
Payment Award in SAR
First 5 years
Two-thirds of half monthly salary for each year
((5 x 10000) / 2) x 2/3 = 16666.67
Next 3 years
Two-thirds of one month’s salary for each year
(3 x 10000) x 2/3 = 20000
Annual Leave days balance payout
4 x 333.33 = 1333.32
Total Payment
16666.67 + 20000 + 1333.32 = 37999.99

Scenario 2: If Ali is terminated

Based on Ai’s service years and his remaining leave balance, if he is terminated, the EOS and leave encashment calculation is made as follows:
Years and Allowance Balances
Reckonable Salary
Payment Award in SAR
First 5 years
Half of monthly salary for each year
(5 x 10000) x 1/2 = 25000
Next 3 years
One month’s salary for each year
3 x 10000 = 30000
Annual Leave days balance payout
4 x 333.33 = 1333.32
Total Payment
55000 + 1333.32 = 56333.32

Click the below image to better understand and have a rough estimate on EOS:

End of Service Computation

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