End of Service Benefits (EOSB) represent one of the most important financial rights for employees in Saudi Arabia. Despite its importance, many employees and employers still misunderstand how these benefits are calculated, when they apply, and how different employment scenarios affect eligibility.
Under the Saudi EOSB regulation, end of service benefits are governed by clear legal principles outlined in the Saudi Labor Law. However, interpretation and practical application often raise questions—especially in cases of resignation, termination, or contract completion.
This article provides a detailed and practical explanation of saudi labor law end of service benefits, clarifying common questions and explaining how the Saudi EOSB regulation works in real workplace scenarios.
What Are End of Service Benefits Under Saudi EOSB Regulation?
End of Service Benefits are financial entitlements paid to an employee when their employment relationship ends. These benefits act as a form of long-term compensation for the employee’s service period.
According to the Saudi EOSB regulation, EOSB is calculated based on:
- The employee’s last basic salary
- Length of service
- Type of contract
- Reason for termination
The goal of this regulation is to ensure fairness and financial security for employees after leaving their jobs.
Who Is Entitled to End of Service Benefits in Saudi Arabia?
Under the Saudi EOSB regulation, most employees working under the Saudi Labor Law are entitled to end of service benefits, including:
- Saudi nationals
- Expatriate employees
- Full-time employees under fixed or unlimited contracts
However, entitlement depends on meeting minimum service requirements and the circumstances under which employment ends.
Minimum Service Period for EOSB Eligibility
The Saudi Labor Law specifies that an employee must complete at least two years of continuous service to qualify for full EOSB entitlement.
Employees with less than two years of service may not be entitled to EOSB, except in specific termination cases where the employer is at fault.
This requirement is a core component of saudi labor law end of service benefits and is strictly applied in legal disputes.
How End of Service Benefits Are Calculated
EOSB Calculation Formula
According to the Saudi EOSB regulation, EOSB is calculated as follows:
- First five years of service:
Half a month’s wage for each year of service - After five years:
One full month’s wage for each additional year
The calculation is based on the employee’s last basic salary, not total compensation or allowances (unless stated in the contract).
Example Calculation
An employee with:
- 7 years of service
- Basic monthly salary of SAR 8,000
Calculation:
- First 5 years: 5 × (8,000 ÷ 2) = SAR 20,000
- Remaining 2 years: 2 × 8,000 = SAR 16,000
Total EOSB = SAR 36,000
End of Service Benefits in Case of Resignation
Resignation affects EOSB entitlement under the Saudi EOSB regulation.
Resignation Before Two Years
- No EOSB entitlement
Resignation Between Two and Five Years
- Employee is entitled to one-third of EOSB
Resignation Between Five and Ten Years
- Employee is entitled to two-thirds of EOSB
Resignation After Ten Years
- Full EOSB entitlement
This tiered approach balances employee rights with employer obligations and is a key feature of saudi labor law end of service benefits.
End of Service Benefits in Case of Termination
Termination scenarios are treated differently depending on the reason.
Termination by Employer Without Valid Cause
- Employee is entitled to full EOSB
- May also be entitled to additional compensation
Termination for Valid Disciplinary Reasons
- EOSB may be reduced or denied depending on severity
- Must align with Saudi Labor Law disciplinary provisions
Understanding these distinctions is essential for applying the Saudi EOSB regulation correctly.
EOSB for Fixed-Term vs. Unlimited Contracts
Fixed-Term Contracts
EOSB is paid upon:
- Contract completion
- Early termination without legal justification
Unlimited Contracts
EOSB applies upon:
- Resignation (subject to service period rules)
- Employer termination
Both contract types fall under saudi labor law end of service benefits, but termination conditions differ.
EOSB for Female Employees and Special Cases
The Saudi Labor Law provides special protections in certain situations.
Under the Saudi EOSB regulation, female employees are entitled to full EOSB if they resign:
- Within six months of marriage
- Within three months of childbirth
This ensures financial fairness during major life transitions.
Common Misunderstandings About End of Service Benefits
Many disputes arise due to incorrect assumptions, including:
- Believing allowances are always included in EOSB
- Assuming EOSB applies regardless of service length
- Confusing resignation rules with termination rules
Clear understanding of saudi labor law end of service benefits helps prevent costly disputes.
Employer Responsibilities Under Saudi EOSB Regulation
Employers are legally required to:
- Calculate EOSB accurately
- Pay EOSB promptly upon contract termination
- Maintain proper employment records
Failure to comply with Saudi EOSB regulation may result in legal penalties and labor disputes.
Why Accurate EOSB Management Matters for Businesses
From an organizational perspective, EOSB is not just a legal obligation—it is a financial and reputational responsibility.
Proper EOSB management:
- Builds employee trust
- Reduces labor disputes
- Supports compliance audits
- Protects employer reputation
Many organizations now rely on HR and payroll systems to automate EOSB calculations and ensure compliance.
Digital HR Systems and EOSB Compliance
Modern HR platforms help organizations:
- Track service duration accurately
- Apply EOSB rules automatically
- Generate compliant payroll reports
Digital solutions reduce human error and ensure consistent application of saudi labor law end of service benefits.
End of Service Benefits are a cornerstone of employee rights in Saudi Arabia. Through the Saudi EOSB regulation, the Saudi Labor Law ensures fairness, transparency, and financial security for employees at the end of their employment journey.
For employees, understanding EOSB protects their rights.
For employers, proper application ensures compliance and trust.
By mastering the rules of saudi labor law end of service benefits, both parties can navigate employment transitions with clarity and confidence.