📌 The official formula — Article 84

The Saudi Labor Law sets End-of-Service Gratuity using two formulas depending on length of service:

  • The first 5 years: half a month's pay (salary ÷ 2) × number of years
  • Beyond 5 years: one full month's pay × number of additional years

Fractional parts of a year are calculated proportionally.

🧮 A worked example

Khalid worked for 7 years on a basic salary of SAR 6,000:

📜 Article 84 — Saudi Labor Law: If the employment relationship ends, the employer must pay the worker a gratuity for the period of service, calculated on the basis of half a month's wage for each of the first five years, and one full month's wage for each of the following years.

📊 Calculating Khalid's gratuity (salary SAR 6,000 | 7 years)
First 5 years: 6,000 ÷ 2 × 5SAR 15,000
2 additional years: 6,000 × 2SAR 12,000
Total owedSAR 27,000 ✅

💡 The gratuity is usually calculated on the basic salary only — it does not include housing and transport allowances, unless the contract states otherwise.