📌 The basic salary is the foundation — but with conditions
Under Article 84 and its implementing regulations, End-of-Service Gratuity is calculated on the last wage the worker received. Wage includes the basic salary and all allowances stated in the contract, if they are regular and continuous.
⚠️ What is usually not counted
- ❌ Housing allowance if it is separate and temporary
- ❌ Exceptional bonuses and irregular incentives
- ❌ Transport allowance if conditional on attendance
✅ What is counted
- ✅ The basic salary, always
- ✅ Any regular allowance listed in the contract as part of the monthly wage
- ✅ Food allowance if it is a fixed monthly amount with no conditions
📜 Implementing Regulations of the Labor Law — definition of wage: everything the worker receives from the employer in return for their work, in addition to all cash benefits stipulated by the contract.
📊 Example: Ahmed on a total salary of SAR 8,000 (basic SAR 4,000 + allowances SAR 4,000) | 6 years
If calculated on basic salary only(4,000÷2×5)+(4,000×1) = SAR 14,000
If calculated on total salary(8,000÷2×5)+(8,000×1) = SAR 28,000
The differenceSAR 14,000!
💡 Check your contract carefully — if it states that the gratuity is calculated on the total salary, that applies and works in your favor. The law always takes whichever is better for the worker.