Guide to Saudi EOSB Resignation & Termination Entitlement
By Saad AlSahli , LL.M. (Intl. Commercial Law, Univ. of Sussex) | Saudi Licensed Lawyer
The employment contract's term - Limited (Fixed) or Unlimited (Indefinite) - is the single most significant factor in determining an employee's rights and liabilities upon separation in Saudi Arabia. This comprehensive guide details the legal distinctions between the two contract types and the specific rules governing termination, notice periods, and EOSB entitlement for each.
1. Scope of End-of-Service Entitlement in Saudi Law
1.1 Overview of EOSB in the Saudi Labor Law
The End-of-Service Award is a compulsory payment due from the employer to the worker upon the termination of the work relationship. The fundamental entitlement is calculated based on the worker’s continuous years of service with the employer:
- Initial Period: The worker is entitled to an award equivalent to a half-month wage for each of the first five years of service.
- Subsequent Period: The award increases to the equivalent of a one-month wage for each subsequent year following the first five years.
The calculation of the End-of-Service Award is based on the last wage received read the full definition of Actual Wage by the worker, and the worker is entitled to an award for portions of the year proportional to the time spent on the job. For an accurate proportional estimate, use our Saudi EOSB Calculator.
1.2 Distinguishing Entitlement: Resignation vs. Termination
The quantum of the End-of-Service Award directly depends on the manner in which the employment contract is concluded (i.e., whether the worker resigned or was legally terminated).
In standard resignation cases (governed by Article 85), the worker’s entitlement is significantly curtailed based on the length of service. However, the worker is entitled to the full award, regardless of the length of service or the fact that they initiated the separation, in special circumstances such as leaving work due to a force majeure event beyond their control or specific provisions related to female workers resigning due to marriage or childbirth.
1.3 EOSB Rights for Expatriates vs. Saudi Nationals
Under the core Saudi Labor Law (Royal Decree No. M/51), all citizens are equal in the right to work. The provisions concerning the End-of-Service Award, including the calculation under Article 84 and the resignation rules under Article 85, apply equally to Saudi nationals and non-Saudi expatriate workers who are covered by the scope of this law. The law does not stipulate differing EOSB entitlement structures solely based on nationality for workers falling under its general jurisdiction. See EOSB Rights for Expatriates vs. Saudi Nationals
Exclusion of Domestic Workers
It is imperative to note that domestic helpers and those in similar roles are explicitly exempted from the implementation of the provisions of the main Labor Law (Article 7, Paragraph (1)(c)). These categories are instead governed by separate regulations, such such as the Regulations for Domestic Workers and the Like, which provide their own framework for end-of-service benefits. Under the domestic worker regulations, the worker is entitled to an End-of-Service Gratuity award amounting to one month’s wage for every four consecutive years spent with the domestic employer.
2. Resignation Entitlement Rules: Partial and Full Awards (Article 85)
The Saudi Labor Law specifies a tiered system for calculating the End of Service Benefit (EOSB) when the work relationship terminates due to the worker’s resignation. The underlying calculation of the total award (before applying the fractional reductions) is based on the standard Article 84 formula.
| Service Duration | Entitlement Fraction | Description |
|---|---|---|
| 2 to 5 years | One-Third (1/3) | Partial Entitlement |
| 5 to 10 years | Two-Thirds (2/3) | Partial Entitlement |
| 10 years or more | Full (100%) | Full Entitlement |
2.1. Partial Entitlement: One-Third (1/3) of EOSB
This rule applies to workers who have completed at least two years of continuous service but have not yet exceeded five years. The worker is entitled to one third (1/3) of the calculated End-of-Service Award. The One-Third EOSB Rule
2.2. Partial Entitlement: Two-Thirds (2/3) of EOSB
This intermediate rule applies once a worker has exceeded five years of continuous service but has not yet completed a decade (less than ten years) with the employer. The worker is entitled to two thirds (2/3) of the calculated End-of-Service Award. The Two-Thirds EOSB Rule
2.3. Full Entitlement Upon Resignation
The worker becomes entitled to the full calculated EOSB award (100% entitlement) only after their continuous service period reaches ten years or more, even if the relationship ends due to their resignation. Full EOSB Entitlement by Resignation
3. Special Cases for Full EOSB Entitlement (Article 87)
Article 87 of the Saudi Labor Law provides specific exceptions that entitle the worker to the full EOSB award, regardless of the service length, thereby overriding the tiered system of Article 85.
💡 Scenario Check
An employee resigns after 3 years to get married. Under Article 85, she'd get 1/3 of the award. Under Article 87, she gets 100%. These special circumstances override the standard rules.
3.1. Full Entitlement for Female Workers Resigning
A female worker is entitled to receive the full End of Service Award if she resigns, provided her decision aligns with one of two specific circumstances:
| Condition | Rule Details |
|---|---|
| Resignation due to Marriage | The female worker ends her employment contract within six months from the date of her marriage. |
| Resignation due to Childbirth | The female worker ends her employment contract within three months from the date of giving birth. |
Read More About: EOSB Entitlement for Female Resignation due to Marriage
3.2. Full Entitlement due to Force Majeure
A worker (male or female) is entitled to the full End of Service Award if their departure from work is necessitated by circumstances entirely beyond their control, categorized as force majeure.
- Termination/Resignation due to Force Majeure: The worker leaves the work due to a force majeure beyond their control.
This entitlement is specifically granted as an exception, meaning the service length requirements (two, five, or ten years) for partial or full awards upon general resignation do not apply here. Termination/Resignation due to Force Majeure
4. Worker Termination/Departure with Full Statutory Rights (Article 81)
Article 81 specifies the conditions under which a worker has the right to terminate their employment relationship immediately, without providing prior notice, while simultaneously preserving all of his statutory rights, including the full End of Service Benefit.
⚖️ Just Cause vs. Resignation
Termination under Article 81 is treated as employer fault, guaranteeing Full EOSB. Article 85 is worker choice, resulting in a Partial EOSB (1/3 or 2/3).
A. Employer Breach of Essential Obligations (General Categories)
- Employer Breach of Essential Obligations: If the employer fails to fulfill his essential contractual or statutory obligations towards the worker.
- Fraudulent Contract Conditions: If the employer or the employer's representative resorted to fraud at the time of contracting concerning the work conditions and circumstances.
- Assignment to Substantially Different Work: If the employer assigns the worker, without the worker's consent, to perform a work which is essentially different from the work agreed upon, in violation of Article 60 of this Law. Assignment and Contract Violation Rules.
- Constructive Dismissal: If the employer or their representative, through their actions (e.g., unjust treatment or contract violation), has caused the worker to appear as the party terminating the contract.
Repeated salary delay = Breach of essential obligations (Article 81) → Worker entitled to full EOSB.
B. Assault, Cruelty, or Immoral Conduct
- Violent Assault or Immoral Act: If the employer, a family member, or the manager in-charge commits a violent assault or an immoral act against the worker or any of the worker's family members.
- Cruelty, Injustice, or Insult: If the treatment by the employer or the manager in-charge is characterized by cruelty, injustice, or insult (humiliation).
C. Serious Workplace Hazard
- Serious Workplace Hazard: If there exists in the workplace a serious hazard threatening the safety or health of the worker, provided that the employer is aware of the hazard but fails to take measures indicating its removal.
5. Cases for EOSB Deprivation (Termination by Employer under Article 80)
Article 80 specifies the serious cases in which an employer may legally terminate the employment contract immediately without being obligated to provide the worker with an EOSB award, advance notice, or indemnity. Read the full legal guide on EOSB exclusion.
⚠️ Right to Defense
Before termination under Article 80, the employer must grant the worker an opportunity to state his reasons for objecting to the termination. The employer bears the burden of proof for the misconduct.
Specific Acts of Misconduct Leading to EOSB Deprivation
- Assault and Violence: If the worker assaults the employer, the responsible manager, one of their superiors, or subordinates during or because of the work.
- Breach of Contractual Obligations and Safety Rules: If the worker fails to perform their essential obligations arising from the work contract, or deliberately fails to observe posted safety instructions despite receiving a written warning.
- Misconduct, Forgery, and Exploitation: If the worker commits an act infringing on honesty or integrity, resorted to forgery to obtain the job, or unlawfully exploited their position for personal gain.
- Damage to Employer's Property (Requires Timely Reporting): If the worker deliberately commits an act with the intent to cause material loss to the employer. The employer must report the incident to the appropriate authorities within twenty-four (24) hours of becoming aware.
- Absence and Probation: If the worker is absent without a legitimate reason for more than thirty (30) days in one contractual year or more than fifteen (15) consecutive days (preceded by a specific warning). EOSB Loss Due to Unjustified Absence.
Read More About EOSB Exclusion: Review the 10 Specific Article 80 Cases in Detail.
6. Summary and Final Payment Timelines
6.1 Overview of Entitlement Calculation Factors
Entitlement is driven by a combination of the contract type, the length of service, and the reason for termination.
6.2 Timing of Final Settlement (Article 88)
| Termination Initiated By: | Maximum Payment Deadline |
|---|---|
| Employer (or Contract Expiry) | Within one week from the date the contract ended. |
| Worker (Resignation) | Within two weeks from the date the contract ended. |
6.3 Deductions from Final Dues
The employer is permitted to deduct any work-related debt owed to them from the final amounts due. However, deductions are strictly limited (e.g., damages limited to five-day wage per month, loans limited to 10% of the wage, with a total maximum of 50% of the worker's due wage).
Any unresolved disputes or questions must be formally directed to the relevant Saudi authorities for official clarification and binding decisions.
Make EOSB Calculation Effortless
Understanding Articles 84–88 and applying the correct formulas can be complex. Simplify the process with our Saudi End-of-Service Benefits Calculator, built in full compliance with Saudi Labor Law. Instantly estimate your entitlement based on your actual wage, service duration, and termination type - all in one place and 100% FREE.
Use Our End-of-Service Benefits CalculatorFAQs about Saudi EOSB Resignation & Termination Entitlement
How is the fundamental End-of-Service Award (EOSB) calculated under Saudi Labor Law (Article 84)?
- Initial Period: The worker receives an award equivalent to a half-month wage for each of the first five years of service.
- Subsequent Period: The award increases to the equivalent of a one-month wage for each subsequent year following the first five years.
Does the Saudi Labor Law apply the same EOSB rules to Saudi nationals and expatriate workers?
What is the tiered entitlement system for the EOSB when a worker resigns (Article 85)?
- Partial Entitlement (1/3): Applies after completing 2 years of continuous service but not exceeding 5 years.
- Partial Entitlement (2/3): Applies after exceeding 5 years of continuous service but not yet completing 10 years.
- Full Entitlement (100%): Applies only after the continuous service period reaches 10 years or more.
In which special circumstances is a female worker entitled to the full EOSB award upon resignation (Article 87)?
- Resignation due to Marriage: The worker must end her employment contract within six months from the date of her marriage.
- Resignation due to Childbirth: The worker must end her employment contract within three months from the date of giving birth.
What rights does a worker retain if they terminate the contract immediately without notice due to employer fault (Article 81)?
- The employer’s failure to fulfill essential contractual or statutory obligations.
- The employer or manager committing a violent assault or immoral act against the worker or their family.
- The existence of a serious hazard in the workplace that the employer fails to address.
What employer actions can lead to a worker terminating under the concept of 'Constructive Dismissal' (Article 81)?
What serious acts of misconduct allow an employer to terminate a worker without providing the EOSB award (Article 80)?
- Assaulting the employer, manager, or superiors during or because of the work.
- Deliberately failing to observe posted safety instructions despite receiving a written warning.
- Being absent without a legitimate reason for more than thirty (30) days in one contractual year or more than fifteen (15) consecutive days (following a specific warning).
- Resorting to forgery to obtain the job or committing an act infringing on honesty or integrity.
What are the legal deadlines for an employer to provide the worker's final settlement payment (Article 88)?
- Termination by Employer or Contract Expiry: Payment must be made within one week from the date the contract ended.
- Termination by Worker (Resignation): Payment must be made within two weeks from the date the contract ended.