EOSB Rights for Expatriates vs. Saudi Nationals (The Principle of Legal Equality)

The End-of-Service Benefit (EOSB) system in Saudi Arabia ensures legal equality between Saudi nationals and expatriate workers. Under the Saudi Labor Law (SLL), both groups are entitled to the same calculation method, accrual rate, and proportional entitlement. The only material distinction arises not from nationality, but from the mandatory contract type for expatriates, which influences termination rights and compensation.

The Identical Foundation: Articles 84 and 85

The SLL enforces a single, unified calculation system for all private-sector workers. Both Saudis and non-Saudis accrue EOSB according to Article 84, and any proportional reduction for resignation is applied under Article 85, identically.

1. Article 84 - The Universal Calculation Formula

The accrual rate is the same for every qualifying worker:

• Half-Month Wage - for each of the first five years of service.
• Full-Month Wage - for each subsequent year beyond the fifth.

The EOSB is calculated based on the last actual monthly wage, including fixed allowances. Rules regarding exclusion of variable pay (Article 86) apply equally to both citizens and expatriates.

2. Article 85 - Identical Resignation Entitlement Tiers

When a worker voluntarily resigns, entitlement follows the same tiered system regardless of nationality:

👉 Review the Full Resignation and Termination Entitlement Rules →

The Crucial Procedural Distinction: Article 37

The key legal difference between Saudi and expatriate workers arises from Article 37, which defines mandatory contract types:

• Non-Saudis (Expatriates): Contracts must be written and for a specified period (fixed-term). If the duration is not stated, the law deems it one year by default (as per recent amendments).
• Saudi Nationals: May enter either fixed-term or indefinite-term contracts. Fixed contracts convert automatically to indefinite after:
  • three consecutive renewals, or
  • four years of service, whichever is shorter.

This procedural rule - not nationality - determines the termination outcome and compensation liability.

Contract Type, Not Nationality, Determines Financial Consequences

The termination compensation rules under Article 77 create financial divergence only due to the contract type, not citizenship.

1. Compensation for Invalid Termination (Article 77)

Thus, expatriate compensation risk is linked to contract duration, while Saudi nationals’ compensation scales with service years.

2. Notice Period and Contract Conversion

• Notice Period:

  • Indefinite contracts require 60 days’ written notice if the worker is paid monthly.
  • Fixed-term contracts generally require only a notice of non-renewal, not a 60-day notice for expiry.

• Contract Conversion:

  • Article 55 permits conversion of fixed-term contracts to indefinite ones.
  • However, Article 37 restricts this right for non-Saudis, ensuring that expatriate workers remain under fixed-term employment structures.
    👉 Review the Differences Between Fixed and Indefinite Contract Termination →

Conclusion

The Saudi Labor Law upholds complete financial equality in the calculation and entitlement of the End-of-Service Benefit. Both Saudi nationals and expatriates receive the same EOSB formula (Article 84) and resignation tiers (Article 85). However, the termination consequences and compensation under Article 77 differ solely because non-Saudis are bound by fixed-term contracts. This distinction is procedural, not discriminatory, and aligns with the legal framework governing expatriate employment in the Kingdom.

Any unresolved disputes or questions must be formally directed to the relevant Saudi authorities for official clarification and binding decisions.