Saudi Arabia (KSA) Final Settlement Process, Timelines, and Dues
By Saad AlSahli , LL.M. (Intl. Commercial Law, Univ. of Sussex) | Saudi Licensed Lawyer
The final settlement represents the total monetary obligations owed by the employer to the worker upon the termination of the contractual relationship. This guide provides a detailed breakdown of the legal components, payment deadlines (Article 88), and strict limits on deductions (Article 92/93).
The Scope of the Saudi Arabia (KSA) Final Settlement Dues
The final settlement encompasses a worker's wages and all entitlements due upon termination of the employment relationship.
Key components typically included in the final settlement are:
- End-of-Service Gratuity (EOSB): The calculated amount based on the worker's period of service and last wage. The Full EOSB Calculation Guide.
- Final Wages: Any unpaid actual wages due up to the last working day.
- Accrued Leave Pay: Wages owed for any earned but unused annual leave days. How to Calculate Accrued Leave Pay upon Termination.
Legal Priority of Worker Dues
Under Saudi law, the amounts due to the worker or their heirs are accorded high legal protection.
⚠️ First-Rate Privileged Debts
Amounts due to the worker are considered first-rate privileged debts over all of the employer's properties. In case of employer bankruptcy or liquidation, the worker is entitled to an expedited payment equivalent to one month's wage before any other expenses.
Legal Timelines for Final Settlement Payment (Article 88 Requirements)
Article 88 mandates strict timelines for employers to finalize and pay out the entitlements.
| Termination Initiated By: | Rule | Maximum Payment Deadline |
|---|---|---|
| Employer (or Contract Expiry) | The One-Week Rule | Within a maximum period of one week from the date the contractual relationship ends. |
| Worker (Resignation) | The Two-Week Rule | Within a period not exceeding two weeks from the date of termination. |
Read the full Legal Timeline for Final EOSB Payment (1-2 Weeks Rule).
To confirm your total entitlement before the deadline, use our Saudi End of Service Benefits Calculator.
Calculation of Accrued Leave Pay (Unused Annual Leave)
Entitlement to Leave Pay (Article 111)
Article 111 establishes the worker's right to receive wages corresponding to the accrued days of leave if the worker departs from work before utilizing that leave.
Annual Leave Allocation Rule (Article 109)
The basis for calculating this accrued pay relies on the standard annual leave entitlement:
- A worker is entitled to a prepaid annual leave of not less than twenty-one (21) days for each year of service.
- This minimum period increases to not less than thirty (30) days if the worker has completed five consecutive years in the service of the same employer.
| Period of Service | Minimum Annual Leave Entitlement (Article 109) | |
|---|---|---|
| Less than 5 consecutive years | Not less than 21 days of prepaid annual leave | |
| 5 or more consecutive years | Not less than 30 days of prepaid annual leave | |
Proportional Calculation of Accrued Leave
The worker is entitled to wages for the leave days corresponding to the portions of the year they have worked. This proportional calculation applies to the period of service for which the leave was not utilized, based on the worker's wage the full definition of the Actual Wage.
Rules Governing Legal Deductions from the Final Amount
The law strictly regulates the amounts that an employer may deduct from a worker’s final wages and entitlements. Maximum Legal Deductions from Saudi Final Settlement Dues.
Maximum Total Deduction Rule (Article 93)
In all cases, the percentage of amounts deducted may not exceed half (50%) of the worker’s due wage.
The Labor Court may permit an increase above this limit if necessary, or restrict the amount to three-quarters (75%) of the wage if the worker requires more than half of their wage.
Specific Permissible Deductions (Article 92)
Generally, no amount may be deducted from a worker's wages against private rights without their written consent, except in the following specific cases:
- Repayment of employer loans, provided the amount deducted does not exceed 10% of the worker's wage.
- Social insurance contributions and other legally required contributions.
- Worker contributions to savings funds or loans owed to such funds.
- Installments for employer housing schemes or other privileges.
- Fines imposed on the worker or amounts deducted to compensate for damages caused to employer property (limited by the five-day wage per month rule in Article 91).
- Debt collected in enforcement of a judicial judgment, provided the monthly deduction does not exceed one quarter (1/4) of the worker’s due wage.
⚠️ Judicial Priority
When collecting debt via judicial judgment, the priority is strictly enforced: Alimony debt is collected first, followed by debts related to food, clothing, and accommodation, before other types of debts.
Any unresolved disputes or questions must be formally directed to the relevant Saudi authorities for official clarification and binding decisions.
Make EOSB Calculation Effortless
The End-of-Service Benefit (EOSB) involves complex rules from the Saudi Labor Law. Simplify the entire process with our Saudi End-of-Service Benefits Calculator, built for full compliance with Articles 84-88 and beyond. Instantly estimate your exact entitlement based on your actual wage, service duration, and specific separation reason (resignation, termination, contract type) - all in one place and completely FREE.
Use Our End-of-Service Benefits CalculatorFAQs about Saudi Final Settlement Process, Timelines, and Dues
What are the key components included in the Saudi Final Settlement dues?
Key components typically included are:
- End-of-Service Gratuity (EOSB): The calculated amount based on service duration and last wage.
- Final Wages: Any unpaid actual wages due up to the worker’s last working day.
- Accrued Leave Pay: Wages owed for earned but unused annual leave days.
- All Entitlements: Any other entitlements due upon the termination of the employment relationship.
What is the maximum payment deadline for the final settlement if the employer terminates the contract?
If the employer initiates the termination or if the termination is due to contract expiry, the employer must pay the full entitlements within a maximum period of one week (The One-Week Rule) from the date the contractual relationship ends.
What is the deadline for final settlement payment when a worker initiates termination (resignation)?
What is the minimum annual leave entitlement used for calculating accrued leave pay under Saudi law?
- Less than 5 consecutive years: Not less than 21 days of prepaid annual leave for each year of service.
- 5 or more consecutive years: Not less than 30 days of prepaid annual leave for each year of service.
What is the maximum total amount an employer can legally deduct from a worker’s final settlement?
The Labor Court may, however, permit an increase above this 50% limit if necessary. Conversely, the court may restrict the deduction amount to three-quarters (75%) of the wage if the worker requires more than half of their wage.
Do a worker’s final settlement dues have priority over other debts if the employer faces bankruptcy?
In the case of employer bankruptcy or liquidation, the worker is entitled to an expedited payment equivalent to one month's wage before any other expenses.