The final settlement payment in the Kingdom of Saudi Arabia (KSA) includes the worker’s End-of-Service Award (EOSB), final wages, and accrued benefits.
While employers may deduct certain work-related debts (Article 88), the Saudi Labor Law (SLL) imposes strict legal ceilings on such deductions to prevent excessive withholding and protect workers’ financial rights.
This guide explains the Maximum Total Deduction Rule (Article 93) and the specific permissible deduction types (Article 92) that may apply when processing a worker’s final settlement.
The Maximum Total Deduction Rule: Protecting the Worker’s Dues (Article 93)
Article 93 sets a legal ceiling on all deductions that can be made from a worker’s due wage.
In all cases, the total deductions may not exceed 50% of the worker’s due wage.
Exceptions to the 50% Limit
The Labour Court (Commission for the Settlement of Labor Disputes) may modify this ceiling under two special conditions:
Authorization for Further Deductions:
The Court may allow deductions exceeding 50% if it determines that the worker’s substantial debt or assets justify a higher repayment rate.Protection of Worker’s Minimum Income:
The Court may also decide that the worker must retain at least 75% of their wage for basic living expenses, effectively limiting the deduction to a maximum of 25%.
Specific Permissible Deductions (Article 92)
Article 92 identifies the limited cases in which an employer may deduct amounts from a worker’s wages without written consent, provided the Article 93 ceiling is respected.
| Deduction Type | Legal Basis & Specific Limit |
|---|---|
| Employer Loans | Repayment of loans granted by the employer. Deduction is capped at 10% of the worker’s monthly wage. |
| Statutory Contributions | Deductions required by law, such as GOSI (Social Insurance) or other official contributions. |
| Fines and Damages | Penalties for violations or material loss caused by the worker (as per Article 91). |
| Employer Scheme Installments | Deductions for employer-managed programs (e.g., home loans, savings schemes). |
| Judicial Debt Collection | Deductions enforced through a judicial judgment, subject to its own priority rules. |
Note on Damages:
For damages under Article 91, deductions are limited to five days’ wage per month for that purpose alone.
Rules and Priority for Judicial Debt Collection
When deductions are made to satisfy a judicial debt (Article 92, Clause 6), the law imposes a strict hierarchy to protect essential living needs:
| Priority Order | Debt Type |
|---|---|
| First Priority | Alimony (maintenance) debts (نفقة) |
| Second Priority | Debts for food, clothing, and accommodation |
| Third Priority | All other debts, collected only after higher-priority obligations |
This system ensures that family and subsistence needs are protected before any other financial claims are deducted.
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Conclusion: Protection in Final Settlement Dues
When calculating a worker’s final settlement, employers must fully comply with these statutory deduction rules.
While Article 88 allows the deduction of legitimate work-related debts, the overall 50% ceiling (Article 93) and individual category limits (such as 10% for loans) are non-negotiable safeguards.
The Saudi Labor Law reinforces this protection by classifying all amounts due to workers as first-rate privileged debts, granting them payment priority over most other financial obligations of the employer.
Any unresolved disputes or questions must be formally directed to the relevant Saudi authorities for official clarification and binding decisions.
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Use the Saudi EOSB Calculator NowFrequently Asked Questions
What is the maximum overall percentage an employer can legally deduct from a worker’s total due wage in the final settlement?
Which specific articles of the SLL govern the types and amounts of permissible deductions?
What is the specific legal limit for deducting amounts related to the repayment of employer loans?
What is the maximum amount an employer can deduct per month to compensate for material damage caused by the worker?
Under what circumstances can the Labour Court intervene to reduce the amount deducted below 50%?
Besides employer loans and damages, what are other specific permissible deductions?
- Social insurance contributions (GOSI)
- Worker contributions to authorized savings or cooperative funds
- Installments for employer-provided housing schemes or similar benefits