What Counts as Actual Wage for EOSB Calculation?

Article 87 of the Saudi Labor Law defines "actual wage" as the basis for calculating End of Service Benefits. Understanding what constitutes actual wage is crucial because it directly determines the amount of your EOSB entitlement.

What Is Included in Actual Wage?

The following components are generally considered part of the actual wage:

• Basic Salary: The fixed monthly salary agreed in the contract
• Housing Allowance: Cash housing allowance paid monthly
• Transportation Allowance: Regular transportation stipend
• Commissions: Regular sales commissions and performance bonuses
• Other Regular Allowances: Any recurring cash allowances

What Is Excluded?

Some payments are typically excluded from the actual wage calculation:

• One-time bonuses and gifts
• Expense reimbursements
• Profit-sharing distributions
• In-kind benefits (unless specified in contract)

Why It Matters

Since EOSB is calculated as a multiple of your final actual wage, any dispute over what constitutes actual wage can significantly impact your entitlement. For example, if your basic salary is SAR 5,000 but your total actual wage including allowances is SAR 8,000, your EOSB would be 60% higher when calculated on the actual wage.