How EOSB Is Calculated Under Saudi Labor Law Article 84

Article 84 of the Saudi Labor Law is the foundational provision governing End of Service Benefits (EOSB) for employees working under indefinite-term contracts. It establishes the formula used to calculate gratuity based on an employee's final actual wage and years of continuous service.

The Calculation Formula

Under Article 84, the EOSB is calculated as follows:

• First 5 years: Half a month's wage for each year of service
• Years exceeding 5: One full month's wage for each additional year
• Total: Sum of both periods, capped at the total entitlement

Practical Example

Consider an employee with a final actual wage of SAR 10,000 and 10 years of service:

• First 5 years: 5 × SAR 5,000 (half wage) = SAR 25,000
• Next 5 years: 5 × SAR 10,000 (full wage) = SAR 50,000
• Total EOSB: SAR 75,000

Key Requirements

To qualify for EOSB under Article 84, the following conditions must be met:

• The employee must have completed at least one year of continuous service
• The calculation is based on the final actual wage at the time of separation
• The employee must not have been terminated for cause as defined under Article 80