Resignation vs Termination: EOSB Entitlement Differences

One of the most important distinctions in Saudi Labor Law is how End of Service Benefits are calculated depending on whether an employee resigns or is terminated. The applicable legal provisions differ significantly, and understanding these differences is crucial for protecting your rights.

Termination by Employer (Article 84)

When an employer terminates an employee's contract (except for cause under Article 80), the employee is entitled to full EOSB calculated under Article 84:

• Half a month's wage for each of the first 5 years
• One full month's wage for each subsequent year
• No reduction or scaling based on years of service

Resignation by Employee (Article 85)

When an employee resigns voluntarily, Article 85 applies with a graduated scale based on years of service:

• 1-2 years: One-third of the Article 84 entitlement
• 2-5 years: Two-thirds of the Article 84 entitlement
• 5+ years: Full Article 84 entitlement

Key Takeaway

The most significant difference is that employees who resign with less than 5 years of service receive a reduced EOSB under Article 85. Only after 5 years of service do resignation and termination entitlements become equal.