Saudi End-of-Service Award: Settle Without Disputes

The end-of-service award under Saudi Labor Law is half a month's wage for each of the first five years and a full month's wage for each year after that, calculated on the last wage, and reduced to one third or two thirds on resignation depending on length of service. Once employment ends, the employer must settle all entitlements within one week, or within two weeks if the worker ended the contract. In part five we built the monthly payroll close; this sixth part turns the end of employment into one process: calculating the award as the Ministry states it, a written final settlement, returning company assets, closing access on the last day and keeping the file, with an exercise on the last employee who left.

What the law says about the award

The current text is on the Labor Relations page of the Ministry of Human Resources and Social Development, and the Ministry's End-of-Service Award Regulations page summarises it:

• Article 84, the basis: when the employment relationship ends, the employer pays half a month's wage for each of the first five years and one month's wage for each following year; the last wage is the basis, and the worker is entitled to a pro-rata award for fractions of a year.
• Article 85, resignation: on resignation the worker gets one third of the award after continuous service of at least two and no more than five years, two thirds if service exceeds five years but is under ten, and the full award at ten years or more. The Ministry page adds that a worker who resigns with under two years of service is not entitled to an award.
• Article 86, commissions: the parties may agree that commissions, sales percentages and similar variable elements are excluded from the wage the award is calculated on.
• Article 87, the full award as an exception: it is payable in full if the worker leaves because of force majeure, and to a female worker who ends the contract within six months of her marriage contract or three months of giving birth.
• Article 88, the deadline: wages are paid and entitlements settled within one week at most of the end of the relationship, and within no more than two weeks if the worker ended the contract; the employer may deduct any work-related debt owed by the worker.

An illustration of the mechanism, not a real case: an employee with 7 years of service and a last wage of 10,000 riyals. If the employer ends the contract, the award is 5 years at half a month, or 25,000 riyals, plus 2 years at a full month, or 20,000 riyals, for a total of 45,000 riyals. If the same employee resigns, the share is two thirds, or 30,000 riyals. The wage here is the actual wage as the law defines it, basic pay plus the increases due, so settle its definition in the contract before you need it.

From resignation to last day: dates the system calculates, not memory

Most disputes start from a disputed date, not from the formula. The current law sets these dates: under Article 75, notice on an indefinite contract with a monthly wage is 30 days when the worker ends it and 60 days when the employer does; under Article 79 bis, a resignation is deemed accepted if 30 days pass without a response, and the employer may postpone acceptance by up to 60 days in the interest of the work, with a written reason given before the 30 days run out.

So the system must record: the date the resignation or notice was submitted, the type of termination, the last working day, and the start of service as in the contract. Service length in days, the entitlement share and the settlement deadline all come from these fields alone. If the employee file and contract are one source of truth, as we built in part two, these fields already exist and nobody digs through old messages.

The final settlement: one document both sides can read

The final settlement gathers everything owed to and by the worker at the end of service, signed by both parties. Built from the system rather than a fresh spreadsheet each time, it lists item by item:

• Pay for the final days: from the last payroll run to the last working day, taken from the attendance record itself.
• The end-of-service award: with service length, termination type, the share applied and the wage used, so the worker sees how the number was reached.
• Leave balance: as shown in the leave path from part four, handled as the law and the contract set out.
• Deductions: outstanding advances and any work-related debt as Article 88 allows, each with its supporting document.
• Net amount, payment method and date: within the one-week or two-week deadline.

The duty does not end with money: Article 64 requires the employer to give the worker, on request and free of charge, a service certificate stating the start date, the end date, the profession and the last wage, with nothing that harms the worker's reputation, and to return all certificates and documents the worker deposited. A final wage that is not paid on time can also become an enforcement request, as we explained in our article on the wage clause in the documented contract.

Assets and access: the last day, not the following week

The part most often forgotten is what the employee still holds in assets and access. Make it a list attached to the employee from the day of hiring, closed item by item before the settlement:

• Physical assets: laptop, phone, keys, access card, car and tools, each handed over with a signed record at hiring and returned with a signed record on leaving.
• Digital accounts: email, internal systems, bank and government platform accounts the employee was authorised on, groups and shared folders.
• Data: files and customer correspondence handed to a named colleague before the account is closed.
• Owner and timing: each item has an owner, and the deadline is the end of the last working day, not after.

After departure the employee file is personal data you still hold, so restrict who can see the settlement and wage after exit, as we explained in our article on permissions and who sees what, and keep the complete file with the signed settlement and handover records in one place.

The Origami view

We are a technology company that builds custom systems and integrations, and when we build an end-of-service process we connect it to everything earlier in this series: the contract gives the start date and wage, attendance gives the final days, the leave path gives the balance and payroll gives the advances, so the settlement comes out of existing data rather than a manual calculation.

We put the rules of Articles 84 to 88 inside the system itself and link assets and accounts to the employee from day one, so they all close in a single step on the last day. That is how we build our services around how a business actually works, while special cases are settled by the text of the law or a labor lawyer.

Exercise: run the checklist on the last employee who left

• Recalculate the award: using start and end dates, termination type and last wage, and compare it with what was actually paid.
• Measure the deadline: how many days passed between the last working day and full settlement, against one or two weeks.
• Review assets: does every item have a handover and return record.
• Check accounts: does the person still have email, system access or group membership after leaving.
• Ask about the certificate and file: was a service certificate requested, and is the complete file kept in one place.

Every item without a documented answer is a potential dispute, and an item in your HR digitization plan.

Conclusion and next part

A good end of service starts from Articles 84 to 88, records notice and resignation dates as the law sets them, produces a clear settlement from existing data, closes assets and access on the last day and keeps the file. In the seventh and final part we gather the exercises of the six parts into a 90-day plan to digitize HR in your business.

Sources

• Ministry of Human Resources and Social Development: Labor Relations — current text of Articles 64, 75, 79 bis and 84 to 88.
• Ministry of Human Resources and Social Development: End-of-Service Award Regulations — calculation rules and resignation shares.

This article explains the mechanism and is not legal advice; confirm your case with the Ministry or a labor lawyer.