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Calculate Your Gratuity Entitlement in Saudi Arabia

Your Gratuity Estimate

KSA: (Calculated Amount)

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What is Gratuity Entitlement in Saudi Arabia?

Gratuity is a financial benefit your employer provides when your service ends—whether through termination or resignation—acknowledging your years of dedicated work under Saudi Labor Law.

In Saudi Arabia, upon the conclusion of employment, employers are required to pay an end-of-service award calculated based on the employee’s last wage. For the first five years of service, the award is equivalent to a half month’s wage for each year, and for every year beyond that, it amounts to one full month’s wage.

Gratuity is typically calculated at the time of resignation or termination. For employees who resign, an entitlement to the benefit is generally recognized after completing two years of service. In contrast, if an employee is terminated, they are eligible for the full benefit accrual once they have completed more than one year of service. These provisions ensure that the end-of-service award fairly reflects the service duration and the employee’s final wage.

What are the Factors Affecting Gratuity in KSA

Gratuity in Saudi Arabia is determined by the reason for the end of employment and the length of service, as outlined in Articles 85 and 87 of the Saudi Labor Law.
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1. On Resignation (Article 85)

- Service of less than 2 years:
- No gratuity is paid.
- Service between 2 and 5 years:
- One-third of the full gratuity is payable.
- Service between 5 and 10 years:
- Two-thirds of the full gratuity is payable.
- Service of more than 10 years:
- The full gratuity is payable.

2. On Termination (Article 85)

- Service of less than 1 year:
- No gratuity is paid.
- Service between 1 and 5 years:
- Half-month salary per year of service is payable.
- Service of more than 5 years:
- One-month salary per year of service is payable.

3. Exceptions (Article 87)

- Full Gratuity:
- Regardless of the length of service, an employee is entitled to full gratuity if their employment is terminated due to circumstances beyond their control.

Your Questions Answered

Is there a separate gratuity policy for female employees?

Yes. Female employees benefit from a specific provision. If a female employee terminates her employment within three months after giving birth or within six months after getting married, she is entitled to receive the full gratuity payment.

When is the gratuity payment made?

Gratuity is paid as part of the final settlement when an employee’s service ends—whether due to resignation or termination. The payout is made according to the duration of service and the terms of departure.

When does an employee become eligible for gratuity?

Generally, an employee becomes eligible for gratuity after completing two years of continuous service. However, in cases of termination, employees with more than one year of service may also qualify for a gratuity payment.

How is the gratuity amount calculated in KSA?

The gratuity is calculated based on the employee’s last basic salary and the type of separation (resignation or termination), following the provisions set forth in Saudi Labor Law.

Do additional allowances or benefits affect the gratuity calculation?

No. The calculation is based solely on the employee’s last basic salary. Other benefits, such as allowances or bonuses, are not typically included unless specified in the employment contract.

What factors influence the gratuity calculation?

The key factors include:
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- The employee’s length of service.
- The type of employment separation (resignation or termination).
- Specific provisions for female employees, as mentioned above.

How are disputes regarding gratuity resolved?

If there is any disagreement over the gratuity calculation, the employee should first consult their employer’s HR department. If the issue remains unresolved, it is advisable to seek legal advice or contact the relevant labor authorities.

Is the gratuity payment subject to tax in Saudi Arabia?

Typically, gratuity payments are not subject to income tax in Saudi Arabia. However, employees should consult a tax professional for the most current information on tax regulations.

Does the type of employment contract affect gratuity entitlements?

Yes. The specific terms and conditions outlined in the employment contract may influence how gratuity is calculated. Employees should review their contract details alongside the Saudi Labor Law provisions.

How frequently are gratuity policies updated?

Gratuity policies are subject to change in line with amendments to the Saudi Labor Law. It is important for employees to stay informed through official updates from the Ministry of Labor.

Disclaimer

This gratuity calculator is designed to give Saudi Arabian employees an estimated calculation of their end-of-service gratuity based primarily on basic salary and years of service. It does not account for additional benefits such as accrued annual leave encashment, airfare, notice pay, or other allowances that may be applicable under Saudi Labor Law. This tool is based on the most common scenarios outlined in the law. It may not reflect specific contractual terms or special circumstances—such as variations due to voluntary resignation or termination under particular conditions.

Qureos is not liable for any inaccuracies; this tool is provided for general guidance only and should not replace professional legal advice or consultation.