End-of-service benefits (gratuity) are one of the key rights guaranteed to employees in Saudi Arabia under the Labor Law. These benefits apply whenever an employment relationship ends, whether the contract is fixed-term or indefinite. This guide explains how gratuity is calculated, when it becomes payable, and your rights as an employee, ensuring clarity and compliance for both employees and employers.
What Is the End-of-Service Benefit?
The end-of-service benefit is a financial entitlement that the employer must pay to the employee upon termination of the employment relationship. It reflects the duration of service and the last salary earned.
Key Points:
- Applies to fixed-term and indefinite-term contracts.
- Ensures fair treatment for employees leaving the organization.
- Can be influenced by reason for termination (resignation, dismissal, or retirement).
How to Calculate End-of-Service Benefit
- First Five Years of Service:
Employees earn half a month’s salary per year. - After Five Years:
Employees earn one full month’s salary per year. - Partial Years:
Gratuity is calculated proportionally for any part of the year worked. - Effect of Resignation:
- Resignation after 2–5 years: one-third of the gratuity.
- Resignation after 5–10 years: two-thirds of the gratuity.
- Resignation after 10 years or more: full gratuity.
Example Calculation:
- Last monthly salary: SAR 7,000
- Total service: 8 years
- First 5 years: 5 × (7,000 ÷ 2) = 17,500 SAR
- Next 3 years: 3 × 7,000 = 21,000 SAR
- Total gratuity: 38,500 SAR
Eligibility and When It Becomes Payable
- Gratuity is payable immediately after the end of the employment contract.
- Employees must complete at least two consecutive years to receive a portion of the gratuity upon resignation.
- In case of dismissal without cause, employees are entitled to full gratuity.
Other Employee Rights Related to End-of-Service
- Payment of any pending salaries and allowances.
- Compensation for unused vacation days.
- Work experience certificate indicating job title and duration.
- Access to legal support for disputes regarding gratuity or termination.
Employer Obligations
- Calculate gratuity accurately according to the labor law.
- Issue final settlement and clearance certificates.
- Avoid delays or errors in payment to prevent legal claims.
Steps to Claim Your End-of-Service Benefits
- Review your employment contract to confirm entitlements.
- Gather evidence: salary slips, service duration, and leave records.
- Submit a claim to Ministry of Human Resources (MHRSD) if necessary.
- Seek assistance from SNDK, which can calculate your gratuity and guide you in submitting claims efficiently.
Frequently Asked Questions (FAQs) – English
Q1: How is end-of-service benefit calculated?
A: Based on last salary, years of service, and reason for contract termination.
Q2: Do I get gratuity if I resign before 2 years?
A: No, generally employees are not entitled to gratuity if service is less than 2 years.
Q3: Can the employer delay payment?
A: No. The law requires payment upon contract termination.
Q4: Are non-Saudi employees entitled to gratuity?
A: Yes, the same rules apply, though contracts may affect calculation.
Q5: Can SNDK help calculate my gratuity?
A: Yes. SNDK provides tools to calculate your end-of-service benefits and assists in submitting claims.
CTA – English
Claim Your Gratuity Today: Ensure you receive the end-of-service benefits you are entitled to with SNDK’s expert guidance. Don’t leave your rights unpaid!