When working in a foreign country, one of the most important things to understand is what happens when your job ends. In Saudi Arabia, this is called End of Service Benefits (ESB).
These benefits are designed to protect workers and ensure they receive fair compensation after completing their service. Whether you are an employee finishing your contract or an employer handling staff payments, understanding these benefits is essential.
This guide will walk you through what End of Service Benefits are, how they are calculated, who is eligible, and how they are paid.
1. What Are End of Service Benefits in Saudi Arabia?
End of Service Benefits (ESB) are payments made by the employer to the employee when their contract ends.
This is required by the Ministry of Human Resources and Social Development under Saudi Labor Law.
The purpose is to reward employees for their years of service and help them transition after leaving a job. It acts as a financial cushion for the employee and ensures fair treatment.
Employees can receive this benefit in different situations, such as:
End of the employment contract
Resignation
Retirement
Termination (according to labor laws)
Death of the employee (benefit goes to their legal heirs)
2. Who Is Eligible for End of Service Benefits?
Both Saudi nationals and expatriate workers are entitled to End of Service Benefits.
However, the amount may vary depending on:
The type of employment contract (fixed-term or indefinite)
The employee’s length of service
Whether the employee resigned or the employer ended the contract
Reason for termination (e.g., resignation, layoff, or retirement)
Key point: An employee must work for at least two years to qualify for partial ESB when resigning. But if the contract ends normally, ESB applies regardless of years of service.
3. How End of Service Benefits Are Calculated?
The ESB calculation is based on:
The employee’s last basic salary (not including allowances or bonuses)
The total years of service
The basic formula under Saudi labor law is:
Half a month’s salary for each of the first 5 years of service
One full month’s salary for each year after the first 5 years
Example:
Let’s say an employee earns SAR 4,000 per month and worked for 7 years.
First 5 years: 5 × 0.5 × 4,000 = SAR 10,000
Remaining 2 years: 2 × 1 × 4,000 = SAR 8,000
Total ESB = SAR 10,000 + SAR 8,000 = SAR 18,000
4. End of Service Benefits When an Employee Resigns
If the employee resigns, the amount may be reduced depending on how long they have worked:
Less than 2 years: No ESB
2 to 5 years: One-third of the ESB amount
5 to 10 years: Two-thirds of the ESB amount
More than 10 years: Full ESB amount
Example: If the ESB calculated was SAR 18,000 but the employee worked for 7 years and resigned — they will receive two-thirds of that amount = SAR 12,000.
5. End of Service Benefits When the Employer Terminates
If the employer ends the contract (not for a legal or disciplinary reason), the employee is entitled to full ESB:
Full ESB for the entire service period
Notice period pay (if applicable)
Other unpaid dues (like unused vacation or overtime)
6. Special Cases and Exceptions
There are a few special conditions under Saudi law where ESB may differ:
Termination for cause: If an employee is terminated for serious misconduct (as defined by labor law), ESB may not be paid.
Death or illness: If the employee dies or becomes permanently disabled, full ESB must be paid to them or their legal heirs.
Female employees: If a female employee resigns within 6 months of marriage or 3 months after giving birth, she is entitled to full ESB.
End of fixed-term contract: If a contract ends naturally after the term, full ESB applies.
7. How Employers Should Pay End of Service Benefits?
Employers must:
Calculate the ESB according to labor law.
Settle all payments (including unpaid salary, leave balance, and ESB) within a specific time after the employee’s last working day.
Provide a final settlement document showing the breakdown.
Transfer the amount to the employee through official payment channels.
Failure to pay ESB on time can lead to legal action or penalties under Saudi labor regulations.
8. How Employees Can Claim Their End of Service Benefits?
Employees can claim their ESB in the following ways:
Through the company’s HR or payroll department
By filing a complaint with the Ministry of Human Resources and Social Development if the employer fails to pay
Using the official Qiwa platform or labor office portal
Having a written contract, payslips, and proof of service makes the process smoother.
9. Recent Updates and Digital Services
Saudi Arabia has introduced digital platforms to make ESB processing easier and more transparent.
Employees and employers can now:
View ESB entitlements online
Submit and approve settlements digitally
Track payment status
Raise disputes through official channels
This improves trust and ensures fair treatment for both sides.
10. Why Understanding ESB Matters?
For employees, ESB is a financial right — it can help support them when they leave their job.
For employers, understanding and complying with ESB laws builds a strong company reputation, avoids legal troubles, and creates a better relationship with staff.
Knowing these rules clearly avoids conflicts and ensures smooth offboarding for everyone.
Summary of End of Service Benefits in Saudi Arabia
| Length of Service | Resignation Entitlement | Termination Entitlement |
|---|---|---|
| Less than 2 years | No ESB | Full ESB |
| 2 to 5 years | 1/3 of ESB | Full ESB |
| 5 to 10 years | 2/3 of ESB | Full ESB |
| More than 10 years | Full ESB | Full ESB |
Tip: Always keep a copy of your employment contract, payslips, and service letters. These documents are important if there is ever a dispute over your benefits.
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Yaqoot Manpower Services helps businesses handle recruitment, payroll, and end-of-service settlements with ease.
Contact Yaqoot Manpower Services today to make employee management simple and compliant.
FAQ’s About End of Service Benefits in Saudi Arabia
1. What is End of Service Benefit (ESB) in Saudi Arabia?
ESB is a payment made by employers to employees when their employment ends, based on the length of service and salary.
2. How is ESB calculated?
It’s calculated using the last basic salary: half a month’s salary for each of the first five years, and one month’s salary for each additional year.
3. Do I get ESB if I resign?
Yes, but the amount depends on how long you have worked. You get one-third after 2 years, two-thirds after 5 years, and the full amount after 10 years.
4. How can I claim ESB if my employer refuses to pay?
You can file a complaint with the Ministry of Human Resources and Social Development or through the Qiwa platform.
5. Is ESB different for foreign workers?
No, foreign workers are entitled to ESB just like Saudi employees, following the same labor law rules.