Article 84 of the Saudi Labour Law (نظام العمل) is the basis of a worker's right to an end-of-service award (often called end-of-service benefit or gratuity): it sets how the award is calculated, on which wage, and when it is due. It is one of the most searched articles of the law, because every employment relationship ends one day. Below we explain the article in plain language, show how the award is calculated with examples, list the articles that reduce or cancel it, and answer the housing allowance question.
What does Article 84 say?
When the employment relationship ends, the employer must pay the worker an award for the period of service, calculated as follows:
- Half a month's wage for each of the first five years.
- A full month's wage for each of the following years.
- The last wage is the basis of the calculation, and the worker is entitled to an award for parts of a year in proportion to the time worked.
Worked examples
| Length of service | Last wage | Calculation | Award |
|---|---|---|---|
| 3 years | SAR 6,000 | half a month × 3 = 1.5 months | SAR 9,000 |
| 5 years | SAR 8,000 | half a month × 5 = 2.5 months | SAR 20,000 |
| 8 years | SAR 8,000 | 2.5 months + (one month × 3) = 5.5 months | SAR 44,000 |
| 4 years and 6 months | SAR 10,000 | half a month × 4.5 = 2.25 months | SAR 22,500 |
This is the full award, paid when the contract expires or when the employer ends it. Work out your own case with the end-of-service calculator.
When is the award reduced or lost?
| Situation | Effect | Article |
|---|---|---|
| Resignation | One third, two thirds or the full award depending on length of service, and nothing before two years | Article 85 |
| Dismissal for a legitimate reason in one of the listed cases | The right to the award may be lost | Article 80 |
| Leaving work because the employer breached its obligations | Full award | Article 81 |
| Leaving work due to force majeure, or a female worker ending the contract within six months of her marriage or three months of giving birth | Full award | Article 87 |
| Termination during the probation period | No award | Probation period |
Which wage is used? Is the housing allowance included?
The article says the "last wage" is the basis of the calculation. In practice the general rule is to calculate on the actual wage the worker was receiving, meaning the basic wage plus fixed allowances that were due, such as housing and transport allowances, not the basic wage alone. Occasional allowances, or allowances tied to particular circumstances, are treated differently, and details can vary with the contract. That is why many disputes are about what counts as part of the wage.
Frequently asked questions
When must the award be paid?
The employer must settle the worker's dues within the period set by law from the date the relationship ends, and a delay opens the door to a claim for compensation. Check the current official text.
Is the award different for an expatriate worker?
No. Article 84 applies to private-sector workers, Saudi and non-Saudi alike.
My employer refuses to pay. What can I do?
Start with a complaint and amicable settlement, then the labour court, and watch the time limit for hearing the claim. Proceedings are in Arabic, so contracts and payslips in English may need an Arabic translation. Read filing a labour claim.
A dispute over your end-of-service award?
The team at Usus Law Firm handles labour cases, calculating dues and claiming them, in Riyadh and Tabuk, and advises in English. See also the Implementing Regulations of the Labour Law.
This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.
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