How Saudi Labor Law Determines End of Service Pay

End of Service Pay is a legal right for employees in Saudi Arabia. Saudi Labor Law explains the rules for calculating this pay. The law helps both employers and employees understand their rights and duties when employment ends.

End of Service Pay, also known as EOS, supports employees after leaving a job. It is a financial reward for the time and effort spent working for an employer.

Key Rules of Saudi Labor Law for EOS

Saudi Labor Law sets clear conditions for End of Service Pay. The law explains when employees can claim EOS and how to calculate it based on years of service.

The law applies to all employees working under a contract in Saudi Arabia. Both Saudi and foreign workers can claim EOS when their contract ends.

When End of Service Pay Applies

End of Service Pay is given when:

• The employer ends the contract.
• The employee resigns.
• The contract ends on its own.
• The employee dies.
• The employee cannot work due to health issues.

EOS does not apply if the employee is dismissed for serious misconduct.

How to Calculate End of Service Pay

Saudi Labor Law provides a clear framework for calculating End of Service (EOS) benefits. The final payout depends on several key factors, including the type of employment contract, fixed or unlimited, and the total duration of the employee's service. Understanding these criteria is essential for both employers and employees to ensure fair compensation upon termination or resignation.

To simplify this process, many companies and HR professionals rely on tools like the End of Service Calculator, which helps accurately determine the EOS amount based on legal guidelines. By inputting relevant details such as contract type, service duration, and salary, the calculator provides a quick and reliable estimate. This ensures compliance with Saudi Labor Law and eliminates confusion, making it a valuable resource for workforce planning and employee settlement.

Calculation for Less Than Two Years

If the employee resigns before completing two years, no End of Service Pay is given. The law excludes this period from EOS benefits.

Calculation for Two to Five Years

If the employee resigns after two years but before five years, the employee receives one-third of the EOS amount. The amount is based on half a month’s salary for each year of service.

Calculation for Five to Ten Years

If the employee resigns after five years but before ten years, the employee receives two-thirds of the EOS amount. The EOS is calculated as:

• Half a month’s salary for each of the first five years.
• Full month’s salary for each year after five years.

Calculation for More Than Ten Years

If the employee resigns after ten years, the employee receives the full End of Service Pay. The calculation is:

• Half a month’s salary for each of the first five years.
• Full month’s salary for each year after five years.

When Employer Ends the Contract

If the employer ends the contract for reasons not related to misconduct, the employee receives full EOS. The calculation is the same:

• Half a month’s salary for each of the first five years.
• Full month’s salary for each year after five years.

Special Cases for EOS Calculation

Saudi Labor Law covers special cases for EOS:

Death or Permanent Disability

If an employee dies or suffers a permanent disability, the employee or the family receives full End of Service Pay regardless of years worked.

Female Employees Leaving After Marriage or Childbirth

If a female employee leaves her job within six months after marriage or within three months after giving birth, she is entitled to full EOS.

Resignation for Unfair Treatment

If an employee resigns due to unfair treatment, unsafe work, or serious harm from the employer, the employee is entitled to full EOS.

Payment Rules and Deadlines

The employer must pay EOS within one week after the contract ends. Delay in payment can cause legal penalties.

EOS should be paid in the same method as regular wages unless both parties agree on another method.

Contract Types and EOS

There are two main types of contracts in Saudi Arabia:

Fixed-Term Contract

For a fixed-term contract, EOS is calculated based on the time worked until the contract ends or is terminated.

Unlimited Contract

For an unlimited contract, EOS is based on the total years of service until the resignation or termination.

EOS and Misconduct Termination

Employees dismissed for serious misconduct lose their right to EOS. Misconduct includes dishonesty, assault, or absence without valid reason.

The employer must have proof of misconduct to deny EOS.

How to Claim End of Service Pay

Employees should request EOS after the contract ends. If the employer refuses to pay, the employee can file a complaint with the Saudi Labor Office.

• The Saudi Labor Office helps employees resolve payment disputes.
• Saudi Ministry of Human Resources and Social Development (MHRSD) Role
• The MHRSD monitors EOS payments and ensures that employers follow Saudi Labor Law.
• The ministry also offers a calculator on its website to help employees check their expected EOS.

Important Notes for Employees and Employers

• EOS is a right under Saudi Labor Law.
• Employees should keep copies of contracts and salary records.
• Employers must follow correct EOS calculation and payment rules.
• Both parties should understand EOS terms in the contract.

Summary

End of Service Pay in Saudi Arabia is a legal benefit supported by Saudi Labor Law. It provides financial security to employees when their employment ends.

Saudi Labor Law explains when employees can claim EOS and how to calculate it based on years of service. The law protects employees and ensures fair treatment by employers.

Both employees and employers should understand the rules to avoid conflicts. Following Saudi Labor Law helps create a fair work environment and supports the rights of all workers.