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How to Compute Gratuity Pay in Saudi Arabia

In Saudi Arabia, if you resigned or get terminated from your work, you don’t only get to serve the notice period for your employer. As a token of appreciation of all your hard work, you are also entitled to an end of service benefit or what they call gratuity pay. Provided you worked for a year or more for the same employer, you will get your compensation at the end of your service period.

Also Read: UAE Guide When An Employer Doesn’t Pay You on Time

Expats find it exhausting to work for a long period of time in the same company and even find it disappointing when they hear the news that they won’t be getting any amount at the end of their contract. Particularly in Saudi Arabia, there is a so-called end of service benefit that awaits you at the end of your service period. To learn how to compute it, here’s a guide we made for you.

Computation Gratuity Pay

Calculate Your End of Service Benefit (ESB) in Saudi Arabia

In the Middle East, employees who worked just for years get gratuity pay, in Saudi Arabia, you have to work for 2 years or more before you become entitled to such benefits. If you did not meet this first requirement, you won’t be getting any from your employer at the end of your service period. To calculate your end of service benefit, follow the formula below.

  • Here are the formulas if the employee resigns from his/her job.

    • In between 2 to 5 years of employment, the employee will get an ESB equivalent to 1/3 of his/her half salary (Basic Salary x 1/2 x 1/3)
    • In between 5 to 10 years of employment, the employee will get an ESB equivalent to 2/3 of his/her full salary (Basic Salary x 2/3). Keep in mind that the first 1/3 of the amount will be given to the employee after the first 5 years of employment and the rest will be on the 5 years or less.
    • If the employment is above 10 years, the employee will get an ESB equivalent to his/her full salary. The first 50% will be given during the first 5 years and the next 50% will be in the next 5 years.
  • Here are the formulas if the employer terminates an employee.

    • If the employment is less than 5 years, the ESB is equivalent to half of the employee’s salary.
    • If the employment is more than 5 years, the ESB is equivalent to an employee’s full salary.

Also Read: How To Transfer Your Money as an Expat Abroad

The computation is simple math. It is better to have your own calculation to make sure your employer is paying you the right amount. The formula is based on the provisions on end of service benefits in Saudi Arabia. In case you want to protest about your ESB, have your employer take a look at your calculation.

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