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End of Service Benefits Gratuity Calculation in Saudi Arabia

Every employee working in Saudi Arabia has a day come in his life when he/she leave the company and in response company pay him his End of Service Benefits(ESB). The benefits also called Gratuity pr termination benefits and calculation of these benefits is a top issue for every employee due to many different laws which govern the calculation of Benefits. Employees get his benefits according to his total period of Job also whether he/she terminated his job contract or resign from his job. The discussion is in this article is quiet lengthy as laws were also defined with some real life examples so be patient to read them. Article: MOL Labor Rights and Law Awareness Portal in KSA

Benefits in Case of Resignation from Company:

The first thing we discuss about how much end of service benefits employee get when he/she resigns from his job there total of 4 situations with examples. These were mentioned in Article 80 and 81 of Saudi Labor Laws.

1. Resignation from Job Before Two Years: Every employee in Saudi Arabia must be clearly mention this in his mind that if he/she resigns from his job before completing Two Years of Job period there is no End of Service Benefits given to him.

2. Resignation From Job after two years but before 5 Years: If any employee resigns from his job after completing 2 years but before 5 years which is in between 2-5 years that employee has been awarded with 1/3 of Entitlement and to be given with half of salary as ESB award. The percentage of salary is 16.67%.

Illustration: 

If employee resigned from his Job after completion of 4 years
Last Drawn Salary: 11000 SAR
Total Number of Years: 4
Calculation: 11,000 x 16.67% x 4
Total ESB: 7,334 SAR

3. Resignation form Job after 5 year but before 10th year: If any employee resigns from his job after completing 5 years but before 10 years which is in between 5-10 years than employee has been awarded with 2/3rd of entitlement of his last drawn salary. In this case ESB award is given to employee half of his first 5 years and full ESB award for his last 5 years salary. Percentage for salary in first 5 years is 33.33% and for next 5 years is 66.67%.

Illustration: 

If employee resigned from his Job after completion of 4 years
Last Drawn Salary: 11000 SAR
Total Number of Years: 4
Calculation: 11,000 x 16.67% x 4
Total ESB: 7,334 SAR

4. Resignation form Job After 10 years: Those employees working in Saudi Arabia resign from their job completed 10 years or more will be awarded with full percentage of his last drawn salary in this case ESB is half of his first 5 years and full ESB for his continuing years. Percentage for salary in first 5 years is 50% and for next 5 years is 100%.

Gratuity Calculation Laws in United Arab Emirates

Benefits in Case of Termination of Job Contract:

If employee is terminated by  company forcefully there are two possible cases were applied in terms of ESB

  1. If employee is terminated before completing 5 years of his service than he/she is entitled for full entitlement and half salary in ESB award
  2.  Those employee who completed more than 5 years of stay in company than he/she is given with full entitlements and half salary for first 5 years and full salary for rest of the years in EOSB award.

EOSB in Case of Child Birth and Marriage of Women:

If female worker is expecting child and she applied for resignation before six month than she will be given with full ESB award and if female worker having marriage and she applied for resignation before 3 months than she will be entitled for ESB award.

Calculation of EOSB on MOL:

First of all check detail days months and years for employee is work in same company. As after finding exact number of time period it is totally assured that ESB is collected correctly. Another thing which is to be considered is last latest wage given to employee as ESB is based on last salary received by employee. And keep in mind if any employee worked for half year in above cases than the ESB is calculated proportionally.

To calculate how much ESB you have to be given from employer check out this easy to use web app developed by MOL Saudi ARabia to promote labor education.

http://www.laboreducation.gov.sa/en/Contracts/End-of-Service-Award-Cal-5823

What is included in ESB?

The esb includes Basic Salary, Housing allowance, transportation allowance, travel tickets etc.

esb calculation in ksa

ESB Due to Disability to Work?

Article: Death Compensation In Saudi Arabia

Another thing in case of disability of employee to perform regular work such as accident, permanent body part disability, death than full payment of ESB is given to employee.

Article: Holidays Leaves and Vacation laws in Saudi Arabia

  • Mhmd U Frhn

    My contract one year if I resigned in one I’m not eligible for graduity or what

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