Understanding your End of Service Benefits (ESB) is crucial for every employee working in Saudi Arabia. Whether you’re an expatriate or a Saudi national, using an End of Service Benefit Calculator helps you accurately calculate your gratuity and ensures you receive fair compensation when leaving your job.
What Are End-of-Service Benefits in Saudi Arabia?
End-of-Service Benefits (ESB), also known as gratuity or “مكافأة نهاية الخدمة” in Arabic, represent a lump-sum payment that employers must provide to employees upon termination of their employment contract. This mandatory benefit is governed by the Saudi Labor Law (Royal Decree No. M/51) under Articles 84-88.
The ESB serves as a financial safety net, recognizing an employee’s dedication and service to their employer over the years.
Key Entities Governing ESB
| Entity | Role |
| Ministry of Human Resources and Social Development (HRSD) | Primary regulatory body |
| General Organization for Social Insurance (GOSI) | Manages pension contributions |
| Saudi Labor Courts | Handles disputes related to ESB |
ESB Calculation Formula for 2026
The Saudi Labor Law prescribes a specific formula for calculating end-of-service benefits based on years of service:
Standard Calculation Method
| Years of Service | Calculation Rate |
| First 5 years | Half month’s salary for each year |
| Beyond 5 years | Full month’s salary for each year |
Formula Breakdown
ESB = (Basic Salary ÷ 2) × Years (1-5) + (Basic Salary × 1) × Years (6+)
Important Note: The calculation is based on the last drawn basic salary plus housing allowance (if applicable). Commissions and overtime are generally excluded unless specified in the employment contract.
2026 ESB Calculator: Step-by-Step Guide
Step 1: Gather Required Information
Before using any calculator, collect the following:
- ✅ Last basic salary
- ✅ Housing allowance (if part of the package)
- ✅ Total years and months of service
- ✅ Reason for termination (resignation/termination/contract end)
Step 2: Calculate Your Service Period
Convert your total service into years and months. For partial years:
| Months Worked | Proportional Calculation |
| 1-6 months | Pro-rated accordingly |
| 7-12 months | Pro-rated accordingly |
Step 3: Apply the Formula
Example Calculation for 2026:
| Parameter | Value |
| Basic Salary | SAR 10,000 |
| Housing Allowance | SAR 2,500 |
| Total Years of Service | 8 years |
| Reason | Contract Completion |
Calculation:
- Total Wage = SAR 12,500
- First 5 years: (12,500 ÷ 2) × 5 = SAR 31,250
- Remaining 3 years: 12,500 × 3 = SAR 37,500
- Total ESB = SAR 68,750
ESB Entitlement Based on Termination Reason
The reason for ending employment significantly impacts your ESB entitlement. Here’s a comprehensive breakdown for 2026:
Resignation Entitlements
| Service Duration | ESB Entitlement |
| Less than 2 years | No entitlement |
| 2-5 years | One-third of total ESB |
| 5-10 years | Two-thirds of total ESB |
| More than 10 years | Full ESB |
Termination by Employer
| Scenario | Entitlement |
| End of contract | Full ESB |
| Termination without cause | Full ESB + compensation |
| Termination under Article 80 | No ESB |
Special Circumstances (Article 87)
Female employees resigning within 6 months of marriage or 3 months of childbirth are entitled to full ESB regardless of service duration.
What’s Included in ESB Calculation?
Understanding which components count toward your ESB is essential:
Included Components
| Component | Status |
| Basic Salary | ✅ Included |
| Housing Allowance | ✅ Included |
| Fixed Monthly Allowances | ✅ Included |
| Transportation (if fixed) | ✅ Included |
Excluded Components
| Component | Status |
| Overtime Pay | ❌ Excluded |
| One-time Bonuses | ❌ Excluded |
| Commission (variable) | ❌ Usually Excluded |
| Annual Tickets | ❌ Excluded |
| Medical Insurance | ❌ Excluded |
Online ESB Calculators: Top Resources for 2026
Several official and trusted platforms offer ESB calculators:
1. HRSD Official Calculator
- Website: HRSD Portal
- Features: Arabic/English, official calculations
- Accuracy: Highest (government-backed)
2. GOSI Calculator
- Website: GOSI Portal
- Features: Integrated with social insurance
- Best For: Employees wanting combined view
3. Qiwa Platform
- Website: Qiwa
- Features: Employment services integration
- Best For: Contract-related calculations
2026 Updates and Changes to Saudi Labor Law
Several amendments affect ESB calculations in 2026:
Key Changes
- Digital Documentation: All employment contracts must be registered on Qiwa platform
- Payment Timeline: ESB must be paid within one week of termination
- Dispute Resolution: Enhanced labor court procedures for faster resolution
- Remote Work Provisions: Clarified ESB entitlements for remote employees
GOSI Contribution Impact
For employees registered with GOSI, certain adjustments apply:
| Category | GOSI Impact on ESB |
| Saudi Employees | ESB adjusted for pension contributions |
| Expatriates | Full ESB without GOSI deduction |
Common ESB Calculation Mistakes to Avoid
Mistake #1: Excluding Housing Allowance
Many employers incorrectly calculate ESB using only basic salary. The law requires including a housing allowance.
Mistake #2: Incorrect Service Period Calculation
Ensure you calculate exact months, not just complete years.
Mistake #3: Applying Wrong Resignation Rates
Remember the tiered system for resignations (one-third, two-thirds, full).
Mistake #4: Forgetting Probation Period
The probation period counts toward the total service for ESB purposes.
ESB vs. Pension: Understanding the Difference
| Aspect | End of Service Benefits | GOSI Pension |
| Eligibility | All employees | Saudi nationals primarily |
| Payment Type | Lump sum | Monthly pension |
| Calculation Basis | Last salary × years | Contribution-based |
| Funding | Employer-funded | Employee + Employer contributions |
Practical ESB Calculation Chart for 2026
Use this quick reference chart for common scenarios:
| Monthly Salary (SAR) | 5 Years Service | 10 Years Service | 15 Years Service |
| 5,000 | 12,500 | 37,500 | 62,500 |
| 10,000 | 25,000 | 75,000 | 125,000 |
| 15,000 | 37,500 | 112,500 | 187,500 |
| 20,000 | 50,000 | 150,000 | 250,000 |
| 25,000 | 62,500 | 187,500 | 312,500 |
Based on full entitlement (contract completion/termination)
How to Claim Your ESB: Process Overview
Required Documents
- Valid Iqama (residency permit)
- Employment contract copy
- Salary certificate/last payslip
- Termination letter
- Bank account details
Timeline
| Stage | Duration |
| Submission | Day 1 |
| Employer Processing | 1-7 days |
| Payment Release | Within 7 days of termination |
| Dispute Filing (if needed) | Within 12 months |
Conclusion
Understanding how to calculate your end of service benefits using a 2026 calculator ensures you receive rightful compensation for your years of service in Saudi Arabia. Whether you’re planning to resign, facing termination, or simply completing your contract, knowing the exact formula and your entitlements protects your financial interests.
For accurate calculations, always use official platforms like the HRSD calculator and keep documentation of your employment terms. If disputes arise, Saudi labor courts provide accessible channels for resolution.
Need to calculate your ESB? Visit the official HRSD portal or use the formula provided above to determine your exact entitlement.
Frequently Asked Questions (FAQs)
Can I negotiate a higher ESB?
Yes, employment contracts can include better terms than the minimum legal requirement.
Do unpaid leave periods affect ESB?
Yes, extended unpaid leave may be deducted from total service years.
Is ESB taxable in Saudi Arabia?
No, Saudi Arabia has no personal income tax, making ESB completely tax-free.
Can my employer refuse to pay ESB?
No, ESB is a legal obligation. Refusal can be reported to the Labor Office.
