End-of-service pay is the figure everyone asks about when employment ends, and Article 84 is its only source. The article is short and the formula is clear; the disputes are in the detail: which wage is the base, how part years are treated, and when the amount is reduced or forfeited.
Article 84 states the rule; the articles after it qualify it. Article 85 reduces the gratuity on resignation, Article 86 allows commissions to be excluded by agreement, Article 87 restores it in full in defined cases, and Article 80 forfeits it.
The text of the article
On the ending of the employment relationship, the employer shall pay the worker an end-of-service award calculated at half a month's wage for each of the first five years and one month's wage for each of the following years. The final wage is taken as the basis of calculation, and the worker is entitled to an award for parts of a year in proportion to the period served.
Status of the text: This article has not been amended; the text below is the original operative text.
The Arabic text published by the Bureau of Experts at the Council of Ministers is the reference; the English above is a working translation.
What the article means in practice
The formula worked through
Final wage 10,000 riyals, seven years of service: the first five years give half a month each, that is 5,000 × 5 = 25,000; the following two years give a full month each, that is 20,000; total 45,000 riyals.
For three years and six months, the calculation is half a month per year with the six months counted in proportion, giving 17,500 riyals.
The final wage, not the basic wage
The text says the final wage is the basis, and Article 2 defines the wage as the basic wage plus established allowances and increments, so housing and transport allowances belong in the calculation. Limiting it to the basic wage understates the entitlement.
One exception is allowed by Article 86: the parties may agree that commissions and percentages of sales, which fluctuate by nature, are excluded from the base.
When the award is reduced or lost
Resignation brings the sliding scale of Article 85: nothing before two years, a third from two to five, two thirds from five to ten, and the full amount after ten. Dismissal under Article 80 forfeits it entirely.
It is restored in full despite resignation in the cases of Article 87: leaving because of force majeure beyond the worker's control, and a female worker ending her contract within six months of marriage or three months of giving birth.
What belongs in the calculation
- 1The basic wage plus established allowances and increments, including housing and transport.
- 2The full period of service in years, months and days, not whole years only.
- 3The ground on which the relationship ended, since it decides full payment, the resignation scale, or forfeiture.
- 4Commissions and sales percentages excluded only where a written agreement does so under Article 86.
- 5Payment for untaken leave as a separate line under Article 111.
Mistakes that recur in practice
Calculating on the basic wage alone
The text says the final wage, and the statutory wage includes established allowances and increments.
Ignoring part years
The text expressly grants an award for parts of a year in proportion, so service is not rounded down to whole years.
Applying half a month to every year
Half a month applies to the first five years only; each year after that earns a full month.
Merging gratuity with leave pay
They are separate entitlements under separate articles, and combining them hides a shortfall in one.
How Barez applies this article
Computed from the employee file
Start date, final wage and termination ground already sit in the file, so the figure comes out without manual entry.
The ground changes the result
Selecting the ground in Barez applies the resignation scale, full entitlement or forfeiture, rather than leaving it to the accountant.
The settlement separates the lines
Gratuity, leave pay, dues and debts appear as distinct lines for both sides to check.
Sources
- Saudi Labour Law, Bureau of Experts at the Council of Ministers
- Ministry of Human Resources and Social Development
This page is explanatory guidance, not legal advice. In a dispute, rely on the official text and consult the Ministry of Human Resources and Social Development or a licensed lawyer.