Saudi Article 77 Compensation Calculator (Termination) 2026
Compensation owed when a Saudi employment contract is ended without a valid reason: 15 days of wages per year (indefinite) or the remaining-term wages (fixed), the two-month minimum, notice pay in lieu and the end-of-service award.
| Wage used (basic + fixed allowances) | — |
|---|---|
| Formula | — |
| Two-month minimum | — |
| Notice pay in lieu (Art. 75/76) | — |
| End-of-service award (Art. 84) | — |
| Total owed to the employee | — |
In short
Article 77 of the Saudi Labor Law makes a party that ends a contract without a valid reason pay 15 days of actual wages (basic plus fixed allowances) per year of service on an indefinite contract, or the wages for the remaining term on a fixed-term contract, never less than two months of wages — on top of notice pay in lieu (60 days from the employer, 30 from the employee) and the end-of-service award; an employer dismissing a SAR 11,000-a-month employee after 3 years 4 months without notice owes about SAR 62,300.
Who this is for: Employees dismissed without a valid reason in Saudi Arabia, employees considering leaving a fixed-term contract early, and HR teams costing a termination before deciding.
Article 77: compensation for ending a contract without a valid reason
If either party ends an employment contract without a valid reason (one not listed in Articles 80 or 81), Article 77 of the Saudi Labor Law makes them compensate the other. On an indefinite contract the amount is 15 days of wages for each year of service; on a fixed-term contract it is the wages for the rest of the term. In both cases the floor is two months of wages. The wage is the actual wage — basic plus fixed allowances such as housing and transport — and the parties may agree a different amount in the contract, which then replaces the formula.
Compensation is in addition to everything else owed: notice pay in lieu if notice was not given (60 days from the employer, 30 from the employee since the February 2025 amendments), the end-of-service award under Articles 84–85 (half a month per year for the first five years, a month per year after, reduced to a third or two-thirds on resignation), unpaid salary and leave. The calculator shows each line so the full settlement is visible.
See also: Saudi End of Service Calculator (EOSB), Saudi Final Settlement Calculator, Saudi Annual Leave & Leave Encashment Calculator.
Assumptions
- Wage = basic + fixed allowances; daily wage = wage ÷ 30.
- Indefinite: 15 days × years of service (fractions counted); fixed-term: wage × months remaining; minimum two months of wages in either case.
- Notice pay in lieu: 60 days (employer) or 30 days (employee) on indefinite contracts when notice is not worked; none on fixed-term.
- End-of-service award per Articles 84–85, with the resignation fractions (none < 2 years, one-third 2–5, two-thirds 5–10, full 10+).
Worked example
Wage SAR 11,000. Article 77 formula: 15 days × 3.33 years × SAR 366.67 = SAR 18,333, which is below the two-month minimum of SAR 22,000 — so SAR 22,000 applies. Notice in lieu 60 days = SAR 22,000. End-of-service: 0.5 × 3.33 × 11,000 = SAR 18,333. Total owed SAR 62,333 plus unpaid salary and leave.
Frequently asked questions
What is Article 77 compensation?
The amount owed when a contract is ended without a valid reason: 15 days' wages per year of service (indefinite contracts) or the remaining-term wages (fixed-term), with a two-month minimum.
Is it based on basic salary?
No — on the actual wage: basic plus fixed allowances such as housing and transport, excluding variable commission and overtime.
Does the employee ever pay it?
Yes. Since the 2015 amendment the article applies to either party, so an employee who walks out of a fixed-term contract without an Article 81 reason can be liable for the remaining-term wages (minimum two months).
Is there a maximum on fixed-term compensation?
No statutory cap — a year left on the contract means a year's wages — unless the contract itself fixes a lower agreed amount.
What counts as a valid reason?
Article 80 reasons for employers (serious misconduct, fraud, absence without cause) and Article 81 reasons for employees (unpaid wages, abuse, unsafe work). Redundancy is not an Article 80 reason.
Did the 2025 amendments change Article 77?
No. They cut the employee's notice on indefinite contracts to 30 days, extended probation and maternity leave, but left Article 77 as it was.
Is compensation taxed or subject to GOSI?
No. Saudi Arabia has no income tax on individuals, and termination compensation is not a GOSI-contributory wage.
How long do I have to claim?
Labour claims must be filed within 12 months of the end of the employment relationship, starting with a Friendly Settlement request on the MHRSD platform.
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