Saudi End-of-Service Award and GOSI Explained (2026)

By Michale · · Saudi Arabia · Figures from dated official sources

In short

The Saudi end-of-service award is half a month's wage for each of the first five years and a full month for each year after, paid in full on employer termination and at one-third (2–5 years), two-thirds (5–10 years) or in full (10+ years) on resignation. GOSI takes 9.75% from Saudi employees and 11.75% from their employer; for expatriates the employer pays 2% only. Since February 2025 the employee notice period on indefinite contracts is 30 days and the employer's 60.

Saudi End-of-Service Award and GOSI Explained (2026)

Two numbers decide what a job in Saudi Arabia is really worth: the end-of-service award that accrues every year you stay, and the GOSI contribution that is or is not deducted from your pay. This guide sets out both under the Labor Law (Royal Decree M/51) and the GOSI rules, including the resignation reductions, the 2025 change to notice periods and what happens when an employer ends a contract without a valid reason. After reading it you will be able to check a final settlement line by line.

Open the Saudi end-of-service calculator →

The end-of-service award (Articles 84 to 87)

The award accrues in two bands and is pro-rated for part years:

Service Accrual per year Cumulative at band end
Years 1 to 5 Half a month’s wage 2.5 months at year 5
Year 6 onwards One full month’s wage 7.5 months at year 10

The wage is the last wage, which in common practice means basic pay plus the regular, fixed allowances written into the contract, such as housing and transport. Variable commission and overtime are not included. The end-of-service calculator takes the wage you enter as the basis, so enter basic plus fixed allowances rather than basic alone.

Termination by the employer

If the employer ends the contract, or a fixed-term contract expires and is not renewed, the employee receives the full accrued amount regardless of length of service. The award must be paid within one week of the contract ending (Article 88).

Resignation: the thirds rule

If the employee resigns, Article 85 reduces the award by service band:

Service at resignation Share of the full award
Under 2 years Nothing
2 to under 5 years One-third
5 to under 10 years Two-thirds
10 years or more Full award

Article 87 restores the full award in some resignation cases, including a woman who resigns within six months of marriage or three months of childbirth. On resignation the employer has two weeks to pay.

Worked example

Seven years of service, SAR 10,000 monthly wage

First five years: 10,000 ÷ 2 × 5 = SAR 25,000. Years six and seven: 10,000 × 2 = SAR 20,000. Full award = SAR 45,000.

If the employer terminated the contract, SAR 45,000 is paid. If the employee resigned, the 5-to-10-year band applies: 45,000 × 2⁄3 = SAR 30,000.

Four years, SAR 8,000, resigned: full award 8,000 ÷ 2 × 4 = SAR 16,000; one-third = SAR 5,333.

GOSI contributions

The General Organization for Social Insurance collects monthly contributions on a base of basic salary plus housing allowance, capped at SAR 45,000 a month. Other allowances are excluded. Who pays depends on nationality.

Branch Saudi employee pays Employer pays (Saudi) Employer pays (expatriate)
Pension (annuities) 9% 9% 0%
SANED unemployment insurance 0.75% 0.75% 0%
Occupational hazards 0% 2% 2%
Total 9.75% 11.75% 2%

For a Saudi on SAR 10,000 contributory wage the deduction is 10,000 × 9.75% = SAR 975, net SAR 9,025, and the employer pays SAR 1,175 on top. For an expatriate on the same wage nothing is deducted; the employer pays SAR 200 for occupational hazards. Expatriates have no pension entitlement and therefore no GOSI refund on leaving; the end-of-service award is their retirement provision.

Saudis first registered on or after 3 July 2024 fall under the 2024 Social Insurance Law, which starts the pension contribution at 9% each and raises it by half a point a year from the second year to 11%. The rules file used by the GOSI calculator models 10% each from 1 July 2026 for this group, derived from that schedule and marked as needing confirmation on gosi.gov.sa. The Saudi salary calculator lets you pick old-law, new-law or expatriate and shows take-home, employer cost and the end-of-service accrual together.

Notice periods after the 2025 amendments

Royal Decree M/44 of 2024, in force from 18 February 2025, changed Article 75. On an indefinite contract with monthly pay the employer must give 60 days’ notice, while the employee’s notice was cut from 60 to 30 days. Fixed-term contracts end on expiry without notice. Either side can pay in lieu of notice at the wage rate for the days not worked.

Termination without a valid reason: Article 77

Where a party ends a contract without one of the valid reasons in Articles 80 and 81, Article 77 adds compensation on top of notice pay and the end-of-service award. On an indefinite contract it is 15 days of actual wage for each year of service; on a fixed-term contract it is the wages for the remaining term. In either case it cannot be less than two months’ wage, unless the contract fixes a different amount. For an employee on SAR 11,000 dismissed after three years and four months the formula gives SAR 18,333, so the two-month minimum of SAR 22,000 applies; with 60 days’ notice pay and the end-of-service award the employer owes about SAR 62,333. The Article 77 compensation calculator runs all three lines.

What people get wrong

  • Calculating the award on basic only. Fixed allowances in the contract are part of the wage. An employer that excludes a SAR 2,500 housing allowance understates the award by a quarter on a SAR 10,000 package.
  • Applying the thirds to a termination. The reduction is for resignation only. Non-renewal of a fixed-term contract is treated as termination and pays in full.
  • Deducting GOSI from expatriates. Expatriates pay nothing; only the employer’s 2% hazards contribution applies.
  • Applying GOSI to the whole package. The base is basic plus housing up to SAR 45,000, not transport or other allowances.
  • Using the old 60-day employee notice. It has been 30 days since February 2025.
  • Ignoring untaken leave. Article 111 pays out accrued annual leave (21 days a year, 30 after five years) at the end of service.

Frequently asked questions

Is the end-of-service award taxed or subject to GOSI?

No. Saudi Arabia has no personal income tax and the award is not a contributory wage for GOSI.

What is the award after ten years on SAR 10,000?

2.5 months for the first five years plus five months for the next five is 7.5 months: SAR 75,000, paid in full even on resignation.

Does GOSI apply above SAR 45,000?

No. Contributions are calculated on basic plus housing up to SAR 45,000 a month; the excess is not contributory.

Can the employer deduct the expatriate levy or Iqama fees from my award?

No. Article 40 puts work-permit and levy costs on the employer, and they cannot be set off against end-of-service dues.

How quickly must the final settlement be paid?

Within one week if the employer ended the contract and within two weeks if the employee resigned, under Article 88.

Sources