Calculate Your EOSB
What is EOSB (End of Service Benefits) in Saudi Arabia?
End of Service Benefits (EOSB), also known as end-of-service gratuity or severance pay, is a mandatory statutory payment that Saudi employers must provide to employees upon termination of employment. Governed by Saudi Labor Law Articles 84, 85, and 87, EOSB is calculated based on the employee's final actual wage and total length of service in the Kingdom of Saudi Arabia (KSA).
EOSB Calculation Formula
The EOSB formula under Saudi Labor Law Article 84: First 5 years = 0.5 month per year. After 5 years = 1 month per year. For resignation (Article 85), the amount is reduced based on service length.
Basic Formula
- First 5 years: 0.50 months salary per year
- More than 5 years: 1.00 month salary per year
Resignation Rules (Article 85)
- < 2 years: 0.00% of EOSB
- 2-5 years: 33.33% of EOSB
- 5-10 years: 66.67% of EOSB
- 10+ years: 100.00% of EOSB
Termination
Full EOSB amount regardless of service years.
What is Actual Wage?
The basis for calculating EOSB is the Actual Wage, which includes Basic Wage plus all fixed allowances such as Housing and Transportation allowances.
Example Calculation
Example: Monthly Salary: 5,000 SAR, Years of Service: 5 years
First 5 years: 5,000 × 0.5 × 5 = 12,500 SAR
Total EOSB: 12,500 SAR
Frequently Asked Questions
What is EOSB in Saudi Arabia?
EOSB (End of Service Benefits) is a statutory payment that employers must provide to workers upon termination of employment. It is calculated based on the worker's Actual Wage and years of service under Saudi Labor Law Articles 84 and 85.
How is EOSB calculated in Saudi Arabia?
EOSB is calculated as follows: First 5 years = 0.50 months salary per year. After 5 years = 1.00 month salary per year. The calculation is based on your Actual Wage (Basic Salary + Fixed Allowances).
What happens if I resign?
If you resign, your EOSB entitlement depends on service length: Less than 2 years = 0%, 2-5 years = 33.33%, 5-10 years = 66.67%, 10+ years = 100%.
Is EOSB mandatory in Saudi Arabia?
Yes, EOSB is mandatory under Saudi Labor Law. All employers must provide end of service benefits to employees upon contract termination, regardless of the reason for termination.
How does the probation period affect EOSB entitlement?
If the employment contract ends during the agreed probation period (typically 90 days, extendable), the worker is not entitled to EOSB for that period. EOSB calculation begins from the date the worker is confirmed after completing the probation period.
Is EOSB calculated on basic salary only or actual wage?
EOSB is calculated based on the "Actual Wage" (الأجر الفعلي), not just the basic salary. Actual Wage includes: basic salary + housing allowance + transportation allowance + any other fixed allowances the worker receives regularly. Variable payments such as overtime or non-fixed commissions are not included in the EOSB calculation base.
What happens to EOSB when transferring sponsorship (kafala) or changing employers?
When a worker transfers to a new employer (sponsorship transfer/نقل الكفالة), they are entitled to receive full EOSB for their entire service period with the previous employer. A new service period begins with the new employer. EOSB balances cannot be transferred between employers without the worker's explicit written consent.
Can expatriate workers claim EOSB in Saudi Arabia?
Yes. Expatriate workers under Saudi Labor Law contracts are entitled to the same EOSB benefits as Saudi nationals, calculated based on their actual wage and years of service.
Are allowances included in EOSB calculation?
Yes. Fixed allowances such as Housing, Transportation, and other regular allowances are part of the Actual Wage and must be included in the EOSB calculation base.
Is EOSB taxable in Saudi Arabia?
Generally, EOSB is not subject to income tax in Saudi Arabia for Saudi nationals. However, tax treatment may vary for expatriates depending on their home country tax obligations.
What is the difference between resignation and termination EOSB?
Termination by employer = Full EOSB regardless of service years. Resignation = Reduced EOSB based on service length (0% to 100%). Article 80 dismissal = No EOSB.
How long does it take to receive EOSB?
Employers must pay EOSB within one week of contract termination. If there is a dispute, the case can be filed with the Saudi Labor Courts for resolution.