End-of-Service Center: Gratuity Scenarios by Years of Service
The same years of service can mean two entirely different gratuities depending on the reason for termination. This center explains every tier under Articles 84 and 85 with a worked example, so you know exactly where you stand now, and how much waiting a few extra months can change your gratuity.
Guide steps
Why does the gratuity differ radically depending on the reason for termination?
Under Article 84, "full entitlement" is calculated with a fixed formula regardless of the reason for termination: half a month's wage for each of the first 5 years, then a full month's wage for each year after that. But Article 85 applies a reduction percentage to this full entitlement exclusively in the case of resignation by the employee themself: zero for less than two years of service, one-third of the gratuity from two years up to less than 5 years, two-thirds from 5 up to less than 10 years, and full entitlement for those who complete 10 years or more.
If the termination is instead initiated by the employer (or by the contract's term expiring, retirement, or exceptional cases such as a woman leaving work after marriage or childbirth), the full gratuity is paid at 100% regardless of years of service — the gradual reduction is a penalty applied only to a voluntary resignation decision, not to termination in general.
The critical timing point: before and after each tier
The biggest thing costing employees large amounts is submitting a resignation just weeks before completing one of the three tiers. An employee who resigns after 1 year and 11 months is entitled to nothing, while if they waited just one more month to complete two full years, they'd immediately be entitled to a full one-third of the gratuity. The same logic applies at the 5- and 10-year thresholds — the difference between a day before completion and a day after can mean thousands of extra riyals.
So, before submitting any resignation letter, first calculate the date you'll complete the next tier via the end-of-service gratuity calculator, and compare the financial difference against the number of weeks or months remaining to wait.
Quick tips
- Check the date you'll complete the nearest tier threshold (two years, 5 years, 10 years) before submitting your resignation — waiting a few weeks can double your gratuity.
- Termination by the employer always grants you the full gratuity — if you have any option to negotiate how the termination happens, this is a fundamental difference.
- The gratuity is calculated on your last actual wage including fixed allowances, so make sure you have the correct figure before any calculation.
- Exceptional cases (such as a woman leaving work after marriage or childbirth, or ending the contract for a reason attributable to the employer) may grant you the full gratuity even though it comes from your side — check whether they apply to your case.
Frequently asked questions
Why is my gratuity at 4.5 years much less than expected?
Because you fall within the "one-third of the gratuity" tier (2 up to less than 5 years) if the termination is a resignation from you. If you wait until you complete a full 5 years, you move directly to the two-thirds tier — a difference of half a year can nearly double your gratuity.
Are partial years (months and days) counted in the gratuity?
Yes, partial years are counted proportionally to the time actually served under the same Article 84 formula (half a month for each of the first 5 years, a full month after that), then the entitlement percentage based on the reason for termination is applied to the full total including fractions.
Do the scenarios differ if the termination is employer-initiated instead of a resignation?
Yes, radically. If the termination is by the employer (or by the contract's term expiring, or retirement), the full gratuity (100%) is due in all scenarios regardless of years of service — the gradual reduction (one-third/two-thirds) applies only in the case of resignation by the employee themself.
What if I have 12 years of service? Do I keep the same post-5-year formula?
Yes, after the first five years (half a month per year), every additional year is calculated at a full month's wage with no upper cap — so the longer you serve after the fifth year, the more each additional year adds to your gratuity, linearly.
Are there cases entitled to the full gratuity despite resigning before 10 years?
Yes, the most notable exceptional cases: a woman leaving work within 6 months of her marriage contract or 3 months after childbirth, leaving work due to force majeure, or ending the contract under Article 81 for a legitimate reason attributable to the employer (such as failing to meet their fundamental obligations) — these cases are treated as employer-initiated termination, not ordinary resignation.