--- title: "How to Calculate End-of-Service Benefits (ESB) in Saudi Arabia: A Complete Guide" description: Calculate End-of-Service Benefits (ESB) in Saudi Arabia with this guide. Learn eligibility, formulas, legal updates & automate ESB with ZenHR. image: https://blog.zenhr.com/hubfs/End-of-Service_Blog-Image-EN.png --- [![ZenHR Logo](https://cdn.prod.website-files.com/6512cbc4fa8d0ecb482a233b/692c23776fa13080da88bb57_logo-dark.svg) ![ZenHR Logo](https://cdn.prod.website-files.com/6512cbc4fa8d0ecb482a233b/692c23776fa13080da88bb57_logo-dark.svg) ZenHR Logo](https://www.zenhr.com/en) Menu button - ZenHR Software [All Modules](https://www.zenhr.com/en/modules) [Payroll](https://www.zenhr.com/en/modules/payroll) [Time Management](https://www.zenhr.com/en/modules/attendance-and-time-tracking) [Employee and Manager Self-Service (ESS & MSS)](https://www.zenhr.com/en/modules/employee-self-service) [Employee Management](https://www.zenhr.com/en/modules/employee-management) [Performance Evaluation](https://www.zenhr.com/en/modules/performance-and-evaluation) [Reporting & Analytics](https://www.zenhr.com/en/modules/reporting-and-analytics) [ZenATS Applicant Tracking System (ATS)](https://www.zenhr.com/en/modules/applicant-tracking-system) [Earned Wage Access (ZenEWA)](https://www.zenhr.com/en/earned-wage-access-zenewa) [Mobile App](https://www.zenhr.com/en/mobile) [HR Software for Construction Companies](https://www.zenhr.com/en/construction-industry) [HR Software for IT Companies](https://www.zenhr.com/en/it-industry) [HR Software for F&B Companies](https://www.zenhr.com/en/food-and-beverage-industry) [HR Software for Retail Companies](https://www.zenhr.com/en/retail-industry) [HR Software for Real Estate Companies](https://www.zenhr.com/en/real-estate-industry) [HR Software for Enterprise Companies](https://www.zenhr.com/en/enterprise-hr-software) - 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These benefits serve as financial compensation, ensuring job security and acknowledging employees’ contributions. Whether you are an employee or an employer, understanding the ESB calculation process is crucial to avoid disputes and ensure compliance with Saudi regulations. In this comprehensive guide, we will cover everything you need to know about ESB in Saudi Arabia, including calculation methods, eligibility criteria, legal updates, and tools for automated calculations.   [Service Termination Benefits Calculator](https://www.zenhr.com/en/service-termination-benefits-calculator)   ## **What is End-of-Service Benefits (ESB) in Saudi Arabia?** End-of-service benefits ( مكافأة نهاية الخدمة ) are lump-sum payments that employees receive at the end of their employment. These payments are mandated under Saudi labor law and are based on the employee’s salary and years of service. The purpose of ESB is to recognize employees' service and provide financial security after leaving a job. ## **Who is Eligible for End-of-Service Benefits?** According to Saudi Labor Law, ESB applies to all employees, whether they are on a fixed-term or indefinite contract. However, the amount of compensation depends on various factors, including: - The **length of service** - The **reason for termination** (resignation, employer termination, force majeure, etc.) - The **type of contract** (fixed-term or unlimited) ## **How to Calculate End-of-Service Benefits in Saudi Arabia?** The calculation of ESB follows a structured formula under Saudi labor regulations. The rules for calculating ESB are as follows:  ### **1. If an Employee Resigns:** - Less than **2 years of service** → **No ESB entitlement** - Between **2 and 5 years of service** → **Entitled to 1/3 of ESB** - Between **5 and 10 years of service** → **Entitled to 2/3 of ESB** - More than **10 years of service** → **Entitled to full ESB** ### **2. If the Employer Terminates the Employee:** - Full ESB entitlement, regardless of the length of service, unless the termination is due to disciplinary reasons. ### **3. General ESB Calculation Formula:** - **For the first five years**, **Half a month’s salary for each year** - **After five years**: **One full month’s salary for each additional year** ### ***Example Calculation:*** *Let’s assume an employee has a **basic salary of SAR 10,000** and has worked for **7 years**:* - ***For the first 5 years:*** - ***5 × (10,000 ÷ 2) = SAR 25,000*** - ***For the additional 2 years:*** - ***2 × 10,000 = SAR 20,000*** - ***Total ESB = SAR 45,000*** *If the employee **resigns** after **2 to 5 years**, they only get **1/3 of the ESB**:* - ***45,000 × (1 ÷ 3) = SAR 15,000*** *If they **resign** after **5 to 10 years**, they get **2/3 of the ESB**:* - ***45,000 × (2 ÷ 3) = SAR 30,000*** ## **Special Cases & Legal Considerations** ### **1. End-of-Service Benefits for Female Employees** Women employees receive **full ESB** if they resign within: - **6 months of marriage** - **3 months after childbirth** ### **2. End-of-Service Benefits in Force Majeure Situations** Saudi labor laws protect employees in force majeure cases, which may include: - **Salary reductions** aligned with actual working hours. - **Paid leave** from the employee’s annual leave balance. - **Unpaid leave** in exceptional cases. - **Illegal termination** if the employer benefits from **government financial aid**. ### **3. End-of-Service Benefits for Fixed-Term Contracts** - If an employee completes a **fixed-term contract**, they are entitled to full ESB. - If they resign before completing the contract, they may lose ESB depending on contract terms. ### **4. End-of-Service Benefits for Employees on Probation** Employees dismissed **during probation** are **not entitled to ESB**, as probation periods do not count toward the service period. ## **How to Automate End-of-Service Benefits Calculation Using ZenHR?** Manually calculating ESB can be complicated, especially for large companies. **ZenHR’s HR software** simplifies the process, ensuring compliance with Saudi labor law. ### **Benefits of Using ZenHR for End-of-Service Benefits Calculation:** ✅ **Automated calculations** to ensure accuracy and compliance. ✅ **Integration of allowances and benefits** into ESB computation. ✅ **Detailed reports** to provide employees with transparency on their entitlements. ✅ **Customizable settings** for different employment contracts and policies. ## **Frequently Asked Questions (FAQs)** ### **1. What happens if an employee is terminated due to misconduct?** Employees dismissed for **disciplinary reasons** may lose their right to ESB, depending on the severity of the case and labor regulations. ### **2. Are bonuses and allowances included in ESB calculations?** No, ESB is calculated **only on the basic salary** and does not include allowances such as housing, transportation, or bonuses. ### **3. How are End-of-Service Benefits paid out?** Employers must pay ESB **immediately upon contract termination**. Delayed payments may lead to legal penalties. ### **4. Can an employer deny End-of-Service Benefits?** Employers **cannot deny ESB** unless the employee: - **Resigns before 2 years** - **Is dismissed due to misconduct** - **Violates contractual terms** ### **5. How can employees ensure they receive the correct End-of-Service Benefits?** Employees should: - Keep **records of their service period** and salary details - Refer to **Saudi labor laws** or consult **a legal expert** - Use **HR systems like ZenHR** for accurate ESB tracking Understanding **end-of-service benefits in Saudi Arabia** is crucial for both employees and employers to ensure compliance and financial fairness. With **automated tools like ZenHR**, companies can streamline ESB calculations and maintain transparency. By knowing your **rights and obligations**, you can ensure you receive your entitled benefits when your employment ends. For further details, consult Saudi labor law or seek professional HR advice.  ![Amanee Hasan](https://blog.zenhr.com/hubfs/1782294238755%20(1).jpg) ###### Amanee Hasan Amanee Hasan is a Senior Content Strategist at ZenHR, an award-winning and top-rated HR software solution serving organizations across the MENA region. She specializes in SEO, UX writing, copywriting, product marketing, and content covering the latest HR trends, labor laws, HR technology, and the future of work. 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ZenHR is a SOC 2 Type II... [Read More](https://blog.zenhr.com/en/enterprise-grade-security-compliance) ##### [How to Calculate End-of-Service Benefits (ESB) in Saudi Arabia (2026 Guide)](https://blog.zenhr.com/en/how-to-calculate-end-of-service-benefits-esb-in-saudi-arabia-2026-guide) End-of-Service Benefits (ESB) in Saudi Arabia are a legal entitlement under the Saudi Labor Law. They are paid to... [Read More](https://blog.zenhr.com/en/how-to-calculate-end-of-service-benefits-esb-in-saudi-arabia-2026-guide) ##### [Streamline HR Operations: End of Service Calculator for KSA Employers](https://blog.zenhr.com/en/streamline-hr-operations-end-of-service-calculator-for-ksa-employers) Among the many responsibilities of HR professionals, ensuring compliance with end-of-service calculations and benefits... 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