Saudi End of Service Pay When You Resign: Article 85 Explained

The direct answer: what Article 85 pays on resignation

The end-of-service award, called mukafa'at nihayat al-khidma in Arabic, is set by Article 84 of the Saudi Labor Law, issued by Royal Decree No. M/51 of 27 September 2005. Article 85 deals with what happens when the worker is the one who ends the contract. The rule is a sliding scale, and it has four bands.

Under two consecutive years of service, Article 85 gives no award at all on resignation. Between two and five years, the worker receives one third of the full award. Above five years and below ten, the share rises to two thirds. At ten years or more, the worker receives the full award as if the employer had ended the contract.

The boundaries matter. The official wording for the one-third band refers to not more than five years, so a worker who has exactly five years still falls in the one-third band. The two-thirds band starts only once the service passes five years. The full award starts at ten years, not before.

Two points about the source of these rules. The Labor Law was amended by Royal Decree No. M/44, published on 23 August 2024 and in force from 19 February 2025. Those amendments added a formal resignation procedure, but the end-of-service articles themselves (Articles 84 to 88) were kept. You can read the text of the law on the Ministry of Human Resources and Social Development (HRSD) website, where the 2005 decree is published.

How the figure is worked out, step by step

You do not calculate the resignation share directly. You work out the full award first, then apply the share. Most mistakes come from skipping the first step.

1. Count the continuous service. Use the start date and the last working day. Partial years count in proportion to the time worked, as Article 84 states.
2. Find the last wage. The award is based on the last wage, not the wage from the first year. Regular allowances such as housing and transport are generally included, and overtime and one-off bonuses are generally left out. Article 86 lets the parties agree that commissions and sales percentages, which go up and down by nature, are excluded from the wage base, but only if that was agreed in writing.
3. Calculate the full Article 84 award. Multiply half the monthly wage by the first five years. Then multiply the full monthly wage by each year after the fifth.
4. Identify the Article 85 band. Under two years, nothing. Two to five years, one third. More than five and less than ten, two thirds. Ten years or more, the full amount.
5. Check Article 87. If a force majeure or a qualifying female worker case applies, the share is replaced by the full award.
6. Check the timing of payment. Under Article 88, the employer must settle entitlements within two weeks when the worker ends the contract, compared with one week when the employer ends it.

The sum is simple, but the inputs need care. A wage that is slightly wrong produces a wrong award in every band.

Worked example: eight years, resignation, last wage SAR 10,000

Take a worker on an indefinite contract with a last monthly wage of SAR 10,000, including housing and transport allowances that are paid every month. The worker has been with the company for eight years and resigns in writing through Qiwa.

Step 1, full Article 84 award. The first five years earn half a month each: 5 × 5,000 = SAR 25,000. The next three years earn a full month each: 3 × 10,000 = SAR 30,000. The full award is SAR 55,000.

Step 2, Article 85 band. Eight years falls between five and ten years, so the share is two thirds. 55,000 × 2/3 = SAR 36,666.67.

Step 3, what is lost. The difference is SAR 18,333.33. That is the amount the worker gives up by resigning rather than being let go by the employer.

The same worker would receive the full SAR 55,000 if the employer ended the contract without a fault-based dismissal under Article 80. If the worker had resigned after three years on a wage of SAR 6,000, the full award would be SAR 9,000 and the resignation share would be SAR 3,000.

Now change one input. If the same worker had served eight years and six months, the Article 84 award would add half a month for the extra half year. That brings the full award to SAR 60,000, and two thirds of that is SAR 40,000. The half year matters because it sits close to a band boundary. Keep exact service dates in the file.

The cases that change the answer

Article 85 is the default rule for resignation, but several things change the result. The table below shows the share for each band, using the same SAR 55,000 full award from the example. Use it as a check on your own figure.

Force majeure. Article 87 of the Labor Law says that, as an exception to Article 85, a worker who leaves because of a force majeure beyond their control receives the full award. The official text does not set a minimum period for this case, so a worker with under two years who leaves for force majeure may still qualify for the full award. Whether a particular event counts as force majeure is a fact question, and it is often disputed. Keep written evidence.

Female workers. Article 87 also gives the full award to a female worker who ends her contract within six months of her marriage or within three months of giving birth. Keep the marriage certificate or birth certificate and the date of the resignation.

Contract type. Resignation from a fixed-term contract follows the same bands. Sources read the 2025 amendments as tying Article 85 to fixed-term contracts through a new definition of resignation. Some practitioners read the same bands as covering any resignation, including from an indefinite contract with notice. The official text of Article 85 refers to a work relation ending because the worker resigned, which supports the broader reading. Ask a lawyer before you assume the narrow one.

Employer-ended contracts. If the employer ends an indefinite contract, or a fixed-term contract expires, the full award is generally due. This is the reason the resignation route costs the worker money.

Dismissal for misconduct. Article 80 lists serious grounds, such as assault, serious misconduct or unauthorised absence, that remove the award. Some commentators say Article 87 keeps half the award for longer-serving workers dismissed under Article 80. We could not find that rule in the official text of Article 87 that we reviewed, which covers force majeure and the female worker cases. Do not rely on it without a written opinion.

Probation. If a contract ends during the probation period, neither party is entitled to compensation and the worker is not entitled to the end-of-service award. Probation under the 2025 amendments can run for up to 180 days, so check the probation clause in the contract before you resign or sign the next job offer.

Resignation through Qiwa. A resignation must be submitted through the Qiwa portal, must be written, and must not be future-dated. The employer has 30 days to respond, and silence counts as acceptance. The employer may postpone the effective date by up to 60 days for business reasons. The worker may withdraw within seven days, as long as the employer has not already accepted it. The award and the share are calculated on the actual end date, so the dates on the Qiwa record matter.

Common mistakes

The most common mistake is using only the basic salary. The Labor Law counts regular allowances, so a basic-only calculation understates the award for most workers. The opposite error also happens. Some payroll teams include overtime and one-off bonuses, which are generally outside the base.

The second mistake is treating the one-third band as starting at two years and ending at five years and one day. The official wording uses not more than five years for that band, so the boundary is at exactly five years.

The third mistake is ignoring Article 87. A worker who resigns for a qualifying reason and takes only the one-third share has lost money they were entitled to claim. The reverse also happens. An employer who pays the full award on a resignation that does not qualify may be paying more than the law requires, and that creates an accounting question for the company.

The fourth mistake is forgetting the time limit. If the worker ends the contract, the employer has two weeks to settle entitlements under Article 88. Late payment is a dispute waiting to happen, so calendar the date when the resignation is accepted.

The fifth mistake is assuming the calculator answers the legal question. A calculator applies the formula to the figures you give it. It cannot confirm the exit reason, the contract type or the wage components. Those need a person and a document.

What to check with HR or a lawyer

Before a resignation is accepted, or before a worker signs a settlement, check these points against the contract and the Qiwa record:

• The start date of continuous service, including any earlier service with the same employer.
• The last wage, and whether any allowance is excluded by a written agreement under Article 86.
• The exact date of the resignation and the effective date after any postponement.
• The contract type, and whether the 2025 resignation definition affects the calculation.
• Whether Article 87 applies, with written evidence.
• Whether any Article 80 ground is being raised, and if so, whether the employer has a documented basis.

Ask a Saudi-qualified employment lawyer when the case involves a dismissal dispute, a force majeure claim, or a fixed-term contract with unusual terms. A lawyer can also confirm how a particular Ministry decision applies to your case. Final amounts should be confirmed by the employer's payroll records and the HRSD or Labor Court process, not by a web calculator alone.

How employers take routine HR and payroll work off their staff

For HR and payroll teams, end-of-service work is repetitive. Each exit needs the same inputs, the same formula and the same deadline. AiStaffo builds AI workers that take over routine business work such as reconciliations, follow-ups and reports. In an exit process, an AI worker can pull service dates and wage components from the payroll records, run the Article 84 calculation and the Article 85 band check, and prepare the settlement statement for review. Each step leaves a record, so the HR lead can check the logic before any payment is approved. The HR lead still decides the exit reason, confirms the Article 87 evidence and signs off the amount. If you want to see how this would work for your own exit cases, you can Book a free automation audit.