Everything You Need to Know About End of Service Pay for Expats in Saudi Arabia

Imagine working for years in Saudi Arabia, dedicating your time and efforts to a company, only to find out that you are unsure about your end of service pay for expats in Saudi Arabia. Many expats face confusion regarding how their gratuity is calculated, when they will receive it, and what happens if their employer refuses to pay. Not knowing your rights can lead to financial stress and legal complications.

In this detailed guide, you will find everything you need to know about end of service pay for expats in Saudi Arabia. From calculation methods to legal rights, we break it down for you in simple terms.

What is End of Service Pay in Saudi Arabia?

End of service pay (ESP) is a mandatory benefit provided to employees in Saudi Arabia when they leave their job. It is governed by the Saudi Labor Law and serves as financial compensation for employees based on their tenure and salary.

Employers are legally obligated to pay expats their ESP upon resignation, termination, or contract completion. Understanding how this compensation is calculated helps you ensure you receive the correct amount.

Who is Eligible for End of Service Pay?

Expats working in Saudi Arabia qualify for end of service pay if:

• They have completed at least two years of service (except in cases of unfair dismissal).

• They resign after working for two to five years (partial ESP is granted).

• They are terminated without cause or finish their employment contract.

• They retire after reaching the official retirement age.

If an expat resigns before two years, they are usually not entitled to ESP, unless the employer agrees.

How is End of Service Pay Calculated?

The Saudi Labor Law outlines the formula for ESP calculation:

1. For the first five years of service: Half of one month’s salary per year.

2. For more than five years: One full month’s salary per year beyond the fifth year.

Example Calculation:

If an employee has worked for seven years and their last salary was SAR 10,000, their ESP will be:

• First five years: (10,000 ÷ 2) × 5 = SAR 25,000

• Additional two years: 10,000 × 2 = SAR 20,000

• Total ESP: SAR 45,000

Resignation cases follow different rules. Employees resigning after 2-5 years get one-third of the ESP, while those resigning after 5-10 years receive two-thirds.

When is End of Service Pay Given?

Employers must settle ESP within two weeks after an employee’s final working day. Delays can lead to legal action under Saudi labor regulations.

Common Issues Expats Face with ESP

Many expats experience challenges when claiming end of service pay in Saudi Arabia, including:

• Employers delaying payment beyond the legal timeframe.

• Incorrect ESP calculations resulting in lower payouts.

• Resignation clauses that reduce ESP entitlement.

• Lack of proper documentation, making it hard to claim ESP.

To avoid these issues, ensure you have a copy of your contract, payroll records, and a resignation letter (if applicable).

Legal Rights for Expats Regarding ESP

The Ministry of Human Resources and Social Development (MHRSD) protects expats’ rights regarding ESP. If an employer refuses to pay, you can:

1. File a complaint with the Saudi Labor Office online.

2. Consult a labor lawyer for guidance.

3. Report the issue through Absher or the MHRSD website.

Employers who fail to pay ESP may face legal penalties, including fines or business suspensions.

How to Ensure You Receive Your ESP?

To secure your end of service pay for expats in Saudi Arabia, follow these steps:

• Keep salary records and contracts to verify ESP calculations.

• Negotiate in writing when resigning to confirm ESP eligibility.

• Report any delays immediately to Saudi labor authorities.

• Seek legal assistance if your employer refuses to comply.

Final Thoughts

Understanding end of service pay for expats in Saudi Arabia ensures you receive the benefits you deserve. Whether you are resigning, retiring, or being terminated, knowing the correct calculations, legal rights, and complaint procedures can protect your financial future. If you are unsure about your ESP, consult an expert or file a complaint to safeguard your earnings.

By staying informed, you can prevent financial disputes and ensure a smooth transition when leaving your job in Saudi Arabia.