How To Calculate End Service Benefits
Category: Information
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In Saudi Arabia, a proper document is distributed by the Ministry of Labor about Labor Law. In labour law, there are five articles  (84-88) dedicated only to end service benefits.

I have seen many articles already on the internet and to me, those are quite confusing that’s why I want to explain it and also will upload the latest available labour law documents at the end.
As Saudi Arabian market observed some downfall due to a decrease in oil prices and it is hard for the smaller companies to sustain. That’s why most of the people are worried about their End Services Benefits in case their organization got bankrupt.

Whatever is the reason, we will see what the Saudi Labor Law says about the benefits of both parties in case of contract termination or expiration.

Articles in Labor Law
It is advisable that whenever it’s a matter of a legal contract then read the specif documents with a great deal of interest again and again before jumping into the premature conclusions.

End of Service Benefits can be calculated between the time of joining and leaving the organization. There is nothing in between. You are resigning, being terminated or end of the contract.

Article 84/85
These are considered as the major articles when calculating the End Services Benefits in Saudi Arabia.
Example of ESB Calculation
Let see an easy example based on the above scenarios. I will use the same duration for Resignation & Termination so that we can compare keeping in view the article 84 & article 85 in Saudi Labor Law.

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In Case of Resignation
In case if your salary is 10,000 SAR per month & you a have served the organization for 6 years and 2 months, then end of service benefit is calculated as below;

First five years = (6 x 10,000)/2 = 30,000 SR.

Next 1 years = (1 x 10,000) = 10,000 SR.

For, extra 2 months we need to calculate like below;

Calculate the benefit by day = 10,000 SAR / 365 days = 27.40 SAR

Now, calculate the days for 2 months = 2 month x 30 days per month = 60 days

Multiply the benefit by day by remaining days = 27.40 SR x 60 days = 1643.85 SAR.

Now, the is Total  30,000 + 10,000 + 1643.85 = 41643.84 SAR

Total ESB he/she will get = 41643.84 x 66.67% = 27763.95 SAR

In Case of Forced Termination
So, in your case if your salary is 10,000 SAR per month & you a have served the organization for 6 years and 2 months, then end of service benefit is calculated as below;

First five years = (6 x 10,000)/2 = 30,000 SR.

Next 1 years = (1 x 10,000) = 10,000 SR.

For, extra 2 months we need to calculate like below;

Calculate the benefit by day = 10,000 SAR / 365 days = 27.40 SAR

Now, calculate the days for 2 months = 2 month x 30 days per month = 60 days

Multiply the benefit by day by remaining days = 27.40 SR x 60 days = 1643.85 SAR.

Hence, Total you will get 30,000 + 10,000 + 1643.85 = 41643.84

01 Dec, 2019 0 631
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