# End of Service Benefits (ESB) Calculation in Saudi Arabia

As an employee of any company in the Kingdom of Saudi Arabia, you are entitled to End of Service Benefits at the end of the employment. It is also referred to as gratuity in other parts of the world. You can calculate your entitled using the ESB or end of service calculator given at the end of the article.

Here in this article, we shall explain ESB computation or gratuity calculation in Saudi Arabia. Actually, the entitlement of end of service benefits depends on whether you resign from the company or company terminates you. Entitlement is different in both cases.

# End of Service Benefits Calculation in case of Resignation

Case 1: If an employee resigns from the company within two years of joining, he is not entitled to end of service benefits since he has not met the minimum criteria of 2 years

Case 2: If an employee resigns from the company after completing 2 years but before 5 years, he is entitled to 1/3rd of his ESB award. ESB award, in this case, is half salary.

Illustration: Let’s say an employee resigns after completing 4 years in a company, his last total salary was  10,000/-. He will be entitled to (10,000 X 16.67% X 4) = 6,667

Case 3: If an employee resigned from the company after completing 5 years but before 10 years, he is entitled to 2/3rd of his ESB award. ESB award, in this case, is a half salary for the first 5 years and full salary for the next 5 years.

Illustration: Let’s say an employee resigns after completing 8 years in a company, his last total salary was 10,000/-. He will be entitled to (55,000 X 66.67%) = 36,667/-

• (10,000 X 5 X 1/2) = 25,000/
• (10,000 X 3 ) = 30,000/-

# End of Service Benefits Calculation in case of Termination

Case 4: If an employee resigns from the company or company terminates him after completing 10 years of employment, he is entitled to his full ESB Award. ESB award, in this case, is a half salary for the first 5 years and full salary for the rest of the years.

Illustration: Let’s say an employee resigns or company terminates him after completing 12 years in a company, his last total salary was 10,000/-. He will be entitled to SR 95,000 as the end of service benefits. (10,000 X 5 X 1/2) = 25,000/- and  (10,000 X 7) = 70,000/-

Case 5: If an employer terminates an employee before completing 5 years in the company, the employee will be entitled to half salary.

Illustration: Let’s say an employee is terminated after completing 4 years in a company, his last total salary was 10,000/-. He will be entitled to (10,000 X 4 X 1/2) = 20,000/-

Case 6: If an employer terminates an employee after completing 5 years in the company, the employee will be entitled to half salary for the first 5 years and full salary for the rest of the period he has worked.

Illustration: Let’s say an employee is terminated after completing 8 years in a company, his last total salary was 10,000/-. He will be entitled to 55,000/- as the end of service benefits. (10,000 X 5 X 1/2) = 25,000/ and (10,000 X 3 X) = 30,000/-

If you are having any confusion in calculating the end of service benefits, you can always use the end of service calculator given at the end of this article. The ESB Calculator developed by the government considers all the factors described above and below while calculating End of Service Benefits.

# An Exception to the End of Service Benefits Rules

If a female worker resigns within six months of the date of her marriage or within three months of the date of giving birth, she will be having her full award of End of Service Benefits.

The full award here means that for the calculation of End of Service Benefits, it will be treated as Termination by Employer.

If a worker leaves the job due to natural inability to do the work e.g. death, permanent mental or physical disability, he will also be entitled to the full award of ESB.

# What is included in the ESB computation?

All the benefits paid in cash to the employee are included at the End of Service Benefits. (Article 2 of Saudi Labor Law)

However, generally in Saudi Arabia, only Basic Salary, Housing Allowance, and Transportation allowance are taken for this calculation. If an employee is given some food allowance, it discarded for the calculation of ESB but it is illegal as per (Article 2 of Saudi Labor Law)

# ESB Calculation when Benefits are given in Kind

In case of benefits paid in kind, the requirement of the law is different. However, it depends completely on the discretion of the company.

For example, one employee is given car and house in place of transportation allowance and house allowance. His ESB will be lesser than the employee who is getting these benefits in cash.

In order to compensate these employees, Law allows the companies to include maximum 1/6th of the basic salary of the employee in the ESB award when calculating End of Service Benefits.

It should be noted that Law puts a cap on the maximum amount. It also means that it depends on the discretion of the employer. Illustration: For example, an employee is given housing and transportation and his basic salary is 10,000/-.

He is terminated after completing 15 years in the company. If the policy of the company is to pay the additional amount as ESB for the benefits paid in Kind, he will be entitled to ((10,000+ 1,667) X 15) = 175,000

# Important Points for ESB Calculation

All the calculations assume that employee has completed consecutive years in the organization.

• ESB award will be based on the latest salary given to the employee. (Article 2 of Saudi Labor Law)
• If an employee has completed a year partially, ESB will be calculated on a pro-rata basis

# End of Service Benefits for Domestic Workers

A domestic worker will be entitled to ESB according to the new law passed by the Ministry of Labor. However, the calculation of the end of service benefits for the domestic workers is different from the other workers living in Saudi Arabia.

A domestic worker will be entitled to one month's Salary after every four consecutive years he has worked for an employer. Let's say, if a domestic worker has worked for an employer for 12 consecutive years, he will be entitled to 3 monthly salaries.

Unfortunately, the end of service calculator given below would not calculate the ESB for domestic workers. However, as explained above, you don't need an ESB calculator to calculate the end of service benefits for domestic workers as the calculation is pretty simple.

# Claiming End of Service Benefits

Claiming ESB from the employer is not a difficult task to do. Normally companies in Saudi Arabia pay End of Service Benefits to their employees.

However, in case of a deceased person, claiming End of Service Benefits for the legal heirs can be a problem. I have explained the procedure of claiming the End of Service Benefits in case of the deceased person in this article. Have a look at it. “Death Compensation Procedure

# ESB or End of Service Calculator

Online Government Calculator: Now you can calculate your end of service benefits using the end of service calculator which is launched by the government. Click here to check your ESB entitlement using ESB calculator.

## ESB or End of Service Calculator in Excel

One of our readers has also shared this end of service calculator with us. I could not check it in detail but apparently, this ESB calculator works perfectly. You can download it from this link.

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