Most employees who leave a job in Saudi Arabia walk away without knowing the full figure they are owed. The list of entitlements is long — end-of-service gratuity, unused annual leave, overtime pay, wrongful-termination compensation — and each one is calculated using a different formula drawn from the Saudi Labour Law.
The Labour Calculator (الحاسبة العمالية) is a free electronic service published by the Ministry of Justice. Enter your contract dates and basic salary; it returns five numbers, each derived from the relevant statutory article. This guide explains every formula, the edge cases that trip up payroll teams, and how to verify the result yourself.
What the Saudi Labour Calculator Computes
The tool covers five distinct entitlement categories:
- End-of-service gratuity (Articles 84 and 85)
- Annual leave pay (Articles 109 and 111)
- Overtime pay (Article 98)
- Wrongful-termination compensation (Article 77)
- Back wages (documented, unpaid amounts)
The calculator is available free of charge on the Ministry of Justice portal and the National Portal. Understanding the formulas it applies matters for three practical reasons: verifying offers before signing, tracking accruing liabilities during a contract, and challenging a figure that looks wrong.
Entitlement 1: End-of-Service Gratuity — Articles 84 and 85
End-of-service gratuity is the largest financial obligation that accumulates silently across years of employment. It is calculated from the basic salary only, not from the total package that includes housing and transport allowances.
When the employer terminates (Article 84)
| Length of Service | Gratuity Rate |
|---|---|
| Up to 5 years | Half a month's basic salary per year |
| Beyond 5 years | One full month's basic salary per year |
Example: An employee with 7 years of service at a basic salary of SAR 5,000, terminated by the employer:
- First 5 years: 5 × (5,000 ÷ 2) = SAR 12,500
- Next 2 years: 2 × 5,000 = SAR 10,000
- Total: SAR 22,500
When the employee resigns (Article 85)
Resignation does not eliminate the right after two years of service:
| Service Length at Resignation | Proportion of Gratuity Due |
|---|---|
| Under 2 years | Nothing |
| 2 to under 5 years | One third |
| 5 to under 10 years | Two thirds |
| 10 years or more | Full gratuity |
Entitlement 2: Annual Leave Pay — Articles 109 and 111
Leave accrual rate
| Length of Service | Annual Leave Entitlement |
|---|---|
| Under 5 years | 21 calendar days per year |
| 5 years or more | 30 calendar days per year |
The transition from 21 to 30 days is not a one-time step on the fifth anniversary. The higher daily accrual rate starts from the first day of the sixth year and applies going forward.
Daily leave rate
Daily rate = basic salary ÷ 30
Example: An employee on SAR 6,000 basic salary, terminated after 3.5 years with 28 unused leave days:
- Daily rate: 6,000 ÷ 30 = SAR 200
- Leave pay-out: 28 × 200 = SAR 5,600
Entitlement 3: Overtime Pay — Article 98
Overtime hours are compensated at 150 percent of the standard hourly rate:
Standard hourly rate = basic salary ÷ monthly working hours
Using the standard 8-hour day, 26-day month (208 hours per month):
Overtime hourly rate = (basic salary ÷ 208) × 1.5
Example: An employee on SAR 8,000 basic salary who works 12 overtime hours in a month:
- Standard hourly rate: 8,000 ÷ 208 = SAR 38.46
- Overtime rate: 38.46 × 1.5 = SAR 57.69
- Monthly overtime pay: 12 × 57.69 = SAR 692
For overtime worked on official rest days or public holidays (Article 107), the minimum compensation is a full day's pay in addition to the standard rate. That bracket is not captured by simple monthly sums and must be tracked separately.
Entitlement 4: Wrongful-Termination Compensation — Article 77
If an employer terminates a worker without legitimate cause, or if a worker resigns because the employer has breached their contractual obligations, Article 77 entitles the worker to:
Compensation = 2 months' wages per year of service
The minimum is 2 full months' wages regardless of how short the employment period was. This compensation is additive — it sits on top of end-of-service gratuity and does not replace it.
Example: An employee dismissed without cause after 4 years at a basic salary of SAR 5,000:
- Article 77 compensation: 5,000 × 2 × 4 = SAR 40,000
- Plus end-of-service gratuity under Article 84 on top of that
Entitlement 5: Back Wages
This category covers any agreed, documented amounts that were not paid: delayed salary instalments, documented commissions, or allowances specified in the contract. The calculator inserts whatever figure the user enters — there is no formula applied. The courts require documentary evidence (payslips, contract clauses, bank records) before a back-wage claim is admitted.
The Most Common Calculation Errors
Error 1 — Basic salary vs. total package confusion
All five entitlements are computed from the basic salary, not from the gross package that includes housing and transport allowances. A company that applies gratuity calculations to SAR 9,000 total pay instead of SAR 6,000 basic overpays by 50 percent; one that does the reverse underpays the worker by the same margin.
Error 2 — Ignoring fractional years
A contract that ends after 3 years and 8 months earns gratuity on the 8 months as a fraction: (8 ÷ 12) of the annual rate, not zero. The calculator uses actual start and end dates and handles this automatically.
Error 3 — Submitting WPS payroll without reconciling overtime
The Mudad WPS payroll engine compares the submitted file against recorded working hours. An employer that files correct base salaries through WPS but omits overtime differentials accumulates a growing underpayment liability that surfaces at contract termination.
Error 4 — Not updating the base salary after a pay rise
Gratuity is calculated from the final basic salary before termination. An employee who received a raise in their last year of employment is entitled to gratuity calculated from the new rate, applied across their full tenure. Saudi courts have consistently upheld this interpretation.
Compute Your Entitlements Now
The free Saudi Labour Rights Calculator accepts start date, end date, reason for contract ending, and basic salary. It returns all five figures in seconds, with a breakdown by statutory article.
For a broader view of Saudi HR compliance — Qiwa integration, Nitaqat thresholds, and employee data flows — see Qiwa Integration for HR Systems and Saudi Nitaqat and Mudad Payroll Integration with Saudi WPS.
If the calculator returns a figure that differs from what your employer has offered, the first step is identifying which of the five entitlements diverges and by how much. Noqta's team provides a line-by-line contract review and entitlement audit. Contact us for a free diagnostic.