On 25 September 2026 the official gazette Umm Al-Qura published Cabinet Decision No. 318 of 4/4/1448H, amending the rules on how employees and workers are treated in sectors targeted for transformation and privatisation, originally issued by Cabinet Decision No. 616 of 20/10/1442H. The amendment settles one question for every worker moved from a supervising government entity to the entity it was transferred to: who pays the end-of-service award and the leave, and on which wage.
What changed
- Service is continuous. A transferred worker's service counts as unbroken for the end-of-service award and for leave. The clock does not restart at the transfer.
- The predecessor pays for the time before. The supervising entity (the predecessor) bears the award and leave for the years the worker spent with it before the transfer, calculated on the last wage.
- The successor pays for the time after. The receiving entity (the successor) bears the award and leave for the later period, also on the last wage.
- The mechanism is still to come. The board of the National Center for Privatization issues the implementing mechanism, after coordinating with the Ministry of Finance and the Ministry of Human Resources and Social Development.
- The Labour Law cross-reference is gone. The phrase "in accordance with Article 18 of the Labour Law" is deleted in three places: Article 9 paragraph 3, and sub-paragraph (c) of paragraph 2 in both Article 11 and Article 20.
The amended text
Paragraph 3 of Article 18 of the rules now reads, in translation:
"His service shall be deemed continuous with respect to the end-of-service award and leave. The supervising entity (the predecessor) bears the value of the end-of-service award and leave for the period of service the worker spent with it before the transfer, calculated on the basis of the last wage; the value of the subsequent end-of-service award and leave is borne by the entity to which he was transferred (the successor), calculated on the basis of the last wage..."
Why dropping the cross-reference matters
Article 18 of the Labour Law deals with a change of ownership: contracts stay in force and service continues, while the worker's rights for the earlier period, including an end-of-service award "presumed due on the date ownership passed", are the joint liability of predecessor and successor. The new text no longer points to that rule. It names who pays each part, and it sets the base as the last wage, not the wage on the transfer date. Okaz read the change as meaning the worker benefits from any raise or promotion received after the move.
A worked example
A worker spent 4 years with the supervising entity and 3 with the receiving entity. The last actual wage is SAR 10,000 and the employer ends the contract (Article 84):
| Method | Calculation | Award |
|---|---|---|
| 7 continuous years | 5 years at half a month + 2 years at a full month | SAR 45,000 |
| If service had been cut at the transfer | 4 years at half a month + 3 years at half a month | SAR 35,000 |
Continuity is worth SAR 10,000 here, because years six and seven earn a full month instead of half. On resignation it matters even more, since the Article 85 fractions rise with length of service. How the total is split between predecessor and successor, pro rata by time or by service band, is left to the mechanism the National Center for Privatization will issue.
Leave follows the same logic. Annual leave is 21 days, rising to 30 after five consecutive years (Article 109). With continuity, the worker in the example reaches the 30-day tier in their second year with the successor.
What to do now
- Transferred workers: compute your award on the full continuous service and your last actual wage (basic plus the allowances due) with the end-of-service calculator, and your leave balance with the leave calculator.
- HR and finance at the receiving entity: review the end-of-service provision for transferees. The service start date in payroll must be the hire date at the supervising entity, not the transfer date. We explain the base in the Article 84 and 85 gratuity guide and the leave rules in the annual leave balance guide. Teams building the calculation into their own system can start from the TypeScript end-of-service engine.
- Wait for the mechanism: the decision sets no separate effective date, and the operating detail for offsetting and paying out will come from the National Center for Privatization board.