Employment · Legal glossary
End-of-service gratuityIn Arabic: مكافأة نهاية الخدمة
Definition
End-of-service gratuity (مكافأة نهاية الخدمة) is the sum an employer must pay a worker when the employment relationship ends, calculated from wage and length of service. It is a statutory award. It is not a bonus the parties invent, and it is not the same figure in Saudi Arabia and the UAE.
The wage that goes into the sum is the point that changes the result. Saudi Arabia uses the last wage, with a narrow agreed exclusion for commissions. The UAE, for a full-time foreign worker, uses the basic wage and leaves allowances out.
When the relationship ends, the worker is often asked to sign a release (مخالصة). That acknowledgement has its own entry. It records payment of this award. It does not replace it.
Saudi Arabia
Article 84 of the Labor Law, in the text published by the Ministry of Human Resources and Social Development, requires an award when the relationship ends: half a month’s wage for each of the first five years, and one month’s wage for each year after that, on the last wage. Fractions of a year count for the time worked. The parties may agree to leave commissions, and percentages of the sale price, out of that base.
On resignation: one third after two to five consecutive years, two thirds above five and under ten, and the full award at ten or more. The full award is also due for force majeure, and where a woman ends the contract within six months of marriage or three months of birth. Nothing is due if the contract ends during probation. Settlement is within one week, or two weeks if the worker ended the contract.
United Arab Emirates
Article 51 of Federal Decree-Law No. 33 of 2021 gives a full-time foreign worker, after one year of continuous service, 21 days’ basic wage for each of the first five years and 30 days for each year after that. Allowances such as housing and transport are out. A fraction of a year counts once the first year is complete. Unpaid absence is excluded. The total cannot exceed two years’ wage, and nothing is due under one year. Payment of wages and the gratuity is due within 14 days, and the employer may deduct what the worker owes.
UAE nationals take their benefit under the pensions legislation, not the 21/30-day scale. Part-time work follows Article 30 of Cabinet Resolution No. 1 of 2022, by hours against a full-time contract. An employer may instead enrol staff in the voluntary savings scheme, which replaces the gratuity for those staff after the amount accrued before enrolment is settled. The portal says the scheme covers the private sector and free zones.
The rules that apply to a specific matter depend on the state, any free zone involved and the current text of the law, so check the official source before relying on them.
Practical points
- Split basic wage from allowances. The split decides the UAE award and is not how Saudi Arabia starts the calculation.
- Do not copy a Saudi resignation fraction into a UAE contract, or a UAE basic-wage sentence into a Saudi contract.
- On a Saudi termination during probation, do not accrue the award. The Labor Law says it is not due.
Common mistakes
- Calculating both countries on gross salary, or both on basic salary.
- Paying a UAE gratuity for a full-time foreign worker who has not completed one year.
- Assuming resignation always reduces the Saudi award to one third. The fraction depends on the years, and some resignations are paid in full.
Questions lawyers actually get
What wage is the Saudi award calculated on?
The last wage. Commissions and percentages of sales may be left out by agreement. Allowances are not automatically excluded.
What wage is the UAE award calculated on?
For a full-time foreign worker, the last basic wage. Housing and transport allowances stay out, and the total cannot exceed two years’ wage.
Is anything due if the worker leaves in the first year?
In the UAE, a full-time foreign worker with less than one year of continuous service is not entitled to the gratuity. In Saudi Arabia the resignation bands in the Labor Law start at two years of service; an ending during probation does not earn the award.
Does the UAE savings scheme cancel the gratuity?
Only for workers the employer has enrolled. The employer stops the traditional gratuity for those workers and must settle the gratuity accrued before enrolment. Workers who are not enrolled stay on the statutory scale.
Sources
Checked against these official texts. This is general information, not legal advice. Domestic-worker rules, and the employment laws of Qatar, Bahrain, Kuwait and Oman, are not stated here.
- Saudi Labour Law, art. 84https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/08381293-6388-48e2-8ad2-a9a700f2aa94/1
- HRSD, Labor Law, consolidated text through Royal Decree No. M/44 (PDF)https://www.hrsd.gov.sa/sites/default/files/2025-11/labor-law.pdf
- HRSD, employment-relations page (Labor Law articles, including the award and probation)https://www.hrsd.gov.sa/%D8%B9%D9%84%D8%A7%D9%82%D8%A7%D8%AA-%D8%A7%D9%84%D8%B9%D9%85%D9%84
- UAE government portal (u.ae), end-of-service benefits in the private sectorhttps://u.ae/en/information-and-services/jobs/Sector-of-employment/employment-in-the-private-sector/end-of-service-benefits-for-employees-in-the-private-sector
- UAE, Federal Decree-Law No. 33 of 2021, English text hosted on u.ae (PDF)https://assets.u.ae/api/public/content/eb65a60bbff949fa912eddd566613014?v=7174ed78