SAR 5000 Salary Gratuity in Saudi Arabia (2026): Why Your Allowances Count
Your SAR 5000 salary gratuity is SAR 12,500 after five years and SAR 37,500 after ten — if SAR 5,000 is your full wage.
Here’s the part that separates Saudi Arabia from most of the Gulf: your fixed allowances belong in that calculation. Housing and transport aren’t excluded the way they are in the UAE or Qatar. If your employer worked your award on basic salary alone, the figure is too low.
Quick Answer
Half a month’s wage: SAR 5,000 ÷ 2 = SAR 2,500
| Years of service | End-of-service award |
|---|---|
| 1 year | SAR 2,500 |
| 2 years | SAR 5,000 |
| 3 years | SAR 7,500 |
| 4 years | SAR 10,000 |
| 5 years | SAR 12,500 |
| 6 years | SAR 17,500 |
| 7 years | SAR 22,500 |
| 8 years | SAR 27,500 |
| 10 years | SAR 37,500 |
| 15 years | SAR 62,500 |
| 20 years | SAR 87,500 |
Each of your first five years earns half a month’s wage. From year six, each year earns a full month.
There is no maximum cap in Saudi Arabia, unlike the UAE.
What Counts as Your Wage
Article 84 bases the award on your wage, and Article 2 of the Labour Law defines wage as basic salary plus all due increments — not basic alone.
In practice that means your fixed contractual allowances form part of the calculation base.
| Component | Counts? |
|---|---|
| Basic salary | ✅ Yes |
| Fixed housing allowance | ✅ Yes |
| Fixed transport allowance | ✅ Yes |
| Other fixed contractual allowances | ✅ Yes |
| Commission and sales percentages | ⚠️ Only if not excluded by agreement |
| Overtime | ❌ No |
| Performance bonuses | ❌ No |
Article 86 is the exception. It allows an employer and employee to agree in writing that variable elements — commission, sales percentages, and similar payments that rise and fall by nature — are excluded from the award base. Check your contract for such a clause. Note it covers variable pay, not your fixed housing allowance.
What That Difference Looks Like
A common Saudi package at this level: SAR 5,000 basic, SAR 1,250 housing, SAR 500 transport.
Your actual wage is SAR 6,750, not SAR 5,000.
| Basis used | 5 years | 10 years |
|---|---|---|
| Basic only (SAR 5,000) | SAR 12,500 | SAR 37,500 |
| Actual wage (SAR 6,750) | SAR 16,875 | SAR 50,625 |
SAR 13,125 of difference at ten years — on the same job and the same package.
This is the opposite of the mistake people make in the UAE. There, including allowances inflates your expectation. In Saudi Arabia, excluding them understates what you’re owed.
Ask HR which wage figure they used. If the answer is your basic salary, ask which provision supports excluding your housing allowance.
Part Years Are Paid in Proportion
Article 84 entitles you to the award for fractions of a year proportionate to your service.
| Service | Award (on SAR 5,000 wage) |
|---|---|
| 1 year 6 months | SAR 3,750 |
| 2 years 3 months | SAR 5,625 |
| 3 years 6 months | SAR 8,750 |
| 4 years 8 months | SAR 11,667 |
| 5 years 6 months | SAR 15,000 |
| 7 years 4 months | SAR 24,167 |
Probation counts towards your service. Training and apprenticeship periods do not.
If You Resign
This is where Saudi Arabia differs sharply from the UAE, and where the law changed recently.
Under Article 85, an employee resigning from a fixed-term contract receives a reduced award: nothing under two years, one third between two and five, two thirds between five and ten, and the full award at ten years or more.
Since 19 February 2025, that reduction applies to fixed-term contracts only. On an indefinite contract, an employee ending the relationship on notice receives the full award.
On SAR 5,000 with five years of service:
| Situation | Award |
|---|---|
| Terminated by employer | SAR 12,500 |
| Resigned, indefinite contract | SAR 12,500 |
| Resigned, fixed-term contract | SAR 8,333 |
Our SAR 10,000 breakdown covers the 2025 change in detail.
When You Get the Full Award Regardless
Article 87 overrides the reduction entirely in three situations:
- You leave due to force majeure — circumstances beyond your control
- A female employee resigning within six months of her marriage
- A female employee resigning within three months of giving birth
In all three, the full award is payable whatever the Article 85 tiers would otherwise say. Very few calculators account for these.
When You Should Be Paid
Under Article 88:
- Within one week of the end of the contractual relationship, where the employer ended it
- Within two weeks, where you ended it
Your employer may deduct any work-related debt you legitimately owe before paying the balance, but you’re entitled to see it itemised.
Settle before your final exit is processed. Recovering an unpaid award after leaving the Kingdom is considerably harder.
Are You Saudi or Expatriate?
Articles 84 and 85 apply identically to both. Nationality doesn’t change the formula.
Saudi nationals are also enrolled in GOSI. That’s a separate system and doesn’t reduce your Article 84 entitlement.
Domestic workers — drivers, housemaids, cooks — are covered by the separate Regulations for Domestic Workers rather than the main Labour Law.
Check Your Own Figure
Enter your actual wage — basic plus fixed allowances, not basic alone — along with your joining and last working dates in the Saudi Arabia Gratuity Calculator.
Run it twice: once on basic and once on actual wage. The difference is what’s at stake in your conversation with HR.
FAQs
How much gratuity on SAR 5,000 after 5 years in Saudi Arabia?
SAR 12,500 if SAR 5,000 is your full wage. On a package of SAR 5,000 basic plus SAR 1,750 in fixed allowances, it’s SAR 16,875.
After 2 years?
SAR 5,000.
After 10 years?
SAR 37,500.
Does housing allowance count towards Saudi gratuity?
Yes. Article 2 defines wage as basic plus due increments, so fixed housing and transport allowances form part of the base.
Can my employer exclude my allowances?
Article 86 permits an agreed written exclusion of variable pay such as commission. It doesn’t extend to fixed housing allowance.
Is there a maximum award?
No. Saudi Arabia sets no cap.
Do I lose the award if I resign?
On a fixed-term contract, Article 85 reduces it. Since February 2025 that reduction doesn’t apply to indefinite contracts.
Do part years count?
Yes, in proportion to service.
Does probation count?
Yes. Training and apprenticeship periods don’t.
How long does my employer have to pay?
One week if they ended the contract, two weeks if you did.
Last updated: September 2026 · Based on: Saudi Labour Law (Royal Decree M/51), Articles 2, 84, 85, 86, 87 and 88 · Royal Decree M/44 of 2024
Written by Farhan — About
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