SAR 20000 Salary Gratuity in Saudi Arabia (2026): Contract Expiry Is Not Resignation
Your SAR 20000 salary gratuity is SAR 50,000 after five years and SAR 150,000 after ten.
Whether you actually receive that depends on something most people never examine: how your exit was categorised.
Employer termination, contract expiry and resignation are three different events under Saudi Labour Law. Only one of them reduces your award. And at this wage level, being recorded as the wrong one costs tens of thousands of riyals.
Quick Answer
Half a month’s wage: SAR 20,000 ÷ 2 = SAR 10,000
| Years of service | Full award |
|---|---|
| 1 year | SAR 10,000 |
| 2 years | SAR 20,000 |
| 3 years | SAR 30,000 |
| 5 years | SAR 50,000 |
| 6 years | SAR 70,000 |
| 7 years | SAR 90,000 |
| 8 years | SAR 110,000 |
| 10 years | SAR 150,000 |
| 15 years | SAR 250,000 |
| 20 years | SAR 350,000 |
Half a month’s wage for each of your first five years, then a full month for each year after. No maximum cap.
Three Ways a Job Ends, Two Different Outcomes
Take seven years of service on SAR 20,000:
| How it ended | Article applied | You receive |
|---|---|---|
| Employer terminates you | Article 84 in full | SAR 90,000 |
| Fixed-term contract expires | Article 84 in full | SAR 90,000 |
| You resign from a fixed-term contract | Article 85, two thirds | SAR 60,000 |
SAR 30,000 rests on that middle row.
Article 85 reduces the award for resignation. A fixed-term contract reaching its agreed end date isn’t a resignation — it’s the contract expiring by its own terms. Neither party ended it early. You didn’t quit; the term simply ran out.
Employees regularly accept a reduced figure because their contract wasn’t renewed and they assumed that counted as leaving. It doesn’t.
Where This Goes Wrong in Practice
Three situations worth watching for at this wage level.
Your contract wasn’t renewed
The term ended, the employer chose not to extend, and you left. That’s expiry, not resignation. The full award is payable.
If HR has applied a reduction here, ask which provision they relied on. Article 85 addresses resignation, and you didn’t resign.
You were asked to submit a resignation letter
This happens more than it should. An employer whose contract is expiring may ask for a resignation letter “for the file” or “to process the exit smoothly.”
Signing one can recharacterise your exit — and on a fixed-term contract at seven years, that recharacterisation costs SAR 30,000.
If your contract is simply expiring, you don’t need to resign. Ask why the letter is required before you sign anything.
Your Qiwa record says something different
Your exit reason is recorded on Qiwa. It’s worth checking what was entered against what actually happened, because the record is what a settlement or a dispute will be assessed against.
If the record says resignation and your contract expired, raise it in writing before your final settlement is processed.
The Article 85 Scale, Where It Does Apply
For genuine resignations from fixed-term contracts, on SAR 20,000:
| Completed service | Proportion | You receive |
|---|---|---|
| Under 2 years | Nothing | SAR 0 |
| 3 years | One third | SAR 10,000 |
| 5 years | Two thirds | SAR 33,333 |
| 7 years | Two thirds | SAR 60,000 |
| 10 years or more | Full | SAR 150,000 |
Since 19 February 2025, this scale applies to fixed-term contracts only. On an indefinite contract, an employee ending the relationship on notice receives the full award. Our SAR 10,000 breakdown covers that amendment in detail.
Your Allowances Count
The award runs on your wage — basic plus fixed allowances — not basic alone.
On a package of SAR 20,000 basic plus SAR 5,000 housing and SAR 2,000 transport, your wage is SAR 27,000:
| Basis used | 10 years |
|---|---|
| Basic only (SAR 20,000) | SAR 150,000 |
| Wage (SAR 27,000) | SAR 202,500 |
SAR 52,500 of difference. Article 86 permits an agreed written exclusion of variable pay such as commission — not fixed housing. Our SAR 5,000 breakdown explains this in full.
Part Years Are Paid in Proportion
| Service | Full award |
|---|---|
| 1 year 6 months | SAR 15,000 |
| 3 years 6 months | SAR 35,000 |
| 5 years 6 months | SAR 60,000 |
| 7 years 4 months | SAR 96,667 |
| 12 years 9 months | SAR 205,000 |
At this wage each month past year five is worth roughly SAR 1,667. Rounding a part year down is expensive — check the service dates on your statement.
No Cap Applies
Saudi Arabia sets no maximum on the end-of-service award.
That’s a genuine difference from the UAE, which caps gratuity at two years’ basic salary. Twenty years on SAR 20,000 pays SAR 350,000 here and keeps accruing at a full month per year beyond that.
At senior wage levels with long service, this is one of the more financially significant differences between the two jurisdictions.
When the Reduction Never Applies
Article 87 overrides Article 85 entirely — force majeure, a female employee resigning within six months of marriage, or within three months of giving birth.
Article 81 lets you leave immediately without notice and keep full rights, where the employer failed essential obligations towards you. At this level, if you’re leaving because of something the employer did, this provision may be worth more than anything else in your settlement.
When You Should Be Paid
Under Article 88: within one week if the employer ended the contract, within two weeks if you did.
At this wage the settlement usually includes several lines beyond the award — leave encashment, notice pay, unpaid bonus or commission, and a repatriation ticket. Ask for it itemised and reconcile every line before signing a release.
If they won’t move, file through the MHRSD friendly settlement process, which precedes the Labour Court. Cross-check your figure against the official MHRSD calculator first — an official output attached to a written request carries weight.
Check How Your Exit Was Recorded
Enter your wage, contract type and separation method in the Saudi Arabia Gratuity Calculator, then run it again with a different separation method. On a fixed-term contract, that single field can change your figure by a third.
FAQs
How much gratuity on SAR 20,000 after 5 years?
SAR 50,000 on termination or contract expiry, or on resignation from an indefinite contract. SAR 33,333 on a fixed-term resignation.
After 10 years?
SAR 150,000 — the Article 85 scale reaches the full award at ten years anyway.
Is contract expiry the same as resignation?
No. Article 85 reduces the award for resignation. A fixed-term contract reaching its agreed end date is expiry, and the full award is payable.
My employer asked me to sign a resignation letter when my contract expired. Should I?
Ask why it’s required first. On a fixed-term contract that’s simply expiring, you don’t need to resign, and signing could recharacterise your exit.
Where is my exit reason recorded?
On Qiwa. Check what was entered against what actually happened.
Does contract type still matter?
Yes for resignation. Since February 2025 the Article 85 reduction applies to fixed-term contracts only.
Do allowances count towards the award?
Yes. It runs on your wage, which includes fixed housing and transport.
Is there a maximum award?
No. Saudi Arabia sets no cap, unlike the UAE.
Last updated: September 2026 · Based on: Saudi Labour Law (Royal Decree M/51), Articles 2, 81, 84, 85, 86, 87 and 88 · Royal Decree M/44 of 2024
Written by Farhan — About
Different wage? See SAR 8,000, SAR 10,000 and SAR 15,000.
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