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End of Service Benefit Formula:
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The End of Service Benefit (ESB) is a legal entitlement for employees in Saudi Arabia upon termination of their employment contract. It's calculated based on the employee's final salary and years of service, with different rates for the first 5 years and subsequent years.
The calculator uses the Saudi labor law formula:
Where:
Explanation: For the first 5 years of service, the employee receives half a month's salary for each year. For service beyond 5 years, they receive a full month's salary for each additional year.
Details: Accurate ESB calculation is crucial for both employers and employees to ensure proper settlement of employment contracts according to Saudi labor laws.
Tips: Enter your final monthly salary in SAR and your total years of service (can include fractions like 0.5 for 6 months). All values must be valid (salary > 0, service years > 0).
Q1: Is the ESB taxable in Saudi Arabia?
A: No, the end of service benefit is not subject to income tax in Saudi Arabia.
Q2: What if my service is less than 1 year?
A: Employees are not entitled to ESB if they work less than 1 year for the employer.
Q3: Does this apply to all employees?
A: This applies to private sector employees under Saudi labor law. Government employees have different pension systems.
Q4: What about resignations vs terminations?
A: The calculation is the same, but eligibility may differ based on resignation circumstances.
Q5: Are there any maximum limits?
A: There is no statutory maximum limit for ESB calculations under Saudi labor law.