How to Calculate End of Service Benefit (ESB) in Saudi Arabia

In Saudi Arabia, ESB (End of Service benefit) is an amount of money that every employee is entitled to have at end of his job or services. It is given by his employer. It will be a good idea to know how you would calculate your ESB. Recently while reading ArabNews I discovered this article that is written by a law expert “Muhammad Jaber Nader”.

The ESB is based on your Last Monthly Wage, or LMW. This is your last salary plus any other allowances, like monthly transport or housing compensations. You get half of your LMW for each of the first five years of service completed and you receive a full LMW for every year after that. To calculate the portion of your ESB for any additional time beyond your last completed year you calculate your daily salary and multiply that by the number of days over your last completed year.

To do this, take your LMW and:

a)      Multiply LMW by 12 to get your annual salary based on the 12-month calendar.

b)      Take that Sum and divide it by 365.25 to get your Daily salary.

c)       Multiply that number by the number of days into the last year of your employment.

For example, if you actually worked 16 years and 27 days then don’t forget to include the ESB for those 27 days by calculating your daily salary.

Another thing to remember is that you are entitled to compensation for unused vacation time.

21 days per year for the first five years and 30 days per year after that. This is the national law, but you check your contract to see if your company gives you more days per year than the legal minimum. For 16 years of service you have 435 of paid vacation days. Add up the days you have claimed and if it’s less than 435, then add up the number of unclaimed days and multiply that number by your daily salary and add that to your ESB.

You are also entitled to an end-of-service certificate that mentioning your job and the number of years spent in the service. This can be used as proof of service in future employment searches here or back home. If you were recruited from abroad your employer must pay for your final-exit return plane ticket.

Finally, it’s important to remember that providing a no-objection certificate (NOC)* that allows you to find work elsewhere in the Kingdom without leaving and returning no sooner than 12 months after your final exit is at your employer’s discretion. You cannot compel your employer to release you back into the Saudi job market. Sometimes you can negotiate for obtaining the NOC by giving up some of your end-of-service benefits. Some employers are happy to release you locally to forgo the need to pay for your return ticket. You can also offer to “pay” for this NOC by giving up a portion of your ESB, like owed vacation time or a set sum.

*Update: I heard news that NOC is no more required to return back to Saudi Arabia. When I get some official proof/news I’ll share it.