CALCULATING END-OF-SERVICE AWARD

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• The end-of-service award shall be considered the worker's entitlement, which the employer shall pay him in the event of the termination of the work contract; the Saudi labor law makes it obligatory for the employer to pay it to the worker at the end of the work contract, whether the work contract is of a fixed or non-fixed term. Therefore, we have further facilitated the method of calculating the end-of-service award, the date of entitlement to the award, and the calculation method according to the rules and regulations of the Saudi labor law.

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It takes the worker’s last gross actual wage as the basis for calculating the bonus. Article 2 of the wage regulations defined the wage as: the basic wage plus all other due increases that are decided upon for the worker in exchange for the effort he exerted at work, or the risks he is exposed to in performing his work, or which are decided for the worker in return for work according to the work contract or work regulations, including allowances, benefits, grants and remunerations, in-kind benefits, commissions and percentages. With regard to commissions and percentages, according to the Labor Law definition of wages in Article 2, commissions and percentages are included within the elements of the wage for which the end-of-service benefits is calculated, taking into consideration what was stipulated in Article 86 of the Labor Law that “it is permissible to agree that it will not be calculated in the wage on which it is settled for the end-of-service benefits, all or some of the commission amounts, percentages of sales price, and similar elements of the wage paid to the worker, which are by their nature subject to increase and decrease.