What does this tool calculate?
It calculates the compensation due to the injured party if the other party terminates the contract without a valid reason, under Article 77 of the Saudi Labor Law, unless the contract specifies a compensation amount:
- Open-ended contract: fifteen days' wage for each year of the worker's service.
- Fixed-term contract: the wage for the remaining term of the contract.
- In both cases, the compensation is not less than two months' wage.
Example
A worker on an open-ended contract, with a wage of 9,000 SAR, served 6 years. The daily wage is 9,000 ÷ 30 = 300, and the compensation is 6 × 15 × 300 = 27,000 SAR, which is more than two months' wage (18,000), so the worker is entitled to 27,000 SAR. Had they served one year, the calculated amount would be 4,500, so they would be entitled to the minimum of 18,000 SAR.
What is added to the compensation
The compensation does not replace the end-of-service benefit or pay for unused leave; each of them is calculated with its own tool. The wage in the calculation is the actual wage (basic salary plus fixed allowances) unless the contract specifies otherwise.
Frequently asked questions
Does the compensation apply to resignation?
What if the contract specifies the compensation amount?
How is a partial year of service calculated?
Content last reviewed: 2026-11-03