VoxxArrive · Saudi Arabia onboarding topic
Saudi Arabia End-of-Service and Termination Process: An Employer's Guide to Final Settlement, Gratuity and Iqama Cancellation (2025-2026)
Under Articles 74-88 of the Saudi Labor Law, notice is 60 days if the employer ends an indefinite, monthly-paid contract (30 days if the employee resigns, or if wages aren't paid monthly). A resignation is a formal request, not an automatic 30-day exit: under Article 79(bis) it is only deemed accepted once 30 days pass without an employer response, the employer may unilaterally postpone acceptance by up to a further 60 days on written business grounds (issued before the 30-day mark expires), and the employee may withdraw the request within 7 days - the contract, and both parties' obligations, stay in force until it actually ends. End-of-service gratuity is half a month's wage per year for the first five years and a full month's wage per year after that (Article 84), reduced on resignation under a sliding scale (Article 85), and full settlement is due within one week of an employer-initiated termination or two weeks of the contract's actual end date in a resignation (Article 88). Since the March 2021 Labor Reform Initiative (LRI), an expatriate whose contract has ended can apply for a Final Exit Visa through Absher (Qiwa is used earlier to close out the labor contract/work permit), which cancels the Iqama, without the employer's sign-off; one legal-industry source (not an official MHRSD/MOI publication) reports the employer is notified and gets 10 working days to object on legal grounds, and outstanding government dues must first be cleared. The employer remains liable under Article 40 for exit/re-entry fees and the employee's return airfare, except where the worker is medically unfit for work or resigns voluntarily without a legitimate reason, in which case the worker bears that cost.
Steps
- Serve or receive written notice - For an indefinite, monthly-paid contract, the employer must give 60 days' written notice and the employee 30 days (Article 75); it's 30 days each way if wages aren't paid monthly. Either party may instead pay wages for the notice period in lieu (Article 76).
- If the employee resigns, confirm when the contract actually ends (Article 79(bis)) - A resignation is a request, not an instant exit. It is deemed accepted once 30 days pass with no employer response; the employer may postpone acceptance for up to a further 60 days by giving the employee a written business justification before that 30-day mark expires; and the employee may withdraw the resignation within 7 days of submitting it, unless the employer has already accepted it. The contract, and both parties' obligations, remain fully in force until the resignation is accepted, the 30-day period lapses, or any postponement period expires - so notice-period and settlement timing run from that actual end date, not from the date the resignation letter was submitted.
- Calculate the end-of-service gratuity - Apply Article 84: half a month's final wage for each of the first five years of service, a full month's wage for each year after, pro-rated for partial years; then apply Article 85's resignation scale (1/3 after 2-5 years, 2/3 after 5-10 years, full after 10+ years) unless the force-majeure or marriage/childbirth exceptions in Article 87 apply.
- Pay the final settlement on time - Article 88 requires payment of wages and all entitlements within a maximum of one week from the contract's end date if the employer terminated the contract, or two weeks from the contract's actual end date (see the Article 79(bis) step above) if the employee resigned; the employer may deduct any debt the worker owes.
- Close out the work permit on Qiwa - End the employment contract record and work permit with MHRSD via Qiwa so the residency and exit steps can proceed.
- Apply for the Final Exit Visa (cancels the Iqama) via Absher - Historically only the employer (kafeel) could trigger this, but post-LRI an employee whose contract has ended can apply independently through Absher, once the labor contract/work permit has already been closed out via Qiwa (the previous step). One legal-industry source - not an official MHRSD/MOI/Absher publication - states the employer is notified and has 10 working days to object on legal grounds (e.g. a pending claim); treat this window as reported rather than officially confirmed. Any outstanding government dues must be cleared before issuance.
- Cover exit costs and repatriation - Under Article 40, the employer bears the exit/re-entry visa fees and the cost of the employee's return ticket home. The worker bears their own return cost only in two cases: if they are medically unfit for work, or if they are leaving voluntarily without a legitimate reason.
- Confirm departure within the visa's validity window - The employee (and any sponsored dependents) must leave the Kingdom before the Final Exit Visa lapses; overstaying risks fines and can complicate future re-entry.
Timeline
Notice period: 30-60 days depending on who initiates and the pay structure; a resignation only becomes final once accepted, once 30 days pass with no employer response, or once an employer postponement (up to a further 60 days) expires, under Article 79(bis). Final settlement: due within 1 week (employer-terminated) or 2 weeks (resignation, measured from the contract's actual end date) of contract end per Article 88. Final Exit Visa/Iqama cancellation: processed digitally via Absher, after Qiwa is used to close out the prior labor contract/work permit; one legal-industry source (not independently confirmed against an official MHRSD/MOI page) reports a 10-working-day employer objection window if the employee initiates it post-LRI; physical departure must then occur before the exit visa's validity period lapses.
Cost & fees
Employer bears Iqama/work-permit fees, exit and re-entry visa fees, and the employee's return airfare under Article 40 of the Saudi Labor Law (except where the worker is medically unfit for work or resigns voluntarily without a legitimate reason). This research could not independently confirm an official, current SAR fee schedule for the Final Exit Visa or exact overstay penalty amounts.
Some figures on this page vary by jurisdiction, zone or nationality, or could not be independently confirmed from a public source at time of writing - confirm the current figure with the regulator before relying on it.
Sources
- MHRSD (HRSD) - Saudi Labor Law, Chapter: Labor Relations (Articles 74-88, termination, notice, resignation and end-of-service indemnity, including Article 79(bis))
- MHRSD (HRSD) - Saudi Labor Law, Chapter: Employment of Non-Saudis (Article 40, exit/re-entry and repatriation costs)
- MHRSD (HRSD) - Official End of Service Benefit Calculator
- AHYSP Law Firm (via Mondaq) - Compliance With Final Exit Regulations In Saudi Arabia For Resident Expats And Employers
- Emerhub - Iqama Requirements for Long-Term Residency in Saudi Arabia (Final Exit Visa and sponsorship-transfer/Job Mobility Initiative context)
Frequently asked
How is end-of-service gratuity calculated in Saudi Arabia?
Article 84 of the Labor Law sets it at half a month's wage for each of the first five years of service and a full month's wage for each subsequent year, based on the employee's last wage, with a pro-rata amount for any part-year worked.
Does a resigning employee get the full gratuity?
No. Article 85 scales it down: one-third of the award after 2-5 years of continuous service, two-thirds after 5-10 years, and the full amount only after 10+ years - unless an Article 87 exception applies (force majeure, or a female employee resigning within 6 months of marriage or 3 months of childbirth), in which case the full award is payable regardless of tenure.
Does submitting a resignation letter end the contract right away?
No. Under Article 79(bis), a resignation is only deemed accepted once 30 days pass without an employer response; the employer may postpone acceptance by up to a further 60 days on written business grounds (given before the 30-day mark expires); and the employee may withdraw the resignation within 7 days of submitting it, unless the employer has already accepted it. The contract and both parties' obligations stay fully in force until the resignation actually takes effect, so notice periods and the Article 88 settlement clock run from that actual end date.
How fast must the employer pay the final settlement?
Article 88 requires payment of wages and all entitlements within a maximum of one week if the employer ended the contract, or within two weeks of the contract's actual end date if the employee resigned; the employer can offset any debt owed by the worker.
Can an expatriate employee cancel their own Iqama and exit without the employer's approval?
Since the March 2021 Labor Reform Initiative, an employee whose contract has ended or expired can apply for a Final Exit Visa through Absher on their own, once the labor contract/work permit has been closed out via Qiwa. One legal-industry source reports that the employer is notified and has 10 working days to object on legal grounds (e.g. a pending claim), though this specific window has not been independently confirmed on an official MHRSD/MOI/Absher page. Any outstanding government dues must be settled before the visa is issued.