End-of-Service Benefits & GOSI in Saudi Arabia 2026: Calculation & Accounting
How to calculate end-of-service benefits exactly per Saudi labor law, current GOSI contribution rates, and correct payroll journal entries.
Payroll is the largest monthly expense for most companies, and in Saudi Arabia it comes with strict statutory obligations: GOSI, Wage Protection (WPS), and end-of-service benefits (EOSB). A small calculation error compounds annually and becomes a large amount when an employee leaves. Let's break it down precisely.
GOSI contribution rates in 2026
Saudi employee
11% employer + 9.75% employee = 20.75% of the contributory wage.
Non-Saudi employee
2% employer only (occupational hazards branch); no employee share.
Contributory wage
Basic + housing allowance (capped at SAR 45,000/month).
Calculating EOSB exactly
Per Article 84 of Saudi Labor Law, EOSB is computed on the last wage (basic + all fixed allowances): • Half-month for each of the first five years. • One full month for each subsequent year. Example: employee with 8 years' service, last wage SAR 10,000: 5 yrs × ½ month × 10,000 = 25,000 + 3 yrs × 1 month × 10,000 = 30,000 Total = SAR 55,000.
Resignation vs termination
Resignation before 2 years
Employee is not entitled to any benefit.
Resignation 2-5 years
Entitled to one-third of the calculated benefit.
Resignation 5-10 years
Entitled to two-thirds of the calculated benefit.
After 10 years or termination
Entitled to the full benefit.
Monthly payroll journal entries
At each month-end, post three sets of entries: 1. Accrue gross salaries as expense. 2. Deduct the employee share of GOSI and income tax (if any) from net pay. 3. Accrue the end-of-service provision monthly rather than waiting until year-end. Monthly accrual prevents surprises and spreads the expense fairly across periods.
Wage Protection System (WPS) compliance
The Ministry of Human Resources requires a monthly WPS file via the Wage Protection System within the first 10 days of the month. Late or partial deposits freeze the company's services on Qiwa, Muqeem, and Absher Business. Bank deposits must match the WPS file exactly.
SIDA computes payroll automatically with all allowances and deductions, accrues end-of-service monthly, generates a bank-ready WPS file, and posts the full journal entries in one click.