End Of Service Contract Letter Template for Saudi Arabia

An End Of Service Contract Letter is a critical legal document that formally concludes your employment relationship in Saudi Arabia. Under Saudi Labor Law (Royal Decree No. M/51), this letter serves as official documentation of employment termination and ensures proper calculation and payment of your end of service benefits. Whether you're an employer or employee, understanding the requirements and implications of this document is essential for compliance with Saudi labor regulations.

When do you need this document?

You need an End Of Service Contract Letter whenever an employment relationship ends in Saudi Arabia, regardless of the reason. If you're resigning from your position, your employer must issue this letter as part of the final settlement process. When your fixed-term contract reaches its natural expiration date, this document becomes mandatory to formalize the conclusion. If you're retiring or being terminated by your employer, the letter serves as official confirmation of your employment end date and benefit entitlements. The document is also required for administrative processes such as visa cancellation, sponsorship transfers, or obtaining an exit re-entry permit. Additionally, if you're switching jobs within Saudi Arabia, your new employer may request this letter as proof of proper termination from your previous position.

Key legal considerations

The letter must accurately calculate your end of service gratuity according to Articles 84-88 of Saudi Labor Law, which typically amounts to half a month's salary for each of the first five years and one full month's salary for each subsequent year. Your final settlement should include any outstanding salary payments, unused annual leave compensation, and other accrued benefits as specified in your employment contract. The document must clearly state the reason for termination, as this affects your legal rights and future employment eligibility in Saudi Arabia. Any outstanding obligations, such as equipment returns or loan repayments, should be detailed to ensure complete clearance. The letter should also confirm compliance with notice period requirements as outlined in Article 75 of Saudi Labor Law, which varies depending on your salary structure and employment duration.

Legal requirements in Saudi Arabia

Under Saudi Labor Law, your employer must process final payments through the Wage Protection System (WPS) as mandated by current regulations, ensuring electronic documentation of all financial transactions. The letter must be issued on official company letterhead and signed by an authorized company representative, typically the HR Director or authorized signatory. Ministerial Resolution No. 684 of 1438 H requires specific information including your employee ID, position, department, exact service duration, and detailed benefit calculations. Your employer must also ensure proper coordination with the General Organization for Social Insurance (GOSI) for final social insurance settlements and documentation. The document should reference your original employment contract terms and confirm that all statutory requirements have been met. Additionally, the letter must be prepared in a format that facilitates smooth processing of exit procedures with the Ministry of Interior and relevant government agencies for visa-related matters.