When Do You Lose Your End of Service Benefit? Cases of EOS Forfeiture

Published: January 2026 | 9 min read

Not every employee who leaves a job is entitled to End of Service (EOS) benefit. Saudi Labor Law specifies several circumstances in which an employee forfeits their right to EOS, either partially or completely. Understanding these cases is essential for both employees and employers to avoid disputes and manage expectations. This article explains the primary situations where EOS benefit is lost under the Saudi Labor Law and its implementing regulations.

Resignation Before Two Years of Service

Under Article 87 of the Saudi Labor Law, an employee who resigns before completing two years of continuous service with the same employer is not entitled to any EOS benefit. This is the most common scenario where EOS is completely forfeited. The rationale is that the employee has not invested sufficient time to earn the benefit, and the employer incurs costs in recruiting and training new staff.

It is important to note that this rule applies regardless of the reason for resignation. Even if the employee resigns for personal reasons, health issues, or to pursue a better opportunity, the two-year minimum service requirement remains in effect. The only exception is if the resignation is due to circumstances attributable to the employer, such as a material breach of the employment contract.

Example:
Ahmed joined a company on January 1, 2024 and resigned on December 31, 2025 (1 year 11 months). He is not entitled to any EOS benefit because his service duration is less than 2 years.

Disciplinary Termination Under Article 80

Article 80 of the Saudi Labor Law lists specific cases where an employer may terminate an employee without notice and without EOS benefit. These are situations where the employee commits a serious breach of duty or engages in misconduct that fundamentally undermines the employment relationship. The cases include:

Assaulting the employer or the manager responsible for supervision.
Failing to perform essential contractual duties despite formal warnings.
Proven acts of dishonesty, breach of trust, or fraud.
Unauthorized absence from work for more than 20 non-consecutive days in one year, or more than 10 consecutive days.
Disclosing confidential company information or trade secrets.
Being convicted of a crime involving honor or honesty.
Engaging in competition against the employer during employment.
Causing significant material damage to the employer's property with intent.
Falsifying documents or using false identity to obtain employment.
Using the workplace to engage in immoral acts.

When an employer terminates under Article 80, the employee forfeits all entitlement to EOS benefit, regardless of how many years they have served. The employer must, however, be able to prove the violation conclusively. Labor courts carefully scrutinize Article 80 terminations, and many are overturned if the employer fails to provide sufficient evidence.

Resignation Between Two and Five Years

For employees who resign after completing two years but before completing five years of service, the EOS benefit is reduced. Instead of receiving the full calculated amount, the employee receives only one-third of the benefit. This is sometimes referred to as "partial forfeiture" because the employee loses two-thirds of what would otherwise be their entitlement.

Example:
Sarah has a basic salary of 12,000 SAR and resigns after 3 years of service.
Gross EOS: 12,000 × 3 × 0.5 = 18,000 SAR
Entitlement ratio for resignation (2-5 years): 1/3
Actual EOS: 18,000 × 1/3 = 6,000 SAR
Forfeited amount: 12,000 SAR

Resignation Between Five and Ten Years

When an employee resigns after completing five years but before completing ten years, they receive two-thirds of the gross EOS benefit. Again, one-third is forfeited due to the resignation being employee-initiated.

When Full EOS Is Preserved Despite Resignation

If an employee resigns after completing ten or more years of continuous service, the full EOS benefit is payable. The law considers that after a decade of service, the employee has earned the full benefit even if they choose to leave voluntarily. Similarly, if the resignation is due to a force majeure event or circumstances beyond the employee's control, full EOS may be payable even before ten years.

Termination for Cause vs. Termination Without Cause

If an employer terminates an employee without a valid cause (not under Article 80), the employee is entitled to full EOS benefit regardless of service duration, provided they have worked at least two years. For employees with less than two years of service who are terminated by the employer, there is no EOS entitlement, but the employee may be entitled to other compensation such as notice pay and leave encashment.

Employee Death

In the event of an employee's death during service, full EOS benefit is paid to the legal heirs. This is not a forfeiture case but rather one of the few situations where EOS is paid in full regardless of service duration. Even if the employee had worked for only a few months, the heirs are entitled to the full calculated benefit.

Constructive Dismissal

If an employee can prove that they were constructively dismissed (forced to resign due to the employer's conduct), the resignation is treated as a termination by the employer. In such cases, the employee does not forfeit EOS and is entitled to the full benefit. Common constructive dismissal scenarios include non-payment of salary for several months, unsafe working conditions, or fundamental changes to the employment contract without consent.

Practical Advice

Before resigning, especially before 2 years of service, understand that you will forfeit all EOS benefit.
If you are facing disciplinary action, consult a labor lawyer before accepting termination terms.
Document all communications with your employer regarding termination or resignation.
If you believe you have been unfairly terminated under Article 80, file a complaint with the Ministry of Human Resources within 15 days.
Use the EOS Calculator to estimate your entitlement under different termination scenarios.

Recent Judicial Trends

Saudi labor courts have increasingly scrutinized Article 80 terminations, requiring employers to provide clear and convincing evidence of the alleged misconduct. In a notable 2024 ruling, the Court of Appeals in Jeddah overturned an Article 80 termination because the employer failed to provide the employee with a formal warning before termination. Courts are also recognizing constructive dismissal claims more frequently, protecting employees who resign due to employer misconduct.