Housing allowance under Saudi labour law: when it is owed, how much, and its effect on end-of-service

Housing became a mandatory employer obligation after the labour law was amended. A practical guide for workers in Saudi Arabia: when the allowance is owed, the usual rate, how it changes your end-of-service award, and the mistakes that forfeit the claim.

Many migrant workers sign a contract stating a single combined salary, then discover years later — when the end-of-service award is calculated — that how that salary was split cost them thousands of riyals. Housing allowance is where this happens most. This guide sets out exactly what you are owed.

First: housing is no longer optional

Before 2025 housing was a matter for the parties to agree. That changed with an amendment issued by Royal Decree M/44. Paragraph 5 of **Article 61** of the Labour Law now states that the employer must "provide suitable housing for his workers", and may substitute "a suitable cash allowance paid to them with the wage".

Three words in that text define your entitlement: **must** — an obligation, not a choice. **Suitable** housing — not any accommodation discharges the duty. And a **suitable** allowance — not any sum counts.

Does it cover you as a migrant worker?

Yes. The amended law draws no distinction between Saudi and non-Saudi workers for this obligation. The test is not your nationality but whether your contract falls under the Labour Law — which covers the private sector and the non-profit sector.

The point most people do not know

This right comes from **the law itself, not your contract**. The employer owes it even if housing is never mentioned in what you signed. If an HR officer tells you "there is no housing allowance in the contract, so you are not entitled", that is wrong.

Housing or cash? The choice is not yours

The primary obligation is to provide the housing; the cash allowance is a substitute for it. So long as the employer genuinely provides suitable housing, you cannot demand cash on top. Equally, where no housing is provided, the allowance must be paid with your wage.

What if the housing is poor?

The law sets no floor area and no cap on occupants per room; it says only "suitable" — fit for human habitation and respectful of the worker's dignity. Accommodation that does not meet that description is treated as no accommodation at all, and your right to the allowance arises.

It goes further: an employer in breach of an obligation the law imposes may give you the right to leave the job under **Article 81** with your entitlements preserved — which is quite different from resigning, since resignation reduces your award and leaving under Article 81 does not.

How much?

The law sets **no percentage**. It says "suitable", leaving the figure to the employer having regard to the nature of the work, the basic wage, and rents around the workplace.

In practice, private-sector contracts put housing between **10% and 25% of the basic wage**. On a basic wage of SAR 4,000, that is typically SAR 400 to SAR 1,000.

Where the figure is unreasonably low against local rents, you may claim the difference before the labour court — during the contract or at its end.

The bigger effect: your end-of-service award

This is where the most money is lost, so read this part twice.

The Labour Law distinguishes the **basic wage** from the **actual wage**. The actual wage is the basic plus the other due increments — including housing and transport allowances where these are fixed and regular.

The end-of-service award (**Article 84**) is calculated on the **last actual wage**, not on the basic alone. The rule: half a month per year for the first five years, and a full month per year thereafter.

The difference is not small. Take a worker of ten years on a basic of SAR 3,000 with a fixed housing allowance of SAR 750. Calculated on the basic alone the award is (2.5 months for the first five years + 5 months for the next five) × 3,000 = **SAR 22,500**. On the actual wage of SAR 3,750 it becomes **SAR 28,125** — **SAR 5,625** more, from one line in the contract.

This is why some contracts state that the award is calculated on the basic wage only. Read that clause before signing, and know that a term reducing a right the law grants is open to challenge.

The salary-splitting trick — and how the law protects you

After the amendment some companies tried this: keep the total salary the same, cut the basic, and label the difference "housing allowance". The contract now looks compliant while your pocket gains nothing — and your end-of-service award shrinks, because it is now calculated on a smaller basic.

Doing this during a running contract is open to challenge under **Article 8**, which voids any term or measure that reduces a worker's rights. If you are offered an amendment in this shape, do not sign before you understand what it does to your basic wage.

From what date is it owed?

Entitlement runs from the date the amendment took effect, not from the start of your employment. Five years worked before the amendment do not attract a claim; the period after it does.

One mistake that forfeits the whole claim

If you sign a **final release** acknowledging receipt of all your entitlements, a later claim for any shortfall may be lost — even a well-founded one. Many workers sign under pressure, to clear a sponsorship transfer or a final exit.

So do not sign a document whose text you do not understand. If you must, ask that it record explicitly that you are not waiving a claim for housing allowance or end-of-service differences.

What to check before you sign

• Does the contract state the basic wage and the housing allowance **each as its own figure**, or one "all-inclusive" sum? Separate figures are clearer and protect you better.
• Is the employer actually providing housing, or paying an allowance? If housing: how many to a room, and are utilities on the company?
• Is the allowance paid **monthly with the wage**, or in instalments every six months? Ask for that to be stated.
• Is there a clause saying the end-of-service award is calculated on the basic alone?
• Do your contract details on the **Qiwa** platform match what you signed on paper? The officially registered version is what counts in a dispute.
• Keep a copy of the contract and a bank statement showing what actually reaches you each month.

And the allowance is for you

The law provides housing, or its allowance, for **the worker**; it does not extend to the family. An employer who provides suitable accommodation for you alone has discharged the duty, and is not obliged to provide family housing because you brought your wife and children. Where your contract does contain an express family housing allowance at a stated figure and it has been paid, it cannot be withdrawn or reduced unilaterally.

If it is not paid

Start with a written demand to the employer, which fixes the date of your claim. If nothing follows, the route is amicable settlement and then the labour court, through the Ministry of Human Resources channels. Keep every document: the contract, payslips, and any correspondence.

The Ministry of Human Resources and Social Development publishes an **official end-of-service calculator** on its website. Run your own figures through it before accepting any settlement, so you know what you are owed rather than what you are told you are owed.

Finally: laws and their implementing regulations change, and this is general information rather than advice on your own case. Check the current text through official sources before acting on it.

Rules and fees change and differ by country and employer. Always check with the official authorities before paying or signing anything.