Financial & Legal

How to calculate end of service benefits?

planejane writes in Financial & Legal

I was given notice that I am being made redundant. I'm quite happy actually as I feel burnt out at work and could use some time to recharge. Thankfully I am on my husband's sponsorship and we are pretty stable at the moment.

What I was wondering is how end of service benefits are calculated? I haven't heard from my employer yet and I've seen a couple of different ways online. My last resort would be to ask Ministry of Labour but I don't want to go down there unless I have to.

Anyone know for sure? The company is a private company in Dubai, not Freezone. Thanks!

Posted on: 14/04/2011 at 13:21

I hope this helps, but your human resources department should give you the information directly. It's sort of confusing and involves some math skills.

The first thing you have to know is that if you're contract is for an UNLIMITED term, your end of service gratuity is based on how many years you worked for the company.

1) 21 days paid for each year you worked for the company (for the first 5 years)

-OR-

2) 30 days paid for each additional year you worked for the company (there is a cap on this, but I'm not sure what it is)

Now here comes the math:

Step 1: Figure out how many days you've worked for the company
Let's say you worked from 1/01/2008 until 12/31/2010. You worked for the company for 365 + 364 days = 729 days total.

Step 2: Figure out how many days of paid gratuity you are owed
Since you only worked for 2 years, you fall under the first category.
21/365 * 729 = 41 days of paid gratuity

Step 3: Figure out your daily pay rate
Take your salary and divide by 365 to find your daily pay rate.

Step 4: Calculate your end of service benefit pay out
Multiply your daily pay rate (Step 3) by the number of days of paid gratuity you are entitled to (Step 2).

Since they are firing you, you are entitled to the full amount. If you had been the one to quit, then it would be a fraction of that amount depending on how long you've worked there.

I hope this all makes sense. I wish it were more simple, but when are things done easily in Dubai?

Posted on: 20/04/2011 at 00:28

Wow thanks so much for that detailed response. I used it to calculate what I am supposed to get and it's just a bit off from what our HR department said. They included a week of additional time off that I took last year, which seems reasonable.

Posted on: 26/04/2011 at 18:53

Someone named Kate sent me a message through the forum to ask how the calculation worked but I'm not sure my email went through to her. So in case it didn't here is the equation to calculate the end of service gratuity.
I used 10,000 as the monthly salary as a placeholder, just insert your actual monthly salary where you see the 10,000. Also your situation is a bit more complicated because you worked just over 5 years at the company. I'm not sure how that is calculated since you didn't work a full year after 5 years (hope that makes sense).
Here are the assumptions:- Worked 1,907 days in the 5 years you worked there (based on the dates you gave me)- Monthly salary of 10,000 AED- No unpaid days off
# of days of payout: (21/365)*(1,907) = 109 daysdaily pay rate: (10,000*12)/365 = 328 AEDESOB: 109 * 328 = 35,752 AED
I hope I have done that correctly, it's what I was told from an HR person here.

Posted on: 10/09/2011 at 12:44

Remember that the calculation is based on UNLIMITED CONTRACTS and whether you resigned or were made redundant. If you RESIGNED then you only get a fraction of your end of service benefits/gratuity based on how many years you worked:
1 to 3 years: 1/3 of the ESOB calculation3 to 5 years: 2/3 of the ESOB calculation5+ years: full
If you were made redundant then you don't need to reduce by a fraction, it's just as Lizzie11 explained above.
If you are still confused then call Ministry of Labour for clarity.

Posted on: 10/09/2011 at 13:21

Salam 3leekom all

I have a query and a bit confused on how my end of service should be calculated

I have completed with my current employer 4.7 years that’s almost 5 years thus please help on how it suppose to be calculated the EOS

Note that my salary has been increased 2 times during my employment with them so do I need to take my recent salary to calculate my EOS?

In addition, is the examples given had been calculated from the basic or total salary?

 Thanks and god bless

Posted on: 17/02/2013 at 21:05

Your concern department should have the exact figure. There must an interest rate, so contact your finance department and make sure you verify all the documents.

 

Posted on: 09/05/2013 at 13:21

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