How To Calculate End Service Benefits
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How To Compute End Of Service Benefits In Saudi Arabia

Employees in the Kingdom of Saudi Arabia are entitled to End of Service Benefits (ESB). These are benefits given to employees at the time they leave the company.Saudi Labour Law is very helpful for labour when calculating the End Service Benefits. ESB is the same as the gratuity. In Saudi Arabia, a proper document is distributed by the Ministry of Labour about Labour Law. In labour law, there are five articles  (84-88) dedicated only to end service benefits. As Saudi Arabian market observed some downfall due to a decrease in oil prices and it is hard for the smaller companies to sustain. That’s why most of the people are worried about their End Services Benefits in case their organization got bankrupt.End Service Benefits is the money that an expat is left with normally as he/she may not save during the course of his job.

End Service Computation

There are some rules and regulations for it  that are given below:

You must complete two years for entitlements

Then there are two types that are Resignation or Termination by the Employer.

Both of these impact the ESB.

If you worked less than two years in Saudi then there will be no benefit.

For 2 to 5 years you will get half month salary (basic) for each year e.g. if you worked for 4 years you will get two months salary

For more than 5 years one month salary for each year.

 

End of Service Benefits in Saudi Arabia

For  Resignation  Employees

Rule 1:

If an employee resigns in less than 2 years of work then he will not be entitled for End Of service benefits.To get these benefits he should have to complete minimum 2 years of employment.

Rule 2:

If an employee stays and work in the company for more than 2 years and less than 5 years.He will be entitles to get 1/3rd of his EOS benefits.EOS  Benefits will be half of his salary in this.

For example;
In case if your salary is 10,000 SAR per month & you a have served the organization for 6 years and 2 months, then end of service benefit is calculated as below;

First five years = (6 x 10,000)/2 = 30,000 SR.

Next 1 years = (1 x 10,000) = 10,000 SR.

For, extra 2 months we need to calculate like below;

Calculate the benefit by day = 10,000 SAR / 365 days = 27.40 SAR

Now, calculate the days for 2 months = 2 month x 30 days per month = 60 days

Multiply the benefit by day by remaining days = 27.40 SR x 60 days = 1643.85 SAR.

Now, the is Total  30,000 + 10,000 + 1643.85 = 41643.84 SAR

Total ESB he/she will get = 41643.84 x 66.67% = 27763.95 SAR

 

For Terminated Employees:

Rule1:
If an Employee gets terminated by his employer or company before 5 years of his service then he will be entitles for Half Salary

Rule2:
If an Employee get terminated after completion of 5 years, then he will be entitled for Full Salary.

For Example:

So, in your case if your salary is 10,000 SAR per month & you a have served the organization for 6 years and 2 months, then end of service benefit is calculated as below;

First five years = (6 x 10,000)/2 = 30,000 SR.

Next 1 years = (1 x 10,000) = 10,000 SR.

For, extra 2 months we need to calculate like below;

Calculate the benefit by day = 10,000 SAR / 365 days = 27.40 SAR

Now, calculate the days for 2 months = 2 month x 30 days per month = 60 days

Multiply the benefit by day by remaining days = 27.40 SR x 60 days = 1643.85 SAR.

Hence, Total you will get 30,000 + 10,000 + 1643.85 = 41643.84

 

 

                                         

 

 

01 Dec, 2019 2 51571
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