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End of Service Benefit
Definition
End of service benefit is the statutory gratuity payable when employment ends across markets jurisdictions.
Statutory end-of-service benefit in the GCC
End of service benefit is the mandatory lump-sum payment due when an employment relationship ends. Across GCC jurisdictions, the concept shares a common structure — tenure multiplied by a wage base — but calculation rules differ materially between UAE mainland law, Saudi Labour Law, and free-zone frameworks. SMEs operating in multiple GCC countries must not assume one formula applies everywhere.
UAE mainland framework
Under Federal Decree-Law No. 33/2021, UAE mainland employers owe gratuity based on basic salary and years of service, with contract type and termination reason affecting the final amount. Payment is due within 14 days of termination alongside other final settlement components including wages, leave encashment, and repatriation costs where applicable.
KSA distinction
Saudi end-of-service award follows HRSD rules with different multipliers for resignation versus employer-initiated termination. The benefit applies to most employees regardless of nationality, unlike GOSI pension which covers Saudi nationals only. Cross-border SME groups often conflate the two systems, creating underpayment in one jurisdiction while over-accruing in another.
Example
CrossGulf Logistics employs 40 staff in Dubai and 22 in Riyadh. Their group finance team applied the UAE gratuity formula to a Saudi warehouse supervisor's exit, underpaying by SAR 14,000. HRSD mediation ordered correction using Saudi end-of-service rules. Separating UAE and KSA accrual policies in payroll configuration prevented repeat errors on subsequent cross-border transfers.
Compliance risks
Late or incorrect end-of-service payment triggers MOHRE fines in the UAE and HRSD disputes in KSA. Employees may file labour complaints or court claims for underpaid benefits plus legal costs. Failure to provision accurately also misstates liabilities in SME financial statements during due diligence or investment rounds.
Related terms
· by ArcHR Compliance Team
Frequently asked questions
What is End of Service Benefit?
End of service benefit is the statutory gratuity payable when employment ends across markets jurisdictions.
Is end-of-service benefit payable during probation?
Probation termination generally does not trigger full end-of-service entitlement in either UAE or KSA unless the employee completed sufficient service under applicable rules. UAE employees with less than one year typically receive no gratuity on resignation during probation, though employer-initiated termination may differ.
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