End of Service Benefits (EOSB) are a legal obligation for employers in the UAE. Governed by UAE Labour Law, these benefits are due to employees at the end of their service and act as a form of retirement or severance pay. While the concept is straightforward, many companies struggle with accurately computing, provisioning, and reporting EOSB. This blog breaks down everything employers need to know to stay compliant and financially prepared.
What Are End of Service Benefits (EOSB)
EOSB is a lump sum payment due to an employee upon leaving the organization, provided they have completed at least one year of continuous service. The purpose of EOSB is to reward loyalty and provide financial support after employment ends.
Key Legal Guidelines Under UAE Labour Law
Eligibility: The employee must complete at least one year of continuous employment.
Basis of Calculation: EOSB is based on the employee’s last drawn basic salary.
Benefit Accrual:
- 21 days’ basic salary for each year of service up to 5 years
- 30 days’ basic salary for each year beyond 5 years
Maximum Cap: EOSB cannot exceed two years’ total salary.
Resignation, termination, and dismissals under certain conditions may lead to modified or reduced gratuity. Employers must always consult current legislation.
EOSB Calculation Formula
A basic EOSB calculation:
EOSB = (Basic Salary / 30) × Eligible Days × Number of Years
Example:
An employee with a basic salary of AED 10,000 and 6 years of service:
First 5 years = 21 × 5 = 105 days
Sixth year = 30 days
Total = 135 days = 4.5 months of salary = AED 45,000
Why Manual Calculations May Lead to Errors
Companies often make mistakes such as:
- Miscalculating partial months or probation periods
- Including bonuses or allowances by mistake
- Missing legal updates or policy changes
These errors result in under-provisioning, audit risks, or even labour disputes.
The Value of Actuarial Evaluation
Actuarial firms provide:
- Precise liability valuation for financial statements
- Compliance with IFRS, IAS 19, and local audit standards
- Long-term insights into trends, attrition, and future provisioning
RJAC Gulf Partners specializes in actuarially-evaluated EOSB reports tailored to UAE business compliance.
When Should Employers Seek EOSB Valuation
- Before year-end financial reporting
- During mergers or acquisitions
- While restructuring or scaling workforce
- On request from auditors or regulators
Timely actuarial valuation not only ensures compliance but prevents budget shortfalls and legal risks.
What Employers Should Do Now
Review internal EOSB calculation policies
Consult an actuarial advisor for a full valuation
Sync HR and finance systems to reflect updated gratuity obligation
EOSB is more than a legal requirement—it’s a financial responsibility that affects your credibility, cash flow, and corporate governance. Accurate EOSB computation protects your business and builds employee trust.
Need help evaluating your EOSB liabilities or conducting an actuarial valuation?
RJAC Gulf Partners is here to help.