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Saturday, 31 May 2014

End of Service Benefits Policy in Saudi Arabia

1.      Every Employee is entitled for End of Service Benefits at the end of his employment as per Saudi Labor Law.
2.      The amount of ESB award differs in case of Resignation and Termination.
3.      In case of resignation by the employee, ESB award will be calculated in following way;

a.       If employee resigns from the company within 2 years of Joining, he is not entitled for ESB since he has not met the minimum criteria of 2 years.
b.      If employee resigns from the company after completing 2 years but before 5 years, he is entitled to 1/3rd of his ESB award. ESB award in this case is half salary.
c.       If an employee resigned from the company after completing 5 years but before 10 years, he is entitled to 2/3rd of his ESB award. ESB award in this case is half salary for the first 5 years and full salary for the next 5 years.
d.      If an employee resigns from the company or company terminates him after completing 10 years of employment, he is entitled to his full ESB Award. ESB award in this case is half salary for the first 5 years and full salary for the rest of the years.


4.      In case of Termination of Employee by the company, ESB award will be calculated in the following way;
a.       If Company terminates an employee before completing 5 years in the company, employee will be entitled to half salary for the number of years he has worked in the company.
b.      If Company terminates an employee after completing 5 years in the company, employee will be entitled to half salary for the first 5 years and full salary for the rest of the period he has worked.
5.      In order to qualify for the ESB award, an employee has to complete consecutive years in the company.
6.      ESB award will be based on the latest salary an employee is entitled to receive.
7.      If an employee has completed a year partially, ESB will be calculated on pro-rata basis.
8.      Only Basic Salary, Housing and Transportation Allowance will be taken into account for the purpose of calculation of the ESB award. All other allowances will not qualify the criteria of ESB award.




Standard Procedure
1.      Employee will have to submit an approved resignation letter to the HR Department along with the “Form E” as an application of the release of his ESB.
2.      HR Department will compute the ESB in the light of the rules mentioned above.
3.      Finance Department will recheck the calculation of the ESB and check if he has any other dues to clear. Any payable amount by the employee to the company will be deducted from his final settlement.
4.      Final settlement will be signed by the HR manager, Finance Manager, General Manager and CEO of the Company
5.      Finance department will make sure to release the funds to the employee once all the required documentation for the final exit visa or transfer have been complete.



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