Saturday, July 5, 2014

What is the maximum limit of End of Service Benefits to be paid to Employees?

My employer has set a maximum limit of End of Service Benefits to be paid to the employees, is it legal?

Question by Visitor
I have been working at a government institution for the past 25 years. 15 years ago, I signed a document accepting my gratuity to 59 thousand Saudi riyals, the total eligible amount as per labor laws at that time. Now I will retire from service shortly, and I wish to know whether I will get only the amount fixed 15 years ago, or as per the calculation given by you?

Answer by Steve
Calculation of ESB depends upon the document you have signed that time. If you have taken ESB that time by resignation and rejoined the company on same date, you ESB calculation will take into account 15 years only.  However, if you took that money as loan or advance, you are entitled to ESB for all the 25 years less 59 thousands.

Comment by Visitor
Thanks for the reply. I did not get any money from the institution towards gratuity until now. I am still continuing in the same position without any break until now. I understand that the institution will give only the amount fixed 15 years ago (that is 59,000 SR) as gratuity when I go for final exit. At present the institution has fixed SR 50,000 as the maximum amount of gratuity for an employee at the time of final exit. Here my question is whether a particular institution (or company) has the right to limit the gratuity to a particular amount, in contravention of the labor laws, or not?

Answer by Steve
Minimum amount of End of Service Benefits can be calculated by the formulas given above. Saudi Labor Law sets the minimum amount of ESB for which an employee is entitled to. There is no clause in the Law for the capping of SR 50,000/-. If your employer is not paying you, you can go to the Labor office and they will surely help you. This is your hard earned money and they cannot take it away from you!

Comment by Visitor
Thanks Steve for your encouraging reply. Definitely I shall approach the labor office at the appropriate time.


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