End-of-service benefit
End of Service Benefit (EOSB)
In one sentenceAn amount the business pays the employee when the employment relationship ends: half a month's wage for each of the first five years, and a month's wage for each year after that.
Simply put
The end-of-service benefit is calculated on the employee's last wage and the full length of service in years and fractions of a year.
The reason the contract ended affects the amount: on resignation the employee may be entitled to only part of the benefit depending on the length of service, so review the case before paying.
Worked example
An employee at a distribution company served 8 years, his last wage is 6,000 SAR, and his contract ended in a case where he is entitled to the full benefit.
First five years: 5 × half a month (3,000)15,000
Next three years: 3 × a month (6,000)18,000
End-of-service benefit33,000 SAR
Formula: (Half the wage × the first five years) + (the wage × the years after them)
Don't confuse it with
End-of-service provisionThe benefit is what is actually paid when the contract ends, while the provision is a liability recorded in the books every year in preparation for it.