End of Service Benefits (EOSB)

What are End of Service Benefits?

End of Service Benefits (EOSB) are lump-sum payments made to employees when they leave a company, as required by UAE Labour Law. 

Think of it as a financial farewell—a gesture of appreciation for years of service. For HR professionals and business owners in the UAE, understanding EOSB is critical for both budgeting and compliance.

Who is Eligible?

All employees who complete at least one year of continuous service are entitled to end-of-service gratuity. This applies to both limited and unlimited contract types, whether the employee is terminated or resigns.

How It’s Calculated

Gratuity is based on an employee’s basic salary, excluding allowances or bonuses. Here’s a simplified breakdown:

• 21 days’ salary for each of the first five years
• 30 days’ salary for each additional year

Example: If your basic salary is AED 10,000 and you’ve worked 6 years:

• First 5 years = 21 days x 5 = 105 days
• Year 6 = 30 days
• Total = 135 days → (135/30) = 4.5 months → 4.5 x AED 10,000 = AED 45,000

Exceptions and Deductions

• If an employee resigns before 5 years, they may get a reduced amount
• Termination due to gross misconduct may lead to EOSB forfeiture

Tips for Employers

• Maintain accurate records of start dates and salary changes
• Budget for EOSB liabilities, especially for long-tenured staff
• Clearly explain EOSB entitlements in your employee handbook

Conclusion

EOSB is more than a legal requirement it’s a mark of a responsible employer. Get it right, and you will strengthen trust and retention. Get it wrong, and you could face legal trouuble.