End-of-service benefit (EOSB) is a mandatory lump-sum payment to employees upon termination across all GCC countries. The calculation method — days per year, salary basis, and caps — varies by country. Getting it wrong is one of the most common and costly payroll errors in the Gulf.
Why EOSB matters
EOSB is not optional — it is a legal entitlement under the labour law of every GCC country. Employers must accrue this liability monthly and pay it upon termination regardless of the reason for leaving (with some limited exceptions for gross misconduct). For long-tenured employees, EOSB can amount to several months' salary.
Under-accruing EOSB is one of the most common payroll errors in the Gulf. Companies that do not track it properly face large unbudgeted liabilities at termination.
Saudi Arabia
EOSB is calculated on basic salary plus housing allowance. For the first five years of service: half a month's salary per year. For years beyond five: one full month's salary per year. The total is capped at two years' salary.
If the employee resigns (rather than being terminated), the entitlement is reduced: no EOSB for the first two years, one-third for 2-5 years, two-thirds for 5-10 years, and full entitlement after 10 years.
UAE
EOSB is calculated on basic salary only (not total package). For the first five years: 21 calendar days' basic salary per year. Beyond five years: 30 calendar days per year. The total cannot exceed two years' basic salary.
The calculation uses calendar days (dividing monthly salary by 30), not working days. This is a common error — using 21 working days instead of 21 calendar days overstates the accrual.
Qatar
Under the 2024 amendment, EOSB is a flat 21 days' basic salary per year of service for all employees regardless of tenure length. There is no tiered structure. The calculation basis is basic salary only.
Kuwait
EOSB calculation depends on pay frequency. For monthly-paid employees: 15 days' salary per year for the first five years, then one month per year thereafter. For other employees: 10 days per year for the first five years, then 15 days thereafter. Total EOSB cannot exceed 18 months' salary.
Bahrain
EOSB is calculated as half a month's salary per year for the first three years, then one full month per year after that. The calculation is based on the last drawn salary. Bahrain does not cap the total EOSB amount.
Oman
For Omani nationals, EOSB follows the social insurance scheme (PASI). For expatriates, it is one month's basic salary per completed year of service. Partial years are calculated pro-rata. The basis is the last drawn basic salary.
Common EOSB mistakes
The most frequent errors are: using the wrong salary basis (total package instead of basic, or basic instead of basic + housing), applying the wrong tier thresholds, not pro-rating for partial years, confusing calendar days with working days in the UAE, and failing to account for resignation vs termination differences in Saudi Arabia.
Our payroll calculators compute EOSB accrual automatically using the correct formula for each country. The accrual amount is locked — it cannot be manually overridden — which prevents accidental errors.