The basis of the end of service gratuity payment

Dear Questioner,

If I understand you correctly, you are saying that you are applying the fixed monthly wage. Which means you apply the Full Monthly Salary including the allowances as the basis for the calculation of the gratuity.

The law is very clear that the basis is the Basic Salary which should be lower than the Full monthly Salary.

I assume that the terminated employees are happy about this because they get much more money that they deserve.

If you are the Employer and asking, you have the freedom to give extra money above what the law determines to any of them.

However, if you are working in the HR Dept. OR the Accounting Dept. for a company and you have been doing this, it means you are in a big problem because the Employer - when he finds out - can accuse you of this mistake responsibility and can basically claim such a loss from you.

Let me know if I can be of any further assistance.

Regards,

Ahmed Elnaggar

The above response provided by the lawyer Mr Ahmed ElNaggar is accurate.

As an employer, you will face no legal problem for computing the EOSB on the monthly wage as the law sets out only the minimum requirement and any higher amount can be given upon your discretion.

However, if you are an HR or Accounting personnel you may run into a trouble with your company if you were expected to point out that the company is paying more than what the law mandates.

The provision for basic salary as base computation for EOSB is Article 134 of the Labour Law, Federal Law No. 8 of 1980.

With best regards

Mrs Khan