How To Calculate End Of Service Or Gratuity For Jobs In Qatar

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End of Service EOS or gratuity is part of the Qatar Labour Law that stipulates a sum of money to be paid to an outgoing employee. The terms will be included in the employee’s contract. These contracts are normally terminated once their duration has passed OR prematurely under several conditions i.e. employee termination or resignation.

Apart from their salary, contract workers are awarded an ‘indemnity’ at the end of the contract period. The indemnity is calculated on the basis of basic salary (excluding bonuses). For those working in Qatar for a long time, indemnity can be a lot of money, as several people manage to accumulate considerable financial backup or live the high life. The indemnity is not related to insurance, but it is more of an end-of-the-term bonus, and is required by law to be paid to expatriate workers thanking them for serving the state. It is also known as ‘end-of-contract benefits’ or ‘end-of-service’ benefits. The indemnity scales are in the range 15 to 20 days of basic pay per year of employment for the first three years, and a month’s pay every year, thereafter.

A worker is entitled to an end of service gratuity, upon expiry of his service. The worker should have completed at least five years of employment. The gratuity will be agreed upon by the two parties, provided it is not less than three-week wages for each year of employment (and if one exceeds 5 years of service, gratuity could even be calculate at 30 days per year). The last drawn basic wage will be the base for calculation of gratuity. The employer is entitled to deduct from service gratuity, the amount due to him by the worker, if any.

Computation

Case 1: Worker served his employer for less than 5 years, the computation will be 3 weeks for every year the service rendered.

Formula: Basic Salary / 30 (the number of days in a month) x 21 days (three weeks) = Gratuity per year

Example: Basic wage of QAR 3,000/month and worked for 3 years

3,000 / 30 = 100

100 x 21 = 2,100

2,100 x 3 = QAR 6,300

Case 2: Worker served his employer for more than 5 years but less than 10 years, the computation will be 4 weeks for every year the service rendered:

Example: Basic wage of QAR 3,000/month and worked for 8 years

3,000 / 30 = 100

100 x 28 = 2,100

2,800 x 8 = QAR 22,400

Case 3: Worker served his employer for more than 10 years, the computation will be 5 weeks for every year the service rendered:

Example: Basic wage of QAR 3,000/month and worked for 15 years

3,000 / 30 = 100

100 x 35 = 3,500

3,500 x 15 = QAR 52,500

When is it payable?

An EOS should be paid upon the termination of the employment. Recalculation of the EOS should be undertaken and a final termination payment should be made to ensure that the employees have received their full payment.

Excerpts pertaining to gratuity from the Qatar Labour Law, Law No 14 of the Year 2004:

Article (51)

The worker may terminate the service contract before its expiry. date if the contract is of a definite duration and without giving reasons for the termination if the contract is of an indefinite duration and retains his full right to obtain the end of service gratuity in the following cases:

  • If the employer commits a breach of his obligations under the service contract or the provisions of this law.
  • If the employer or his responsible manager commits a physical assault or immoral act upon the worker or any of his family member.
  • If the employer or his representative has misled the worker at the time of entering into the service contract as to the terms and conditions of the work.
  • If continuance with the work endangers the safety and health of the worker provided that the employer is aware of the danger and does not take the necessary steps to remove it.

Article (54)

In addition to any sums to which the worker is entitled to upon the expiry of his service, the employer shall pay the end of service gratuity to the worker who has completed employment of one year or more. This gratuity shall be agreed upon by the two parties, provided that it is not less than a three-week wage for every year of employment. The worker shall be entitled to gratuity for the fractions of the year in proportion to the duration of employment.

  • The worker’s service shall be considered continous if it is terminated in cases other than those stipulated in article 61 of this Law and is returned to service within two months of its termination.
  • The last basic wage shall be the base for the calculation of the gratuity.
  • The employer is entitled to deduct from the service gratuity the amount due to him by the worker.

Article (55) 

If the worker dies during the employment for whatsoever causes, the employer shall within a period not exceeding fifteen days from the date of death deposit with the court any wages or entitlements due to the worker in addition to the gratuity. The depositing record shall contain a detailed report indicating the method of calculating the sums referred to and a copy of the record shall be delivered to the Department.

The court shall distribute the deposited sums amongst the heirs of the deceased worker in accordance with the provisions of the Islamic Sharia or the personal law applicable in the country of the deceased and if three years lapse from the date of depositing without the person entitled to the deposited sums being known the court shall transfer the said sums to the public fund of the State.

Article (56)

The employer who maintains a retirement system or a similar system which secures for the worker a greater benefit than the end of service gratuity to which the worker is entitled under the provisions of Article (54) of this law shall not be obligated to pay to the worker the end of service gratuity in addition to the benefit available to the worker under the said system.

If the net benefit accruing to the worker under the said system is less than the end of service gratuity the employer shall pay to the worker the end of service gratuity and return to him any sum whereby the worker may have contributed to the said system.

The worker may choose to receive either the end of service gratuity or the pension accruing to him under the said system.

Article (59)

The disciplinary penalties which may be inflicted on the workers are:

Notification, which shall be deemed to have been achieved by a written letter to the worker containing a notification of the violation he has committed and requesting him not to repeat the commission thereof and warning him of the infliction of a severer penalty in case of repetition.

Deduction from the wage of the worker for a period not exceeding five days in respect of one violation.

Suspension from work together with non-payment of the wage for a period not exceeding five days in respect of one violation.

Suspension from work without payment or with reduced payment pending the adjudication upon the criminal charge attributed to the worker and if the worker is acquitted or if the charge against him has been dropped the suspension shall be deemed to have never taken place and the worker shall be paid his entitlements during the suspension period.

Postponement of the grant of annual increment for a period not exceeding six months or the non-payment therefrom in the establishments which maintain increments systems.

Postponement of promotion for a period not exceeding one year in the establishments which maintain promotion systems.

Dismissal from work with payment of the end of service gratuity.

Dismissal from work and non-payment of the end of service gratuity.

Article (61)

 

The employer may dismiss the worker without notice and without payment of the end of service gratuity in the following instances.

  • If the worker assumes a false identity or nationality o r submits false certificates or documents.
  • If the worker commits an act which causes gross financial loss to the employer provided that the employer shall notify the Department of the incident within twenty four hours from the time of his being aware thereof.
  • If the worker violates more than once the written instructions of the employer concerning the safety of the workers and the establishment despite his being notified in writing of the violation provided that these instructions shall be written and posted up in a conspicuous place.
  • If the worker fails more than once to carry out his essential duties under the service contract or this law despite his having been notified in writing thereof.
  • If the worker discloses the secrets of the establishment where he is employed.
  • If the worker is found during the working hours in a state of drunkenness or under the influence of a drug.
  • If the worker commits an assault on the person of the employer, the manager or one of his supervisors in the work during the work or by reason thereof.
  • If the worker repeats his assault on his colleagues in work despite his being warned in writing thereof.
  • If the worker absents himself from work without legitimate cause for more than seven consecutive days or fifteen days in one year.
  • If the worker has been finally sentenced for a crime involving immorality or dishonesty.

Article (72)

The wage of the worker during the annual or sick leave and his end of service gratuity shall be calculated on the basis of his basic wage on the date of entitlement and if the worker is employed on a piece-by-piece work basis the entitlement shall be calculated on the basis of his average wages for the three months preceding the date of entitlement.

LABOUR LAW: WHO IS EXCLUDED?

The Labour Law (Article 3) excludes individuals employed by the following employers from its provisions and regulation:

Ministries and other governmental organisations, public institutions, corporations and companies which are established by Qatar Petroleum (QP) by itself or with others and individuals whose employment is regulated by special laws.

The Qatar armed forces, the police and individuals employed at sea.

In addition the Labour Law excludes individuals working in the following roles from its provisions and regulation:

Casual workers.

Domestic workers, eg. drivers, nurses, cooks, gardeners, etc.

Family members and dependents of individuals working in Qatar.

Agricultural workers, including, individuals involved in grazing, product processing and marketing, equipment operators and those individuals who repair agricultural equipment.

The provisions of the Labour Law, or any part thereof, may be applied to the employment of the individuals set out in the last four bullet points above subject to a resolution of the Council of Ministers upon the recommendation of the Minister.

Where individuals are excluded from the provisions of the Labour Law, their employment is subject to alternative legal and regulatory provisions, eg. Law No (8) of 2009, Human Resources Law, governs the rights of Ministries and other Governmental organisations and the QFC Employment Regulations govern the employment of the employees of Qatar Financial Centre Authority licence holders.

For the purposes of this article we have not considered any employment termination payments.

QATAR END OF SERVICE OR GRATUITY: WHO WILL QUALIFY?

The Labour Law (Article 54) provides in summary that in addition to any other payments to which an employee is entitled on the termination of his employment, he shall also be entitled to EOS provided he has worked for the same employer for a period of one year or more.

Employees who have had their employment validly terminated (Article 61) for reasons of gross misconduct, eg. submitting fraudulent documentation, causing material financial loss, etc, without notice will not qualify for an EOS termination payment.

Employees who validly terminate their employment (Article 51) without notice as a result of an employer’s gross misconduct, eg. material breach, physical assault, etc, should qualify and be paid EOS in addition to their other employment termination payments.

Employees who are entitled to a greater benefit under their employer’s retirement or similar scheme will not generally be entitled to EOS in addition to those scheme benefits (Article 56). Where for whatever reason the scheme’s benefits are less than EOS on the termination of an employee’s employment he can choose to be paid EOS and an employer will be required to repay to the employee any scheme contributions which the employee may have paid or the employer may have paid on the employee’s behalf.

If an employee dies when he is working in Qatar and if he would have qualified for EOS then the employer is under an obligation to pay EOS to the employee’s heirs in addition to his other employment termination payments.

QATAR END OF SERVICE OR GRATUITY: HOW IS IT CALCULATED?

The Labour Law (Article 54) provides in summary that the employer and employee can agree on the amount of EOS to which an employee will be entitled when his employment terminates provided the amount equals to or is higher than three weeks’ of the employee’s termination basic salary for every full year that he has worked for the employer. Part years are pro rated.

EOS is usually calculated using calendar days, but may be calculated using working days if more appropriate given the industry working practices. Periods of valid leave, eg. sick, maternity or annual leave are generally included in the calculation. Periods of voluntary unpaid leave are generally excluded, but this will usually be determined by company policy in relation to the same.

If an employee was employed by an employer prior to the Labour Law taking effect, ie. January 6, 2005, EOS for the period to  January 6, 2005 may be calculated in accordance with the terms of Law No (3) of 1962, the previous Labour Law. EOS under this law is more generous than under the Labour Law given there is a calculation escalation after five years. The previous Labour Law permits the employer and employee to opt out of EOS payments where one of the parties terminates employment for reasons of gross misconduct, but also if the employee was foreign, worked for a national enterprise and had agreed in writing. Such an opt out is not possible under the provisions of the Labour Law.

QATAR END OF SERVICE OR GRATUITY:  WHEN IS IT PAYABLE?

The Labour Law provides for EOS to be paid to qualifying employees when their employment is terminated. Recent entrants to the Qatar market have started introducing payment policies which provide for employees to be paid EOS throughout the duration of their employment in order to ease cash flow by avoiding material payments having to be made on termination.

Where such policies are implemented it will be important for employers to ensure that their employees receive their full EOS entitlement in compliance with the Labour Law when their employment terminates.

A recalculation of the EOS should be undertaken and a final termination payment made to employees to ensure that full payments are made.

I am working in a company in Qatar for the last seven years. How is my EOS calculated? Will I get 30 days’ gratuity after five years of service?

“The entitlements prescribed by labour law No. 14/2004 represent the minimum entitlements of the workers and any stipulation contradicting the provisions of the law shall be void even if it was made prior to the date of application of this law, unless the said stipulation is more advantageous to the workers, and any release, compromise or waiver of the entitlements prescribed for the worker by this law shall be deemed void”.

  • The labour law says the employer shall pay end of service gratuity to the worker who has completed one year or more of employment.
  • The gratuity shall be agreed upon by the two parties, provided that it is not less than three week’s wages for every year of employment.
  • The gratuity will not increase automatically after five years; it will be the same amount, but the two parties can amend it by agreement.
  • “The worker shall be entitled to gratuity for the fractions of the year in proportion to the duration of employment.
  • The last basic wage shall be the base for the calculation of gratuity. The employer is entitled to deduct from the gratuity the amount due to him from the worker”.

Sources: The Peninsula, Expat Woman, Gulf Times

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