A Comparative Study on GCC Gratuity
Joharan Nachia Mohamed Eusuf
22 February, 2021
The Gulf Cooperation’s Council (GCC) is a political and economic union of Arab states bordering the Arabian Gulf. It was established in 1981 and its 6 members are the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.
Gratuity/ End of Service benefit in GCC
Gratuity is a monetary payment eligible to an employee as a lumpsum at the end of his tenure. Gratuity payment is a liability to the employer which accrues as the employee service period progresses.
In accordance with GCC country’s labor law, all expatriate workers are entitled for gratuity or severance Pay. Each GCC country has their own policies and procedure in settling the worker’s gratuity payment. This article helps you to understand the comparison of gratuity payment between the GCC countries.
When does gratuity accrue and how is it differentiated between the GCC countries?
Gratuity accrues from the first day of employment up to the last working day. But the accrual criteria and policies are different from one country to another. Below table will brief how gratuity accrues in GCC countries:
What is the base amount considered while calculating gratuity amount, across GCC countries?
As specified in GCC countries labor law, the base amount differs based on the fixed component. However, the laws clearly state that the base amount for calculating gratuity is based on either the last drawn basic salary or last drawn total fixed salary. Here, the table will give the brief explanation on the base amount:
How is Gratuity calculated during final settlement?
Each country has its own policy relating to Gratuity payment. Some countries are considering type of separation and type of contract for calculating Gratuity during final settlement. Below table shows the comparison of Gratuity payment criteria across each GCC country:
Even though the criteria for calculating gratuity varies from one GCC country to another, all these countries ensure that their employees get paid a good amount as gratuity at the end of their tenure. This amount acts as a huge relief for the employees and they should be aware of the gratuity payment terms and criteria; whether they are eligible, how it is calculated, etc.
For a comprehensive understanding of gratuity accrual and settlement in GCC countries, please refer to our articles relating to each country.
The process of payroll is a little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.
One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.
As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward.
To know more about our payroll process, click here
Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
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