Although the UAE is a popular business locale for multinationals, there are many different types of employment rules that may be unexpected or unfamiliar. One of the unique requirements that we assist our clients in navigating, is the UAE End of Service Benefit (EOSB). The EOSB is essentially a severance payment that is owed to an employee after termination or resignation. This is a mandatory payment, and is not optional even if your employee is still a resident of your home country.
How is the EOSB Calculated for Employees in the UAE?
The EOSB kicks in after one year of employment in the UAE, and is based on a daily pro rata amount of salary. The longer the term of employment, the more days are calculated to arrive at the amount of the payment. For each year of employment, the worker is owed 21 days of pay, for the first five years. After that it goes up to 30 days, so this is not an insignificant expense when an employee is terminated.
Because of the one year minimum employment term, this benefit will only apply to longer term employee assignments where there is a local payroll.
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Does the EOSB Apply for Expat Workers in the UAE?
Yes, because foreign companies must employ expats under local laws, and that includes payment of the EOSB after termination. In addition, expat employees are required to have private medical insurance in the UAE that meets their guidelines. That insurance has to be locally sourced, and cannot be a global or home country insurance policy. Obviously, these rules would apply to local employees as well.
Who Needs to Know About EOSB?
Any company that has foreign or local employees in the UAE need to be aware of the EOSB. In our experience, many foreign companies do not know about this requirement, so we work with our clients to make sure that they understand how it works. Otherwise, they may be met with unexpected expenses at assignment end, or worse, could be found non-compliant with UAE employment laws
How Can We Assist With EOSB?
We make sure that our clients fully understand the EOSB and insurance laws as part of being an employer in the UAE. We have access to local resources that can help with calculating EOSB payments and finding appropriate private medical insurance.
Without this assistance, many companies will not know what is expected, and could run into problems when hiring employees in the UAE. Our GEO service is designed so that you can employ workers quickly and easily in the UAE, while still being in complete compliance with that country’s laws.
Please contact us if you have questions about doing business and employing workers in the UAE, or other foreign countries.
Read our other articles on employment in UAE:
Special Rules for Work Permits and Visa on Arrival in UAE