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4-Oct-2004 Arab News (
Law & You )
J.R. from Riyadh I just want to
know if the end-of-service benefit (ESB) stated in my contract is legal
and within the rule of law. (1) My contract states that: In case the
service is not less than two years and not more than five years, the
employee shall be entitled to receive at the end of service a service
award equal to fifteen days salary. For service of more than five years,
the employee shall be entitled to receive at the end of service beyond
the fifth year, a service award of one-month salary. I am working with
the company with a two-year contract. (2) Is it possible for me to get
service award every time I finish my two-year contract?
(1) The timing is correct but the basis of calculation of your company
is not. The law also stipulates that only after two years of service is
an employee entitled to ESB. The basis of calculation in the law is not
the monthly salary, but the last monthly wage (LMW).
LMW is more than the salary. It is the total of the salary added to it
with all other personal allowances monthly averaged. If your salary is
SR1,000, your housing is SR400 per month and food allowance is SR300 per
month, then your LMW is SR1,700. This LMW is the basis of calculation
for your ESB.
If you work for five years you will get SR4,250. If you work for ten
years, you will get SR4,250 for the first five years, and above that you
will get a full LMW, i.e., SR1,700, for each of the next five years.
Your total ESB for ten years will be SR12.750. If you work for only two
years of your present two-year contract, you will get SR1,700 as ESB.
(2) By law, ESB can only be calculated and finally given at the end of
the service of an employee. It is possible that an employee may take
advances of amounts, big or small, a one-time payment or periodical, but
these may only be considered as advances on account of ESB. They are not
final. ESB can only be final when calculated at the end of the service,
when the company stops work or when the employee leaves the company. The
employee must then be given the difference between what he took as
advance and the actual calculation of ESB to which he is entitled
according to the law, as described above.