Are you trying to calculate your End of Service Gratuity (EOSG) in Saudi Arabia but feeling confused about the “15-day rule”? Many employees find this rule tricky, making it hard to estimate their final payout. This guide will explain the 15-day rule in simple terms so you can understand how it affects your gratuity.
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End of Service Gratuity (EOSG), also known as severance pay, is a lump-sum payment that employers in Saudi Arabia must provide to eligible employees when their job ends. It rewards employees for their service and helps them financially after leaving a job.
The “15-day rule” is part of Saudi Labor Law and determines how partial months are counted in EOSG calculations. This guide is designed to help employees and HR professionals understand how the rule works so they can accurately calculate their gratuity.
What Is the 15-Day Rule?
The 15-day rule is used to calculate how long an employee has worked when determining EOSG. It applies when an employee has worked for part of a month.
According to Saudi Labor Law, if an employee works for 15 days or more in a month, that month counts as a full month in the EOSG calculation. If they work for less than 15 days, that month is not counted.
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This rule applies to both fixed-term and indefinite contracts. However, it’s always good to check your employment contract for any specific clauses.
Examples of the 15-Day Rule in Action
Scenario 1: Employee Works More Than 15 Days in the Final Month
- An employee worked for 5 years and 3 months.
- Their last working month was March, and they worked for 20 days before leaving.
- Their basic salary was SAR 10,000.
Since they worked more than 15 days in March, that month is counted as a full month. Their total service period becomes 5 years and 4 months.
Scenario 2: Employee Works Less Than 15 Days in the Final Month
- An employee worked for 3 years and 8 months.
- Their last working month was November, and they worked only 10 days before resigning.
- Their salary was SAR 8,000.
Since they worked less than 15 days in November, that month is not counted. Their total service period remains 3 years and 8 months.
How Does the 15-Day Rule Affect EOSG Calculations?
EOSG is calculated based on two time periods:
- First 5 years → Half a month’s salary for each year.
- After 5 years → One full month’s salary for each year.
For example:
- If an employee works 6 years and 4 months, they get:
- 5 years × (0.5 × monthly salary)
- 1 year × (1 × monthly salary)
- 4 months prorated
Each partial year is calculated as a fraction. If an employee works 4 extra months, EOSG for that period is:
(4/12) × (0.5 × salary) = Additional EOSG
The 15-Day Rule and Different Termination Scenarios
The 15-day rule applies regardless of how the job ends:
- Employer Termination – If an employer terminates the contract (with or without cause), the final month is counted based on the 15-day rule.
- Resignation by Employee – If the employee resigns, the final month is counted only if they worked 15+ days.
- Mutual Agreement – If both parties agree to end the job, the same rule applies.
Common Myths About the 15-Day Rule
Myth 1: “If I work less than 15 days, I lose my gratuity.”
Fact: You still get gratuity for your completed years of service. The 15-day rule only decides if the last month is counted or not.
Myth 2: “The rule only applies to fixed-term contracts.”
Fact: It applies to both fixed and indefinite contracts.
Myth 3: “If I work 15 days, I get a full salary for that month.”
Fact: The rule only affects EOSG. Your salary is based on actual days worked.
Conclusion
The 15-day rule is a key part of EOSG calculations in Saudi Arabia. Knowing how it works ensures that you get your rightful gratuity when your job ends. Always check the latest labor laws and seek professional advice if needed.
