Understanding when your End of Service Gratuity (EOSG) might be reduced or denied is important for employees working in Saudi Arabia. Saudi Labor Law outlines clear conditions for gratuity eligibility, whether you resign or are terminated.
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Factors That Affect EOSG
1. Resignation vs. Termination
Your gratuity depends on whether you resign or your employer terminates your contract:
- Employer terminates the contract: You are generally entitled to the full EOSG.
- Employee resigns: The gratuity amount depends on your total years of service:
- Less than 2 years: No EOSG.
- 2 to 5 years: One-third of the EOSG.
- 5 to 10 years: Two-thirds of the EOSG.
- 10 or more years: Full EOSG.
2. Termination for “Cause” (Article 80)
Under Article 80 of Saudi Labor Law, an employer can terminate an employee without gratuity for serious violations, such as:
- Misconduct or violation of company policies.
- Repeated absences without a valid reason.
- Fraud or dishonesty in the workplace.
- Breach of contract or failure to perform duties.
If an employee is dismissed under Article 80, they may lose their EOSG.
3. Exceptions: When Employees Still Get Full EOSG
There are situations where an employee resigning is still eligible for full gratuity:
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- Force majeure (beyond the employee’s control) causes them to leave the job.
- Female employees resign within 6 months of marriage or 3 months after childbirth.
- Employer misconduct, such as harassment, unsafe working conditions, or unpaid wages, forces an employee to resign.
4. The Impact of Unpaid Leave on EOSG
If you take unpaid leave, those days are not counted in your service period. This means:
- Your total years of service for EOSG calculations may be reduced.
- If your unpaid leave is long, your EOSG might be lower than expected.
To avoid issues, ensure your employer clarifies how unpaid leave affects gratuity in your contract.
Why Record-Keeping Matters
Maintaining accurate records of your employment is crucial to avoid EOSG disputes. Keep copies of:
- Your employment contract with gratuity terms.
- Salary slips, which affect your EOSG calculation.
- Any approved leave records, especially if unpaid leave is involved.
Key Takeaways
- Employees terminated by their employer usually get full EOSG.
- Employees who resign receive a reduced EOSG unless they complete 10 years or qualify for an exception.
- Article 80 terminations can deny EOSG completely.
- Unpaid leave is not counted in the gratuity calculation.
- Keeping proper records can help prevent disputes.
Before making any job changes, always check your employment contract and the latest Saudi Labor Law updates. If in doubt, consult a legal expert for guidance.
