Calculating EOSB/End of Service Benefit or Gratuity (In the UAE)

EOSB/End of Service Benefits or Gratuity is a sum of money paid to an employee at the end of a period of employment

Calculations for Limited Contract gratuity pay in UAE

  • Less than 1 year of service : No gratuity
  • Between 1 year and 5 years of service : 21 days salary
  • 5 or more years of service :30 days salary

Example: An employee who has a BASIC SALARY of 10,000/- resigned after 2 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 (This is for one year)
= 6,904.11 x 2 (years worked) = 13,808.22 (Gratuity for 2 years of work)

 

Calculations for Unlimited Contract gratuity pay

  • Less than 1 year of service : No gratuity
  • Between 1 year and 3 years of service : One third (1/3) of the 21-days gratuity pay.
  • Between 3 years and 5 years of service: Two third (2/3) of the 21-days gratuity pay.
  • 5 or more years of service :Full 21-days gratuity pay.

Example-01: An employee who has a BASIC SALARY of 10,000/- resigned after 2 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) / 3 (1/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 / 3 = 2,301.37 (This is for one year)
= 2,301.37 x 2 (years worked) = 4,602.74

Example-02: An employee who has a BASIC SALARY of 10,000/- resigned after 4 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) X 2/3 (2/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 x 2/3 = 4602.74 (This is for one year)
= 4602.74 x 4 (years worked) = 18,410.96

Example-03: An employee who has a BASIC SALARY of 10,000/- resigned after 4 years & 3 months (Jan, Feb & Mar) of work

 
=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) X 2/3 (2/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 x 2/3 = 4602.74 (This is for one year)
= 4602.74 x 4 (years worked) = 18,410.96

Calculating for those extra 3 months worked:

= 4,602.74 (2/3 rd pay for one year’s work) / 365 = Pay Per day
= 4,602.74 / 365 = 12.61
= 12.61 x 90 days (Jan=31 + Feb=28 + Mar=31)
= 1,134.92 (for Three months worked)

Therefore, for 4 years and 3 months worked you get 18,410.96 + 1,134.92 =  19,545.88

Note

  • Gratuity pay is calculated based on the most recent salary paid into your account.
  • Gratuity is calculated based on your BASIC salary
  • If you are terminated from your job, unless you break the rules as stated in Article 139 of the Labour Law, the employee is still entitled to gratuity pay.

Click here for UAE Labour Law: end of service gratuity

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Filling ‘blank/empty cells’ using data from the cell that is above the blank/empty cell

 

Steps:

1. Select the row header (select the entire colum)
2. Press F5
3. Press Alt+S or click on “Special…”
4. Select “BLANK”
5. Click OK
(Blank cells will be selected)
6. Enter ‘=’ and select the above cell
7. Press CNTRL+ENTER

If you wish to delete blank cells:

Follow Step 1 through to step 4 as mentioned above
Step 5. Right click on your mouse and select “Delete”
Step 6. Select “Shift cells up” or other options as required

If you wish to count all the blank cells:

In any cell that is outside your selection area type “=countblank(select your area)” ENTER

If you wish to colour all the blank cells:

1. Select your area
2. Select “Conditional Formatting” from the main menu
3. Select “Highlight cells rules”
4. Select ” More rules”
5. Under ‘Edit the rule description’ > ‘Format only cells with’ Choose ‘BLANKS’
6. Click on “Format”
7. Under FILL chose any colour of your choice
8. Click OK
9. Click OK again!

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Liquidity Ratios

Liquidity Ratios measure the ability of the organization to meet its short-term financial obligations.

Two ratios are commonly used:

  1. Current ratio or Working capital ratio = Current assets ÷ current liabilities

  • The current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations.
  • A very high current ratio is not necessarily good. It could indicate that a company is too liquid or the company is not making sufficient use of cheap short-term finance.
  • Normally this ratio should exceed 2:1 for a company to be able to safely meet its liabilities
  1. Acid test or Quick ratio = (current assets – inventory) ÷ current liabilities

  • Inventory often takes a long time to convert into cash hence it is deducted from current assets
  • A company with a quick ratio of less than 1 cannot currently fully pay back its current liabilities.

 

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