5-5. End of Service (EOS):
By default, the End of Service Setup is per the country's Labor Law. The System does not allow calculating EOS if the Service period is less than a year. EOS Setup can be adjusted as per the Company policy. Below are details for TERMS used in Setup:
Note:
- The User can define which columns must be displayed for the EOS Setup.
- All the columns displayed here are per the Setup in Edit columns.
Department and Position:
- Here, the User can define EOS for Department and Position levels.
- The User can select 'All' if they want the same Setup.
EOS Reason:
-Users can define the reason for creating EOS (specified in edit columns), whether an Employee Resigned or is Terminated. In UAE, there are separate settings in Each Case.
If Resign:
- For the service period between years 1 to 3, there are 7 days of Salary each year.
- For the service period between years 3 to 5, there are 14 days of Salary plus the preceding 3 years as 14 days.
- For a service period of more than 5 years, then there will be (Either 14 or 21) day's Salary for the first 5 years,
- Above 5 years will have 30 days' Salary.
If Terminated:
- For the service period between years 1 to 5, 21 days' Salary will be considered for each year.
- For more than 5 years of service, 30 days will be considered.
Note:
There is an option to Calculate EOS in Resignation as a Termination if the Service period is more than 5 years.
Max-Month\Amount:
- The User can define the maximum benefit for the Employee.
- I.e., maximum month Salary or Amount to be given as maximum benefit.
Type:
- The User can define what Type is for Max Benefit. Two options are available, total monthly Salary or Amount.
- E.g., It can be 24 times the total monthly Salary or 1000 to be the Amount.
- By default, the total monthly Salary allowed for max benefit is 24 times the total Salary.
Salary Items:
-If Salary is selected as Type, select which Salary components to include in Max benefit here.
Salary– EOS:
-Users can define which Salary components to be included in EOS calculation. The User can add components like Basic Salary and allowances depending on their Setup.
Service From/Service To:
-Defines the period of service from and to for the EOS calculation.
Salary Days:
-Users can define the Salary days for EOS calculation.
Percentage to pay:
-Users can define the percentage of the Amount to be paid as an EOS Amount from the EOS calculation.
-E.g., If the EOS Amount is 1000 and the percentage to pay is 100, then the Amount to be paid is 1000 (total Amount), and if the percentage to pay is 50, the Amount to be paid will be 500.
Note:
1. Max benefit means: What is the maximum EOS that can be paid to Employee
2. EOS Amount or Max benefit, which one is lower, will be paid.
Dependable:
-Users can select either Yes or No for 'Dependable.'
- The first line is always 'Yes' for dependable since there is nothing to depend on from a previous line.
-If the option is "Yes" from years 1 to 3 and 3 to 5, calculated days are 7 days for 1 to 3 years and 14 days for 3 to 5 years as per the EOS Setup.
-If the option "No" is selected from years 3 to 5, calculated days are 7 for 1 to 3 years, but any sooner Employee who has a service period that exceeds 3 years will enable getting 14 days for all previous years as well.
Note:
All the columns above are as per the settings in Edit Columns.
Maximum Leave Days Allowed for the calculation of EOS:
-Users can set the maximum number of leaves allowed while calculating EOS.
-If an Employee has 40 day leave balance and the 'Maximum Leave Days Allowed for the calculation of EOS' is 10, they will be paid only for 10 days. This is as per the Company policy.
Calculate Unpaid Leave Salary Calculation based on Leave Setup:
-If this box is checked, the unpaid Salary will be calculated based on the Leave Setup.
-I.e., Company Setting→Advanced Activities Setup→Annual Leave Setup
Calculate Unpaid Leave Salary Calculation based on Total Salary:
-If this box is checked, the unpaid Salary will be calculated based on the Total Salary.
Calculate Unpaid Leave Salary Calculation based on Salary Items:
-If this box is checked, the unpaid Salary will be calculated based on the Salary Items listed: Basic Salary, Accommodation, Furniture, etc. Users can select the Salary Item to be included in the EOS calculation.
- E.g., Users can select the Basic Salary, Accommodation, etc.
Leave Calculation Basis:
-Users can check the box and set the basis to 360 or 365 Days.
-By default, this option is unchecked with a Value zero (i.e., the basis is not set), meaning the leave calculation is based on the Salary Setup.
-If the basis is not set and leave days are 10, the Salary calculation is: Actual Month Days: Leave Salary Calculation will be: 3000*12*10
365
Fixed 30 Days: Leave Salary Calculation will be: 3000*12*10
360
When Resigns; If the service period exceeds five years, calculate as Terminate:
-If the option is checked for any Employee after 5 years, calculate EOS as Termination when they resign.
Omit Unpaid Salaries/Not Created Salary Sheets in the Create End of Service form:
-If this option is checked, unpaid salaries and not created Salary sheets are not included in the EOS calculation.
Date:
Start Calculating EOS provision after---- Months from Joining
-Users can set the Number of months to start calculating EOS provision from the joining Date.
- E.g., if 6 months is selected, the System will start calculating the EOS provision after 6 months of the joining Date.
Calculate EOS Service Period based on Days Basis Days:
- EOS Service Period can be calculated on a different day's basis. It could be 365 or 360 days on any basis as per Company policy.
- If 'Calculate EOS Service Period based on Days' is not set, then the service period will be calculated as 3 + (4 / 12) + (2 / 365) = 3.338813 if Employee worked for 3 Years 4 Months and 2 Days.
- If 'Calculate EOS Service Period based on Days' is 360 Days, then the service period will be calculated as 1221 / 360 = 3.391 if the Employee worked for 1221 days. (1221 is the Number of calendar days worked from the joining Date to EOS Date).
Note:
When the User selects Set Default, it should go to the default settings of EOS as per UAE (country). Set default should read from the country EOS Setup.
Note:
Creating EOS will not affect any transaction/activities unless EOS is approved.
E.g., For a Timesheet Employee, if the User wants to create an EOS Date on 12 June, then they need to do the following:
- Users need to create Timesheet for June. Fill Timesheet entry till 11 June usually, and from 12 June till the end of the month, fill as 'Absent.'
- Create Salary sheet for June
- Create EOS
Now to cause an effect on activities, the User must approve EOS.
In the Additions & Deductions Tab, the User can add the additions and deductions to be added for the EOS Employee as below:
If the User wants to make any Adjustment in the total amount, they can do it from the Summary Tab as below:
Different Cases:
If the Employee's Salary is 3000, Calculate the Unpaid Leave Salary Calculation Based on Leave Setup (Leave Setup is to include All Salary Items and Transfer To Next Year is Yes), Employee works for 3 years,4 months, and 2 days and EOS Setup is as below: the Default Setup.
The Calculation summary is the following:
Note:
If the Leave Salary Calculation basis is 0 Days, it will read the Setup from Payroll Settings. If the Setup is actual month days, then the leave days are divided by 365 Days. If Setup is fixed by 30 days, then leave days are divided by 360.
The image above represents a close-up view of the EOS Setup where users can choose and apply suitable actions and requirements.
Moreover, the cases below represent several calculations regarding the End of Service.
However, the results might vary between one User and another depending on how the Setup is made among users
Case 1:
If the Setup is
And Leave Salary Calculation basis is 360 Days, EOS basis =360 in EOS Setup:
Here, 1-day Salary = 3000*12 =100
360
100 X 70.115073 (Eligible Days) =7011.51
If EOS basis = 365, then the calculation will be as follows:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be
365
98.63 * 70.115073 (Eligible Days) = 6915.459
Note:
1. Total Days is calculated as the total no of Calendar Days. i.e., 1219 days her
2. When 'Calculate EOS Service Period based on Days' is not set (By Default zero), then the years calculated as (as the example shown above) 3 + (4 / 12) + (2 / 365) = 3.338813 of 3 Years 4 Months and 2 Days.
And If the Maximum Leave Allowed for Calculating EOS is set as 10, then the Leave Salary will be (3000 * 12 * 10) / 360 = 1000 [basis: 360].
Case 2:
If the Setup is
And Leave Salary Calculation basis is 365 Days,
EOS basis = 360 in EOS Setup:
Here, 1-day Salary = 3000*12 =100, then the total amount for EOS will be
360
100 * 70.115073 (Eligible Days) = 7011.51
If EOS basis = 365, then the calculation will be the following:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be
365
98.63 * 70.115073 (Eligible Days) = 6915.459
And If the Maximum Leave Allowed for Calculating EOS is 10, then the Leave Salary will be: (3000*12*10) / 365 = 986 [basis: 365]
Case 3:
If the Setup is
And Leave Salary Calculation basis is 360 Days,
EOS basis =360 in EOS Setup:
Here, 1-day Salary = 3000*12 =100, then the total amount for EOS will be
360
100 * 71.108331 (Eligible Days) = 7110.8331
If EOS basis = 365, then the calculation will be the following:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be
365
98.63 * 71.108331 (Eligible Days) = 7013.4
And If the Maximum Leave Allowed for Calculating EOS is 10, then the Leave Salary will be (3000*12*10) / 360 = 1000 [basis: 360].
Case 4:
If the Setup is
And leave Salary calculation basis is 365 Days
EOS basis = 360 in EOS Setup:
Here, 1-day Salary = 3000*12 =100, then the total amount for EOS will be
360
100 * 71.108331 (Eligible Days) = 7110.8331
If EOS basis = 365, then the calculation will be as follows:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be
365
98.63 * 71.108331 (Eligible Days) = 7013.4
And If the Maximum Leave Allowed for Calculating EOS is 10, then the Leave Salary will be:
(3000*12*10) / 360 = 1000 [basis: 360].
Case 5:
If the Setup is
And leave Salary calculation basis is 360 Days,
EOS basis = 365 in EOS Setup:
Here, 1-day Salary = 3000*12 =100, then the total amount for EOS will be
360
100 * 70.134246 (Eligible Days) = 7013.4246
If EOS basis = 365, then the calculation will be as follows:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be
365
98.63 * 70.134246 (Eligible Days) = 6917.34
And If the Maximum Leave Allowed for Calculating EOS is 10, then the Leave Salary will be: (3000*12*10)/360=1000 [basis: 360]
Case 6:
If the Setup is
And leave Salary calculation basis is 365 days,
EOS basis is = 365 in EOS Setup:
Here, 1-day Salary = 3000*12 =100, then the total amount for EOS will be
360
100 * 70.134246 (Eligible Days) = 7013.4246
If EOS basis = 365, then the calculation will be the following:
1-day Salary = 3000 *12 =98.63, then the Total Amount for EOS will be:
365
98.63 * 70.134246 (Eligible Days) = 6917.34
And If the Maximum Leave Allowed for Calculating EOS is 10, then the Leave Salary will be: (300*12*10)/ 365 = 986 [basis: 365]
Note:
- Users can have separate settings for EOS regardless of the Company Setup. They can also have the same settings as per the Company policy.
-In EOS, the System will calculate the actual leave days. i.e., If the Transfer to next year is No (In Leave Setup) and EOS is created for the Employee in March, the Leave days will be 7 or 8 days.
- If the Leave Salary Calculation basis is Not checked, then it will be calculated Based on the Salary calculation Setup:
i.e., If the Maximum Leave Allowed for Calculating EOS is 10
1. Fixed 30 Days: Leave Salary Calculation will be: (3000 * 12 * 10) / 360
2. Actual Month Days: Leave Salary Calculation will be: (3000 * 12 *10) / 365