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End of Service Gratuity (EOSG) rules have been long established in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) and seem, at least on the face of it, straightforward.

On termination of employment, employees in the UAE and the KSA are entitled to receive an EOSG provided that certain qualifying conditions are fulfilled. However, the lack of clarity in certain provisions of the UAE law and the KSA law means that employers still regularly underestimate the complexity of calculating the EOSG and establishing when and how much EOSG is payable.

This confusion results in different practices, not just within the market, but even within a company. Not only does it increase a company's exposure to claims by departing employees, but some employers end up overpaying those employees.

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