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The payment amount is calculated depending on the type of employment contract and length of employment, and it also depends on whether the employee has been fired or resigned voluntarily.
The functionality is available only if the Enable End-of-Service Benefit Calculation option is selected on the Administration > Settings > HR and Payroll form.
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Employment contract | Limited | Unlimited |
Termination Type | End- of Contract | Voluntarily |
Length of service 1-3 years | R =21 | R = 7 |
Length of service 3 - 5 years | R =21 | R = 14 |
Length of service over 5 years | R=30 | R = 21 |
Formula | A*R/12 | A*R/12 |
Table 1. EoSBMonthy amounts
Note that the rate from the current interval of the length of service is applied to
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GL Account | Debit | Credit |
End-Of-Service Provision |
| Monthly EoSB Amount |
Expense | Monthly EoSB Amount |
|
Table 2. Accrual of EoSB Amounts at month end
Also, documents of the End-of-Service Calculations type can be created manually by users and can include one or multiple employees with their benefit amounts. For manually created documents, the Manual Processing check box must be selected. The End-of-Service Calculations are dated by the last date of the month and list all the employees of an entity for which there are no any End-of-Service Calculation documents which are created manually (have the Manual Processing check box selected).
For each month, there can be only one automatically created document. If the process is run repeatedly, the automatically created document will be overwritten. The employees listed in any of the manually created documents are not included in the automatically created document and the manually created documents are not affectedby affected by the Month-End-Closing operation.
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The end-of-service benefit is included in the final pay only if the Pay the End-of-Service Benefit check box is selected on the Employment Termination form.
On termination of the employment with the limited-term contract, the application calculates the final EoSB gratuity as follows with N as length of service in months and A as daily salary:
Length of -Service | Voluntarily | Fired | End-of Contract |
Less than 1 year |
|
|
|
EoSB Rate | 0 | 0 | 0 |
1-5 year |
|
|
|
EoSB Rate | 0 | R1=21 | R1=21 |
Over 5 years |
|
|
|
EoSB Rate | 0 | R2=30 | R2=30 |
Table3. EoSB Rates for limited-term contracts
Note that daily salary is calculated as the employee's earnings during the previous month divided by 30. If the earning by any reason was zero, then the salary from the employments contract and the last changes to it is used.
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Length of -Service | Voluntarily | Fired |
Less than 1 year |
|
|
EoSB Rate | 0 | 0 |
1 - 3 year |
|
|
EoSB Rate | R1=7 | R1=21 |
3 - 5 year |
|
|
EoSB Rate | R2=14 | R1=21 |
Over 5 years |
|
|
EoSB Rate | R3=21 | 30 |
Table4. EoSB Rates for unlimited-term contracts
Because, most probably, the length of service also includes a certain number of days in addition to a number of full months, the benefit amount prorated for these days should be added to the benefit amounts in each case; it is calculated as follows: A* Nd *R/12/30 (where Nd - is the length of service in days; R - the rate from the last interval).
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GL Account | Debit | Credit |
End-Of-Service Provision | Min (Accrued Amount, Final Pay) |
|
Payroll |
| Min (Accrued Amount, Final Pay) |
Table 5. Cancellation of EoSB accruing
If the accrued amount is less than the final pay for the benefit, then the following GL entries are generated:
GL Account | Debit | Credit |
Other Expenses (or another expense account) | Final_Pay - Accrued_Amount |
|
Payroll |
| Final_Pay - Accrued_Amount |
Table 6.Recording additional expenses
If the accrued amount is greater than the final pay, then the following GL entries are generated:
GL Account | Debit | Credit |
Other Income (or another income account) |
| Accrued_Amount - Final_Pay |
End-Of-Service Provision | Accrued_Amount - Final_Pay |
|
Table 7. Table 6.Recording additional income