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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
Formula

0
0

0
0

0
0

1-5 year

 

 

 

EoSB Rate
Formula

0
0

R1=21
A*N*(R1)/12

R1=21
A*N*(R1)/12

Over 5 years

 

 

 

EoSB Rate
Formula

0
0

R2=30
A*N*(R2)/12

R2=30
A*N*(R2)/12

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
Formula

0
0

0
0

1 - 3 year

 

 

EoSB Rate
Formula

R1=7
A*N*(R1)/12

R1=21
A*N*(R1)/12

3 - 5 year

 

 

EoSB Rate
Formula

R2=14
A* 36*(R1)/12 + A*(N-36)*(R2)/12

R1=21
A*N*(R1)/12

Over 5 years

 

 

EoSB Rate
Formula

R3=21
A* 36*(R1)/12 + A*24*(R2)/12 +(N-60)*(R3)/12

30
A* 60*(R1)/12 + A*(N-60)*(R2)/12

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