This manual provides detailed guidance on calculating End of Service Benefits (EOSB) provision, including both manual calculation methods and system-based calculation logic used in FirstBIT.
1. External Resource for Verification
To verify EOSB calculation results, users can refer to the official calculator:
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This calculator determines EOSB based on employment length in accordance with UAE labor regulations.
2. EOSB Calculation Logic
EOSB is calculated based on employee length of service and divided into two periods:
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(See More: 10.1.9. End-of-Service Benefit Rates)
3. Manual Calculation Method (Calendar-Based)
3.1 Employee Worked Less Than 5 Years
Days to be paid:
21 × full years
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Days to be paid × Basic Salary / 30
Example
Employee worked:
- From 02/01/2024 to 04/17/2025
- Total: 1 year, 2 months, 16 days (14 months 16 days)
- Basic Salary: 6000 AED
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25.24 × 6000 / 30 = 5085 AED
3.2 Employee Worked More Than 5 Years
Days to be paid:
21 × 5 years
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Days to be paid × Basic Salary / 30
Example
Employee worked:
- 6 years 2 months 30 days (74 months 30 days)
- Basic Salary: 6000 AED
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142.47 × 6000 / 30 = 28,494 AED
4. Calculation Method in FirstBIT (30/360 Standard)
In FirstBIT Software, EOSB is calculated using the standardized 30/360 method, which is commonly applied in payroll systems.
Key Principles:
- 1 month = 30 days
- 1 year = 360 days
This approach ensures consistency and simplifies calculations, although results may slightly differ from calendar-based (365 days) calculations.
5. Alternative Formula (Used in FirstBIT)
For employees with service length less than 5 years, EOSB can be calculated as:
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- Basic Salary – salary defined in the contract
- 30 – fixed days per month
- 360 – fixed days per year
- 21 days – entitlement per year (<5 years)
- Total worked days – calculated using 30-day months
6. Examples (FirstBIT Calculation)
6.1 Provision Calculation (Month-End)
Employee details:
- Hire date: 01/02/2024
- Calculation date: 31/03/2025
- Basic Salary: 6000 AED
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21 × 1.1667 × 200 = 4900 AED
6.2 Final Settlement Calculation
Employee details:
- Termination date: 17/04/2025
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21 × 1.2111 × 200 = 5086.67 AED
7. Important Notes
- FirstBIT uses the 30/360 calculation method as a system standard.
- Manual calculations may use 365 days, leading to minor differences.
- For compliance or validation, always compare with the official calculator from
Dubai Development Authority.
8. Common User Mistakes
Below are the most frequent issues encountered when calculating EOSB:
8.1 Mixing Calculation Methods (360 vs 365)
Users may compare:
- FirstBIT calculation (30/360 method)
with - Manual calculation using calendar days (365 days)
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Recommendation:
Always ensure the same calculation method is used when validating results.
For system checks in FirstBIT Software, use the 30/360 method.
8.2 Incorrect Service Length Calculation
Common mistakes:
- Using calendar months instead of fixed 30-day months
- Ignoring remaining days
- Incorrect conversion of months into years
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- 1 month = 30 days
- Total service duration must be converted via /360
8.3 Wrong Salary Used in Calculation
Users may:
- Use total salary instead of Basic Salary
- Include allowances (housing, transport, etc.)
Recommendation:
EOSB must be calculated using Basic Salary only, as defined in the employee contract.
8.4 Incorrect EOSB Rates Applied
Typical issues:
- Applying 30 days rate before completing 5 years
- Not splitting calculation into:
- first 5 years (21 days)
- period after 5 years (30 days)
Recommendation:
Always verify service duration and apply correct tiered rates.
8.5 Rounding Differences
Differences may occur due to:
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Recommendation:
Use consistent rounding rules when comparing results. Minor differences (e.g., few AED) are acceptable.
8.6 Incorrect Expectation from External Calculators
Results from external tools such as
Dubai Development Authority calculator https://dda.gov.ae/en/gratuity-calculator/gratuity-calculator
may differ because:
- They may use calendar-based calculation (365 days)
- Internal system uses 30/360 method
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