All about End of services Gratuity in Qatar

Joharan Nachia Mohamed Eusuf

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Article 54 of the Labor Law (Law No. 14 of 2004) states as follows regarding Gratuity.

‘In addition to any sums to which the worker is entitled to upon the expiry of his service, the employer shall pay the end of service gratuity to the worker who has completed employment of one year or more. This gratuity shall be agreed upon by the two parties, provided that it is not less than a three-week wage (21 days) for every year of employment. The worker shall be entitled to gratuity for the fractions of the year in proportion to the duration of employment. The worker’s service shall be considered continuous if it is terminated in cases other than those stipulated in Article (61) of this law and is returned to service within two months of its termination. The last basic wage shall be the base for the calculation of the gratuity. The employer is entitled to deduct from the service gratuity the amount due to him by the worker.’

  1. What is Gratuity?
    Gratuity is a monetary payment eligible to an employee as a lump sum at the end of his tenure provided that the period of service exceeds one year. Gratuity payment is a liability to the employer which accrues as the employee service period progresses.
  2. When does an employee become eligible for his/her gratuity payment?
    Employees are eligible for gratuity pay at the end of their service period, at termination or resignation. According to Article 54, the worker shall be entitled to gratuity for the fraction of the year worked provided he has completed more than one year of continuous service.
  3. What is the basis amount that is used to calculate gratuity?
    The Last drawn basic wage shall be considered the basis for the calculation of the gratuity.
  4. What is the number of days used to accrue gratuity?
    Gratuity accrual and calculation is based on 21 days per year for every year of service, so long as the service period exceeds one year.The following example shows the gratuity accrual at a given time.

    Particulars Accrual Calculation
        Hire date     15/04/18
        Basic salary     1,000.00
        One day Basic salary (Basic salary/30)     33.33
        Payroll Month     January -2020
        Number of days in service as of 31 January 2020     657
        Number of years in service     1.80
        Gratuity Days     37.80
        Gratuity Amount (Gratuity days*One day Salary)     1,260.00

     

  5. Does type of separation of an employment contract affect the gratuity payment?
    No, the type of separation from the employment contract does not affect the amount of gratuity paid.
  6. What is the effect of unpaid leave taken during the period of service?
    Any period taken by the employee as unpaid leave is excluded when determining the service period. The period of service is reduced by the number of days served as unpaid leave.
  7. What happens if a worker dies while in service?
    If a worker dies while in service of an employer, the employer within a period of fifteen days from the date of death should deposit with the court his outstanding wages and entitlements plus the outstanding gratuity.
  8. Should an employer who pays a pension plan for the employee pay gratuity at end of service?
    If an employer maintains a pension plan for the employee with a greater benefit than the gratuity payable, then the employer is not obliged to pay gratuity at end of service. If the benefit from such a plan is less than the gratuity payable, then the employer is obliged to pay the gratuity and refund the employee any amounts deducted towards the plan.
  9. Can gratuity payment be withheld by the employer?
    As per Article 61, the employer may dismiss the worker without end-of-service gratuity in any of the following instances:

    • If the worker assumes a false identity or nationality or submits false certificates or documents.
    • If the worker commits an act which causes gross financial loss to the employer provided that the employer shall notify the Department of the incident within twenty-four hours from the time of his being aware thereof.
    • If the worker violates more than once the written instructions of the employer concerning the safety of the workers and the establishment despite his being notified in writing of the violation provided that these instructions shall be written and posted up in a conspicuous place.
    • If the worker fails, more than once to carry out his essential duties under the service contract or this law despite his having been notified in writing thereof.
    • If the worker discloses the secrets of the establishment where he is employed.
    • If the worker is found during the working hours in a state of drunkenness or under the influence of a drug.
    • If the worker commits an assault on the person of the employer, the manager or one of his supervisors in the work during the work or by reason thereof.
    • If the worker repeats his assault on his colleagues in work despite his being warned in writing thereof
    • If the worker absents himself from work without legitimate cause for more than seven consecutive days or fifteen days in one year.
    • If the worker has been finally sentenced for a crime involving immorality or dishonesty.
  10. How Gratuity is calculated during final settlement?
    Gratuity is paid if the service period exceeds one year. The illustration below breaks down the details.

    Total Service period Gratuity calculation
        Less than 1 Year     No Gratuity
        1 year and Above     Three weeks (21 days) of each year of service

    Please see the below example for calculation of gratuity during final settlement.

    Service period Less than 1 Year
    ( No Gratuity)
    1 Year and Above
    ( Eligible for 21 days)
        Hire date 24/02/18 15/04/13
        Last Working Day 25/01/19 25/01/20
        Basic salary 1,000.00 1,000.00
        One day Basic salary (= Basic salary/30) 33.33 33.33
        Number of days in service 336 2477
        Number of years in service 0.92 6.79
        Gratuity Days criteria 0 21
        Gratuity Days calculation 0 142.51
        Gratuity Amount (Gratuity days*One day Salary) 4,750.41

     
    The gratuity scheme was introduced in Qatar certain years ago to ensure that when an employee is terminated from job, he/ she receives a lump sum payment to take care of their expenses till they get another job. But, employees should have a definite understanding on how gratuity is calculated in Qatar, to avail the complete benefits offered by the scheme.

For information on the payroll process in Qatar click on this link

Payroll Process in Qatar

The process of payroll is little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.

One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.

As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward.

To know more about our payroll process, click here

Disclaimer:
Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
 

 
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