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HR & Payroll

End-of-service benefits in Qatar: the calculation and how your ERP should handle it

End-of-service is the payroll number most often disputed on an employee's last day and most often missing from the balance sheet before it. This guide explains the calculation and how to configure it so both problems go away.

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The calculation in outline

Under the Qatar Labour Law, an employee whose contract ends is entitled to an end-of-service award calculated on the last wage: three weeks' basic wage for each year of service, as the Qatar Labour Law requires. When the employee resigns, the award is reduced: nothing for less than two years of service, one third between two and five years, two thirds between five and ten, and the full award after ten. Certain terminations by the employer and resignations for specified reasons carry the full amount.

Two definitions decide the outcome: what counts as wage, and what counts as service. Wage generally includes basic salary and the regular allowances defined as wage in the contract, which is why the salary structure matters. Service is the contract start date to the end date, with treatment of unpaid leave and probation confirmed with your advisers. Rules change and cases differ, so treat this as structure and confirm current provisions.

Why the accrual belongs in the ledger

A company with 200 employees carries an end-of-service liability that can exceed a month of payroll several times over. If it is calculated only on exit, the balance sheet understates liabilities, cash is not planned for it, and auditors ask for a schedule that has to be built from scratch. Configuring the ERP to accrue monthly per employee posts the expense as it is earned and holds the liability where it belongs.

Configuring it in the ERP

In Zoho Payroll, Odoo and ERPNext the setup has the same parts: flag which salary components count as wage; set the service-band rates and resignation reductions as effective-dated rules; define the accrual journal entry and accounts; and configure the final settlement to compute the award, add leave encashment and other dues, deduct loans and advances, and produce the settlement statement in Arabic and English. Migrate opening accrual balances per employee so the liability is complete on day one.

Worked example

CaseServiceLast wageAward
Termination by employer7 yearsQAR 10,0005 x 5,000 + 2 x 10,000 = QAR 45,000
Resignation7 yearsQAR 10,000Two thirds of 45,000 = QAR 30,000
Resignation3 yearsQAR 10,000One third of 15,000 = QAR 5,000
Resignation18 monthsQAR 10,000Nil

Illustrative only, using a wage of QAR 10,000 with no partial years. Actual cases depend on the wage definition, contract type and the reason for termination.

Common mistakes

  • Calculating on basic salary only when the contract defines allowances as wage.
  • Ignoring partial years.
  • Applying resignation reductions to employer terminations.
  • No accrual, so the liability appears only on exit.
  • Opening balances not migrated, so accruals start from zero for long-serving staff.

Explore related pages

Where to go next, depending on what you are trying to decide.

GRSIA and WPS payroll setup

The full payroll guide.

Zoho People & Payroll

Cloud payroll.

Odoo HR & Payroll

Payroll in Odoo.

ERPNext HRMS & Payroll

Open-source payroll.

HR & payroll ERP

The product view.

Qatarization in your HR system

Tracking Qatarization.

Questions before you book

Yes, with reductions by length of service: none under two years, one third from two to five, two thirds from five to ten, full after ten, subject to the exceptions in the Labour Law.

Generally regular allowances defined as wage in the contract count; confirm the definition with your advisers and configure components accordingly.

Yes, so the liability is on the balance sheet and cash is planned.

Yes, computing the award, leave encashment, deductions and a bilingual statement.

Opening accrual balances are migrated per employee.

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