End of service gratuity under Qatar Labour Law

Gratuity is a statutory entitlement for employees completing at least one year of continuous service. The principle is simple. The details are where disputes start.

The basic rule

An employee earns a minimum of three weeks' basic wage for each year of service. Service beyond a complete year is pro-rated. The entitlement is calculated on the basic wage, not the gross package.

Where calculations go wrong

• What counts as basic. Housing, transport and food allowances are not basic wage. If your salary structure does not separate them clearly, every calculation will be arguable.
• The pro-rata method. Three weeks per year can be computed on 365 days or on a 30-day month convention. Pick one, write it down, and apply it consistently.
• Unpaid leave. Periods of leave without pay generally do not count toward continuous service. Many spreadsheets ignore this.
• The last salary or an average. The calculation uses the last basic wage. Using an average is a common error.
• Caps. Some employment contracts cap the total. If yours does, the system needs to know.

Provisioning monthly

The bigger problem is not the final calculation, it is that most companies never provision for it. The liability accrues every month and appears in the accounts only when someone resigns. A monthly provision journal keeps the balance sheet honest and removes the shock.

In the system

Gratuity should compute from the employee's joining date, last basic wage and leave history, with the method documented and the result reproducible by hand. If your finance manager cannot check a gratuity figure on paper, you will not be able to defend it when it is challenged.

This article describes the general framework, not legal advice. Confirm the treatment of your specific contracts with a Qatari employment lawyer.