The importance of calculating employee benefits in GCC

With the ever-changing landscape in labor law, specifically in the GCC - there has been a major crackdown on companies that do not fully comply with applicable labor laws.

For example, companies employing more than 15 employees must ensure that any deductions made from salaries are added to a separate fund, which is governed by a committee elected by the employees.

It is laws like this that make the labor market dynamic in the GCC extremely complicated, especially for SMEs, who don’t employ costly lawyers to ensure a watertight system.

This is why one of the most important steps to ensure compliance with labor laws is to keep a separate fund for employee benefits like gratuity and in-claimed paid leave remuneration.

The added benefit of this would be that your Profit and Loss at the end of a reporting period would include the costs of these expenses, which are often not considered.

Complex accounting systems do not need to be utilized for these calculations, and physical cash doesn’t need to be stashed in a bank account or safe to ensure compliance.

The authorities simply look for the accurate amount. It’s quite possible to ensure compliance via an excel spreadsheet.

In conclusion, with ever changing labor markets, and more informed laborers entering the market, it’s wise to keep all your papers right, since the slightest err in compliance once reported, can carry hefty fines or even hiring freezes.