Enhanced Service Termination Benefits (STBs) Calculations
We're excited to announce that we have enhanced our Service Termination Benefits (STBs) feature. STBs are the benefits paid to employees when their employment has been terminated for whatever reason. We have also added a new option to the Service Termination Benefit calculation, allowing Financial Officers and Super admins to include a “Payment for the remaining period of the contract” for employees with limited contracts.
TABLE OF CONTENTS
- Enhanced Service Termination Benefits (STBs) Calculations
How to Add a Service Termination Benefit (STB)
User Menu → System Preferences → Financial Setup → Service Termination Benefits (STBs)
On the Service Termination Benefits (STBs) page, you will be able to define STB calculation policies based on labor laws or internal policies. Financial Officers and Super admins can add new Service Termination Benefits by clicking on the “Add New STB” button and following these steps:
Add the STB name.
Check the Set this STB as default box if you’d like this STB to become the default used in the Provisions Report calculation.
Select the Related termination category for this STB.
Select the Contract type that is associated with this STB.
Select if you want to exclude unpaid vacation days from this STB calculation.
Under Allowances, select all allowances that will be included in the calculation of this STB.
Under STB calculation, choose the Annual calculation base that will be used to calculate the daily rate during the STB calculation. Select Calendar to calculate your STB based on the total number of days in the year. (e.g., 365 or 366), or Select 360 days to calculate your STB based on 30-day months.
Calculation of Service Termination Benefits
You can choose how you would like your STB to be calculated in the STB Calculation section while editing or adding new STBs.
Service Interval STB Calculation
User Menu → System Preferences → Financial Setup → Service Termination Benefits (STBs)
If you want to compensate employees for their total years of service, follow these steps:
On the Service Termination Benefits (STBs) page, click on the “Add New STB” button.
Set the STB calculation to Service interval.
In the Service Interval Range section, add the minimum and maximum salaries that employees can be compensated based on their total years of service in the Minimum amount & Maximum amount fields.
Under STB Calculation Slices, select if you want to distribute years of service per slice. If you select "Yes", the employees' years of service will be distributed among the different slices with different compensation percentages for each slice. The Service Termination Benefit (STB) will then be calculated based on all the slices the employee is entitled to; otherwise, the system will calculate the STB for employees based on the last slice that their final year of service falls on.
For Calculation slice 1, fill in the From and To fields with the desired service interval for the slice and add the desired compensation percentage in the Amount field.
To add more calculation slices, click “Add Another Calculation Slice”. Each slice’s service interval must start from where the previous slice ends.
Under STB Worth Rate Slices, select the worth rate percentage(s) of employees' salaries to include in the Service Termination Benefit (STB) calculation based on their years of service.
Add the interval for years of service in the From and To fields of the Worth Rate Slice and add the worth rate percentage of the slice in the Amount field.
To add more worth rate slices, click the “Add Another Worth Rate Slice”.
Once you’ve completed all the fields, click “Add STB”.
Service Interval STB Calculation Example
Needed Variables:
Employee Monthly Salary: 10,000 SAR
Hiring Date: 15 March 2003
Termination Date: 20 Nov 2022
Calculate End Date (in Termination Salary Tab): Yes
Annual Calculation Base: Calendar
Years of Service : 19 years & 251 days
STB Setup:
STB calculation: Service interval
Annual Calculation Base: Calendar
Distribute years of service per slice: Yes
Service Interval Range Minimum Amount: 0
Service Interval Range Maximum Amount: 999
Calculation Slice 1:
From 0 To 5 years: Amount = 50%
Calculation Slice 2:
From 5 years to 50 years: Amount= 100%
STB Worth Rate Slice:
From 0 To 50 years : Amount: 100%
STB service interval calculation:
Calculation Slice 1: (10,000× 50% ×5)= 25,000 SAR
Calculation Slice 2: (10,000×100%×(14+251/365))= 146,876.71 SAR
STB amount: 25,000+146,876.71= 171,876.71 SAR
STB Calculation for the Remaining Period of Contract
If you want to calculate the STB for terminated employees with limited contracts based on the remaining period of their contract, then follow these steps:
Under STB Calculations, select Payment for the remaining period of the contract.
ChooseEnter the Annual calculation base that will be used to calculate the daily rate during the STB calculation.
Under Payment Range for the Remaining Period of Contract, add the minimum and the maximum number of salaries that employees can be compensated based on the remaining period of their contract in the Minimum amount & Maximum amount fields.
Select if you want the remaining payment to be calculated as income or deduction during the STB calculation. If Add remaining payment is selected, the system will calculate the remaining payment for employees based on their termination date and their original contract’s end date. This amount will then be added to their termination settlements as income when this STB is calculated. If Deduct remaining payment is selected, the system will calculate the remaining payment and deduct it from employees’ termination settlements.
Select if you want to enable amount override, if “Yes” is selected, the user will have the option to override the Minimum and Maximum amounts specified in the Payment Range for the Remaining Period of Contract while terminating employees.
Once you’ve completed all the fields, click “Add STB”.
STB Calculation for the Remaining Period of Contract Examples
Example 1:
Needed Variables:
Employee Monthly Salary: 10,000 SAR
Employee Contract’s End Date: 15 march 2023
Employee’s Termination Date: 20 Nov 2022
Calculate End Date (in Termination Salary Tab): Yes
Employee’s Remaining Period of Contract: 115 days
STB Setup:
STB Calculation: Payment for the remaining period of the contract
Annual Calculation Base: Calendar
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Add remaining payment
Calculation:
Annual Salary: =10,000×12 = 120,000 SAR
STB Amount: ((120,000/365 )× 115)=37,808.22 SAR
Example 2:
STB Setup:
STB calculation: Payment for the remaining period of the contract
Annual Calculation Base: Calendar
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Deduct remaining payment
Needed Variables:
Employee monthly salary: 10,000 SAR
Employee contract’s end date: 15 march 2023
Employee’s termination date: 20 Nov 2022
Calculate End Date (in Termination Salary Tab): Yes
Employee’s remaining period of contract: 115 days
Calculation:
Annual salary: 10,000×12 = 120,000 SAR
Calculation: ((120,000/365) × 115)=37,808.22 SAR
STB amount = -37,808.22 SAR
Example 3:
Needed Variables:
Employee Monthly Salary: 10,000 SAR
Employee contract’s end date: 15 march 2023
Employee’s termination date: 20 Nov 2022
Calculate End Date (in Termination Salary Tab): Yes
Employee’s remaining period of contract: 115 days
STB Setup:
STB calculation: Payment for the remaining period of the contract
Annual Calculation Base: Calendar
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 2
Do you want the remaining payment as income or deduction?: Add remaining payment
Calculation:
Annual Salary: =10,000×12 = 120,000 SAR
Calculated remaining payment amount: ((120,000/365)×115)=37,808.22 SAR
Maximum remaining payment amount: (10,000×2)=20,000 SAR
The calculated remaining payment amount exceeds the specified maximum, so the employee will receive the maximum amount.
STB amount= 20,000 SAR
STB Calculations when you select “Both” (Service Interval & Remaining Period of Contract)
If you want to calculate the STB for terminated employees with limited contracts, based on their service interval as well as the remaining period of their contract, follow these steps:
Under STB Calculations, select Both.
ChooseEnter the Annual calculation base that will be used to calculate the daily rate during the STB calculation.
In the STB Calculation Slices section, select if you want to distribute years of service per slice. If you select "Yes", the employees years of service will be distributed to the different slices with different compensation percentages for each slice, and the Service Termination Benefit (STB) will be calculated based on all the slices the employee is entitled to; otherwise, the system will calculate the STB for employees based on the last slice their final year of service falls on.
For Calculation slice 1, fill in the From and To fields with the desired service interval for the slice and add the relevant compensation percentage in the Amount field.
To add more calculation slices, click“Add Another Calculation Slice”.
In the STB Worth Rate Slices, you can select the worth rate percentage(s) of employees' salaries to include in the Service Termination Benefit (STB) calculation based on their years of service.
Add the interval for years of service in the From and To fields of the Worth Rate Slice and add the worth rate percentage of the slice in the Amount field.
To add another worth rate slice, click “Add Another Worth Rate Slice”.
In the Payment Range for the Remaining Period of Contract section, add the minimum and the maximum number of salaries that employees can be compensated based on the remaining period of their contract in the Minimum amount and Maximum amount fields.
Select if you want the remaining payment to be calculated as income or deduction during the STB calculation. If Add remaining payment is selected, the system will calculate the remaining payment for employees based on their termination date and their original contract’s end date and add this amount to their termination settlements as income when this STB is calculated. If Deduct remaining payment is selected, the system will calculate the remaining payment and deduct it from employees’ termination settlements.
Select if you want to enable amount override, if “Yes” is selected, the user will have the option to override the minimum and maximum amounts specified in the Payment Range for the Remaining Period of Contract while terminating employees.
Both STB Calculations Examples
Example 1:
Needed Variables:
Employee Monthly Salary: 10,000 SAR
Hiring Date: 15 March 2003
Termination Date: 20 Nov 2022
Annual Calculation Base: Calendar
Years of Service: 19 years & 251 days
Employee contract’s end date: 15 march 2023
Employee’s remaining period of contract: 115 days
Calculate end date (in Termination Salary Tab): Yes
STB Setup:
STB calculation: both
Annual Calculation Base: Calendar
Distribute years of service per slice: Yes
Service Interval Range Minimum Amount: 0
Service Interval Range Maximum Amount: 999
Calculation Slice 1:
From 0 To 5 years: Amount = 50%
Calculation Slice 2:
From 5 years to 50 years: Amount= 100%
STB Worth Rate Slice:
From 0 To 50 years: Amount: 100%
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Add remaining payment
STB service interval calculation:
Calculation Slice 1: (10,000× 50% ×5)= 25,000 SAR
Calculation Slice 2: (10,000×100%×(14+251/365))=146,876.71 SAR
STB amount: 25,000+146,876.71= 171,876.71 SAR
Payment for the remaining period of the contract calculation:
Annual Salary: =10,000×12 =120,000 SAR
Payment for the remaining period of the contract calculation:((120,000/365 )× 115)=37,808.22 SAR
STB amount: 171,876.71 +37,808.22= 209,684.93 SAR
Example 2:
Needed Variables:
Employee Monthly Salary: 10,000 SAR
Hiring Date: 15 March 2003
Termination Date: 20 Nov 2022
Calculate End Date (in Termination Salary Tab): Yes
Years of Service: 19 years & 251 days
Employee contract’s end date: 15 march 2023
Employee’s remaining period of contract: 115 days
STB Setup:
STB calculation: both
Annual Calculation Base: Calendar
Distribute years of service per slice: Yes
Service Interval Range Minimum Amount: 0
Service Interval Range Maximum Amount: 999
Calculation Slice 1:
From 0 To 5 years : Amount = 50%
Calculation Slice 2:
From 5 years to 50 years: Amount= 100%
STB Worth Rate Slice:
From 0 To 50 years : Amount: 100%
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Deduct remaining payment
STB service interval calculation:
Calculation Slice 1: (10,000× 50% ×5)= 25,000 SAR
Calculation Slice 2: (10,000×100%×(14+251/365))=146,876.71 SAR
Service Interval’s STB amount: 25,000+146,876.71= 171,876.71 SAR
Payment for the remaining period of the contract calculation:
Annual Salary: =10,000×12 = 120,000 SAR
Remaining Payment’s STB amount: ((120,000/365)×115)=-37,808.22 SAR
STB amount: 171,876.71 - 37,808.22= 134,068.49 SAR
How to Add STB to an Employee During Termination
Main Menu → Employees → Employee Affairs → Employee Management
On the Employee Management page, click on the employee’s name to go to their profile and click on “Offboarding”.
Select the offboarding template and click “Start Offboarding” to move through the offboarding steps or click on “Skip Offboarding”.
Then add the employee’s “Termination Date”.
Add the employee’s termination Category while ensuring it matches your STB setup's Related termination category.
Then click on “Terminate”.
On the Termination Salary tab, the STB type drop down will only show the STB types that match the employee’s selected termination category and contract type (limited or unlimited). Then click on “Calculate”, and the calculated STB amount will be added to the employee’s termination settlement.
How to Use Amount Override of the Remaining Payment While Offboarding Employees
User Menu → System Preferences → Financial Setup → Service Termination Benefits (STBs)
If you enable amount override while editing or adding a new STB, you will have the option to override the minimum and maximum amounts of the remaining payment specified in the STB setup while offboarding employees. To override the remaining payment amount for an employee, follow these steps:
On the Service Termination Benefits (STBs) page, add a new STB by clicking “Add New STB” or edit an existing STB by clicking the pen icon to edit.
Make sure the STB’s Contract type is Limited.
Set the STB calculation to “Payment for the remaining period of the contract” or “Both”. Please note that if Both are selected, only the remaining payment can be overridden, while the service interval calculation will remain unaffected by the override value.
In the Payment Range for the Remaining Period of Contract section, under “Do you want to enable amount override?” select “Yes”.
Click on “Add STB” or “Update STB”.
Then go to Main Menu → Employees →Employee Affairs →Employee Management, click on the name of the employee with a limited contract who you want to terminate, and go to the Offboarding tab.
Select an offboarding template and click “Start Offboarding” to go through the offboarding steps or click “Skip Offboarding”.
Add the employee’s “Termination Date”.
Select the employee’s Termination category while ensuring it matches your STB setup's Related termination category.
Click “Terminate”.
On the Termination Salary tab, select the STB type from the drop-down list.
In the “Override STB amount by”:
Select “Months” if you would like the employee’s remaining payment to be calculated based on a specific number of monthly salaries, regardless of the STB setup’s minimum and maximum amounts.
Select “Fixed Amount” if you would like the remaining payment to be overridden by the fixed value which you add in the field.
Note: If the option “Do you want the remaining payment as income or deduction?” in the STB setup is set to “Deduct remaining payment”, then the override value you add here will be calculated as a deduction.
Override Remaining Payment Examples
Example 1:
STB Setup:
STB calculation: both
Annual Calculation Base: Calendar
Distribute years of service per slice: Yes
Service Interval Range Minimum Amount: 0
Service Interval Range Maximum Amount: 999
Calculation Slice 1:
From 0 To 5 years: Amount = 50%
Calculation Slice 2:
From 5 years to 50 years: Amount= 100%
STB Worth Rate Slice:
From 0 To 50 years: Amount: 100%
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Deduct remaining payment
STB service interval calculation:
Calculation Slice 1: (10,000× 50% ×5)= 25,000 SAR
Calculation Slice 2: (10,000×100%×(14+251/365))=146,876.71 SAR
Service Interval’s STB amount: 25,000+146,876.71= 171,876.71 SAR
Payment for the remaining period of the contract calculation:
Annual Salary: =10,000×12 = 120,000 SAR
Remaining Payment’s STB amount: ((120,000/365)×115)=-37,808.22 SAR
Override Setup:
Override STB amount by: 2 months
Remaining Payment’s STB amount after override: -(2×10,000)= -20,000
STB amount: 171,876.71 - 20,000= 151,876.71 SAR
Example 2:
STB Setup:
STB calculation: both
Annual Calculation Base: Calendar
Distribute years of service per slice: Yes
Service Interval Range Minimum Amount: 0
Service Interval Range Maximum Amount: 999
Calculation Slice 1:
From 0 To 5 years: Amount = 50%
Calculation Slice 2:
From 5 years to 50 years: Amount= 100%
STB Worth Rate Slice:
From 0 To 50 years: Amount: 100%
Payment Range Minimum Amount: 2
Payment Range Maximum Amount: 6
Do you want the remaining payment as income or deduction?: Deduct remaining payment
STB service interval calculation:
Calculation Slice 1: (10,000× 50% ×5)= 25,000 SAR
Calculation Slice 2: (10,000×100%×(14+251/365))=146,876.71 SAR
Service Interval’s STB amount: 25,000+146,876.71= 171,876.71 SAR
Payment for the remaining period of the contract calculation:
Annual Salary: =10,000×12 = 120,000 SAR
Remaining Payment’s STB amount: ((120,000/365)×115)=-37,808.22 SAR
Override Setup:
Override STB amount by: Fixed amount = 10,000 SAR
Remaining Payment’s STB amount after override: - 10,000
STB amount: 171,876.71 - 10,000= 161,876.71 SAR
