How much do social security contributions add to Tunisia's employment costs?

In Tunisia, social security contributions significantly add to the total employment cost. The combined social security contribution rate for both employer and employee is approximately 26.75% of the gross salary. Additionally, employers may pay extra contributions for occupational accident insurance, typically around 0.5% but varying by sector and risk level, which further increases the employer’s cost.

How does the 17.07% employer social security rate affect hiring costs in Tunisia?

The 17.07% employer social security contribution rate in Tunisia significantly impacts hiring costs by increasing the employer’s total payroll expenses beyond the gross salary paid to the employee. This contribution is mandatory and calculated on the employee’s gross salary, including allowances and bonuses.

How does the increase to 17.07% in 2025 impact companies' payroll budgeting in Tunisia?

The increase of the employer social security contribution rate from 16.57% to 17.07% in 2025 raises the direct labor cost for companies in Tunisia by an additional 0.5% of the employee’s gross salary. This seemingly small percentage increase has several implications for payroll budgeting.

Understanding the End-of-Service Benefits (EOSB) System in the UAE

The End-of-Service Benefits (EOSB) system in the UAE represents one of the most significant aspects of employment law for private sector workers. As EOR service providers in the UAE, understanding this system is crucial for ensuring compliance and providing comprehensive guidance to our clients and their employees.

What Are End-of-Service Benefits?

End-of-Service Benefits, commonly known as gratuity, are mandatory lump-sum payments that employers must provide to employees upon termination of their employment contracts. These benefits serve as a financial safety net for workers, particularly expatriates who may not have access to traditional pension schemes, and reward employees for their years of service.

Other than expected by many of our clients, and as common in other countries the End of Service Benefits have to be paid also when an employee terminates the employment.

The EOSB system functions as the primary retirement-type benefit for expatriate workers in the UAE, while UAE nationals typically have access to additional national pension schemes through the General Pension and Social Security Authority (GPSSA).

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Legal Framework and Governance

The EOSB system operates under Federal Decree-Law No. 33 of 2021 concerning the Regulation of Labor Relations, which came into effect in February 2022. This comprehensive legislation replaced the previous labor law and established clearer guidelines for end-of-service benefits across the UAE’s private sector.

Article 51 of the UAE Labor Law explicitly outlines gratuity entitlements, stating that any foreign worker who completes at least one year of continuous service is entitled to EOSB upon termination. The law applies universally across the UAE’s private sector, though individual free zones may have specific regulations that broadly align with the federal framework.

Eligibility Criteria

To qualify for EOSB, employees must meet several fundamental criteria:

Minimum service period: At least one year of continuous service with the same employer
Employment type: Both full-time and part-time employees are eligible, though part-time workers receive pro-rata benefits
Contract type: All employment contracts, whether limited-term or previously unlimited-term, are covered

Exclusions from EOSB

Certain categories of workers are not eligible for standard EOSB benefits:

Employees with less than one year of continuous service
UAE nationals covered under the General Pension and Social Security Authority (GPSSA)
Employees dismissed for gross misconduct as defined in Article 44 of the UAE Labor Law
Freelancers and short-term contractors unless meeting the one-year threshold

EOSB Calculation Formula

Calculation Examples

The UAE employs a tiered gratuity system based on the employee’s basic salary and years of service:

For the first 5 years of service: 21 days of basic salary for each completed year
For years beyond 5: 30 days of basic salary for each additional year
Maximum cap: Total gratuity cannot exceed two years’ worth of the employee’s basic salary

The formula for Dubai end-of-service benefits (EOSB) must account for both completed years and incomplete years (months and days beyond the last anniversary). According to UAE law, gratuity is calculated proportionally for any fraction of a year after one year of service.

Complete Formula (Pro-rata for months)

Daily Basic Wage = Annual Basic Salary

365

EOSB = (Daily Basic Wage x 21 x Y₁) + (Daily Basic Wage x 30 x Y₂)

Where:

Y₁ = Number of years (including fractional year) up to 5 years (e.g., 3.7 years → use 3.7)
Y₂= Number of years (including fractional year) after the fifth year (e.g., 6.5 years → use 1.5 for , 5 for )
For service exceeding one year but not an exact whole number, use months/days as a decimal. Example: 4 years and 7 months → years ( = 0.583)

EOSB calculator for Fulltime Employees

Part-Time Employee Adjustments

For employees working less than full-time hours, the calculation requires additional steps:

Calculate the standard full-time EOSB amount
Determine the ratio of actual working hours to full-time hours
Apply this percentage to the full-time EOSB calculation

Key Provisions and Important Considerations

Payment Timeline

Employers are legally required to pay all EOSB within 14 days of the employee’s last working day. This represents a significant change from previous legislation, which did not specify such a strict timeline for payment.

Salary Basis for Calculation

EOSB calculations are based on the employee’s last drawn basic salary, excluding allowances such as housing, transport, or bonuses. This represents a crucial distinction that employers must understand when calculating final settlements.

It is important to consider, that the EOSB is only calculated from the basic salary many employers create a salary structure of 60 % base salary and 40 % allowances, this has a direct influence on the EOSB.

Universal Application

Under the current law, all employees who complete at least one year of service are entitled to full gratuity benefits, regardless of whether they resign or are terminated by the employer. This eliminates the previous distinction between voluntary resignation and employer-initiated termination.