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On this page
  • What is Severance Accrual?
  • How Does Severance Accrual Work?
  • Benefits of Severance Accrual
  • Countries having Statutory Severance Payment Accrual for EOR Employees

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  1. Employer of record (EOR)

Severance Payment accrual for EOR employees

What is severance payment accrual?

Severance payments are a critical component of employee compensation in many countries. These payments, often mandated by local labor laws, are provided to employees when their employment is terminated, whether due to redundancy, layoffs, or other eligible reasons. The amount typically depends on factors like the employee’s length of service and the country’s specific legal requirements.

Ensuring compliance with these regulations is not just a legal obligation but also a way to foster trust and transparency in employment practices.

What is Severance Accrual?

Severance accrual is the accumulation of money throughout an employee's agreement to pay final severance obligations. These obligations are based on the length of the employee's service.

How Does Severance Accrual Work?

Multiplier will include a Severance Accrual charge in the client's monthly invoice each month. This amount is set aside to cover the employee's statutory severance entitlement during termination.

Unlike the deposit invoice, the Severance Accrual is a separate charge in monthly invoices. By accruing this amount over time, we help clients avoid large, unexpected severance payments at termination.

What Happens to Accrued Severance Amounts?

  • Utilized to pay the employee during termination to fulfill statutory obligations.

  • In the case of employee resignations, any unused severance accrual will be refunded, ensuring transparency and fairness.

Benefits of Severance Accrual

Severance accrual helps clients avoid unexpected financial burdens. Instead of facing a large, lump-sum payment at the time of termination, severance accrual allows for small, predictable contributions to be set aside monthly. This proactive approach ensures:

  • Financial Planning: Smooth cash flow management and avoidance of surprise expenses.

  • Legal Protection: Full compliance with local labor laws, minimizing the risk of penalties or disputes.

Severance accrual safeguards both your business and your employees, providing peace of mind and financial stability.

Countries having Statutory Severance Payment Accrual for EOR Employees

Here is the list of countries where severance pay is a mandatory requirement. The accrual periods and payment amounts differ based on the specific regulations of each country.

Argentina

Egypt

Madagascar

South Africa

Australia

Estonia

Malaysia

South Korea

Bangladesh

France

Mauritius

Spain

Belarus

Greece

Mexico

Taiwan

Belgium

Honduras

Netherlands

Thailand

Bulgaria

Indonesia

Pakistan

Turkey

Canada

Ireland

Peru

Uganda

Colombia

Kazakhstan

Philippines

United Arab

Costa Rica

Kenya

Poland

Uruguay

Czech Republic

Lithuania

Rwanda

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Last updated 15 days ago

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