How end-of-service entitlements accrue, where calculations go wrong, and how to keep a defensible audit trail.
End-of-service benefits are a statutory entitlement in many markets, and they are one of the easiest places for a payroll team to make an expensive mistake. The rules depend on contract type, length of service, the reason for leaving and, in some countries, the employee’s final basic salary.
The most common errors are not mathematical. They come from stale data: a salary change that never reached the calculation, an unpaid leave period that was not deducted from service, or a contract change that was only recorded in an email.
The practical fix is to calculate from a single employee record. When service dates, salary history and leave balances all live in one place, the calculation can show its working line by line, and anyone reviewing it can see why the number is what it is.
Before every final settlement, check three things: the service period is correct, the salary basis matches the local rule, and any outstanding loans, leave encashment or notice-period adjustments are included. Keep the approved calculation attached to the employee record so it can be produced on request.