E.KALAIKOVAN (Sr. Accounts Manager ) (341 Points)
09 March 2012In the New Schedule VI, Liabilities and Assets are to be classified into Long Term and Short Term.
Provision for Gratuity and Earned Leave are Long Tem or Short Term?
CA Manish Garg
(CA )
(287 Points)
Replied 06 June 2012
It will depend upon fact, short term if payable in 12 Months..
pankaj pathak
(none)
(40 Points)
Replied 19 March 2025
In accordance with the New Schedule VI classification of liabilities and assets into Long Term and Short Term, the classification of provisions such as Gratuity and Earned Leave depends on when the obligation is expected to be settled.
Provision for Gratuity: Gratuity is generally considered a long-term liability because it is typically payable upon termination of employment, which could occur several years after the provision is made, unless the employee is expected to leave within the year.
Provision for Earned Leave: The classification of earned leave provision can vary depending on the company’s policy and the specific timing of when the leave is expected to be utilized. If the employee is expected to take the leave within the next 12 months, it can be considered a short-term liability. If the leave is expected to be taken beyond one year, it may be classified as long-term liability.
For more detailed explanations on provisions under UAE Labor Law, as well as updates on the classification of liabilities and assets, you can visit our blog at UAE Labour Law. We provide a comprehensive breakdown of various provisions and legal classifications that affect businesses in the UAE.
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