How to Record a Staff Redundancy or Severance Payment When a Grant Ends
Recording a lump-sum severance payment when a position is eliminated due to grant funding ending, drawing against the EOSB provision.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Severance & Redundancy Expense | Expense (+) | 8,000.00 | - |
| Provision for EOSB (Partial Use) | Liability (-) | 5,000.00 | - |
| Cash / Bank | Asset (-) | - | 13,000.00 |
💡 Accountant's Note
When a grant ends, positions are often eliminated. The EOSB provision covers part of the payment; the excess above the provision is an additional expense in the termination period.
Practitioner & Systems Framework
💻 ERP Architecture
Calculate the total payment: EOSB entitlement (per Jordan Labor Law formula) plus any contractual notice pay. The EOSB provision absorbs the accrued entitlement; any additional contractual severance above the provision is an additional expense. Negotiate with active donors to include redundancy costs in grant budgets — end-of-grant staff costs are a real and often overlooked liability.
⚠️ Audit Flags
Auditors verify the termination entitlement calculation against the Labor Law and employment contract. The total payment (provision + additional expense) must reconcile to what was actually paid. The employee should sign a final settlement agreement (waiver of further claims) — absence of this document creates an open liability.
📄 Required Documentation
Termination notice, EOSB entitlement calculation (Labor Law formula), notice pay calculation, final settlement agreement signed by the employee, bank transfer confirmation, EOSB provision balance prior to use, and any donor reimbursement for redundancy costs.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.