Determine the private sector compensation according to Kuwait Labour Law No. 6 of 2010. No resignation penalty. Contains 18-month cap, unpaid leave deductions, and pro-rated computation for partial year leave.
The payment for the end of the service is known as "indemnity" in Kuwait. It is determined based on the Labour Law No. 6 of 2010, which is applicable to the employees of private companies. The indemnity rate for the first 5 years of service is 15 working days per year, which is less than in the UAE and Saudi Arabia. But, after 5 years, the rate increases to 30 working days per year.
The big advantage for employees is Kuwait's indemnity system. The amount of the indemnity will be defined by the number of active service years (i.e., the same for those who resign or are terminated) subject to the statutory limit.
| Years of Service | Rate | Formula | Example (KWD 400 basic) |
|---|---|---|---|
| Less than 1 year | No entitlement | KWD 0 | KWD 0 |
| 1 to 5 years | 15 working days per year | (Basic Ć· 30) Ć 15 Ć Years | 3 yrs = KWD 300 |
| More than 5 years | 30 working days a year | (Basic Ć· 30) Ć 30 Ć Years | 7 yrs = KWD 1,400 |
| Cap (any duration) | Maximum 18 months salary | Basic Ć 18 | Max = KWD 7,200 |
Step 1 ā Daily wage: Daily = Monthly Basic Salary Ć· 30
Step 2 ā Indemnity (1ā5 years): Daily Ć 15 Ć Total Years of Service
Step 3 ā Indemnity (5+ years): Daily Ć 30 Ć Total Years of Service
Step 4 ā Apply cap: If result > Basic Ć 18, then cap at Basic Ć 18
ā ļø Please note: Indemnity is based only on your basic salary amount. Excluded from the legal math in its entirety are all regular monthly allowances such as accommodation, transport, food, mobile, school fees, and variable performance bonuses. Please note that your official basic salary line is in your signed employment agreement.
Kuwait Labour Law allows for pro rated calculations of incomplete and on-going years of service. If you've worked for 3 years and 6 months, your indemnity will be based on 3.5 years of work. The fraction is calculated based on the number of continuous calendar days to avoid rounding errors and ensure precise results.
The total continuous service period is first reduced by any days of approved unpaid leave taken during your employment. If you were personally absent for unpaid leave or extended medical leave, for example, the total number of calendar days active will also decrease and this will slightly decrease the output of the calculation. To accommodate this, use the unpaid leave field in our calculator above.
Under domestic service contracts in Kuwait, domestic workers, including housemaids, personal drivers, and gardeners, are governed by a separate law (Law No. 68 of 2015 on Domestic Workers). They may have different rights and entitlements from the typical private-sector rules in this tool. Labour Law No. 6 of 2010 applies to private sector jobs.
Kuwait Labour Law stipulates that the employer is responsible for settling all outstanding rights when the employment contract is terminated. In the event of an intentional delay in your processing or disagreement, you can request case review with the Public Authority for Manpower (PAM) to initiate the official case review and dispute procedures.
Employers may recover specific amounts from your final settlement if they are documented, for example, advanced salary or loans from the company or for damages caused by the employee. These deductions, however, need to be written in or agreed to in the contract. No deductions are allowed for unverified or questioned claims, and will not go negative.
In the private sector, the same basic paths are used to calculate the indemnity for fixed-term (limited) or indefinite (unlimited) contracts as per Kuwait Labour Law No. 6 of 2010. If no renewal of the fixed contract is made at the end of the contract, or in a normal contract relationship, the same rates and thresholds apply regardless of who initiated the separation.
It is based only on your basic salary. By law, according to Kuwait Labour Law No. 6, 2010, all Monthly Allowances (housing, company transport, mobile expenses, utilities or variable sales bonuses) are completely omitted from the main math.
Yes, absolutely. Kuwait has no cuts to or penalties for private-sector workers' resignations, unlike some neighboring systems. Indemnity is the same amount regardless of whether you resign or are terminated and depends on your salary and length of service (after reaching the 1-year mark).
The maximum legal accumulation is capped at 18 months of basic salary. For instance, if your basic salary is KWD 500, you will not be able to earn more than KWD 9,000 even after working for the same employer for 10 years.
Yes. Any day approved as unpaid leave counts as a day lost in continuous service. This will reduce your total active service tracking figure, thereby slightly lowering the output for the final calculation of the indemnity.
Yes, when you pass your probation period and keep working with the employer, those initial months are definitely part of your overall continuous service record. But if you terminate probation prior to the 1-year continuous mark, no indemnity is due.