Kuwait Indemnity: End of Service Calculation
Indemnity (end-of-service benefit) in Kuwait is one of the most valuable worker entitlements. Unlike some Gulf countries, Kuwait calculates indemnity on the full last-drawn salary including allowances, not just basic pay. Here is exactly how it works.
The Indemnity Formula
Articles 51-53 of Kuwait Labour Law No. 6 of 2010 set the calculation.
First 5 years: 15 days' pay per year of service
After 5 years: 1 month's pay per year of service
Maximum: 1.5 years' total salary (18 months' pay)
Based on LAST DRAWN SALARY including all regular allowances
Calculation Example
Worker with 8 years of service earning KWD 800/month (total salary including allowances).
First 5 years: 15 days x 5 years = 75 days. Daily rate = KWD 800 / 26 = KWD 30.77. Amount = 75 x KWD 30.77 = KWD 2,308
Next 3 years: 1 month x 3 years = 3 months. Amount = 3 x KWD 800 = KWD 2,400
Total indemnity: KWD 2,308 + KWD 2,400 = KWD 4,708 (if terminated by employer)
Resignation vs Termination
How much you receive depends on whether you resign or are terminated, and how long you have worked.
Resign under 3 years: No indemnity
Resign 3-5 years: Half (50%) of calculated indemnity
Resign 5-10 years: Two-thirds (66.7%) of calculated indemnity
Resign 10+ years: Full (100%) indemnity
Terminated by employer: Full (100%) indemnity regardless of service length
Key difference from UAE/Saudi: Kuwait calculates indemnity on total salary (basic + allowances), not just basic salary. This can make Kuwait indemnity significantly higher than equivalent service in countries that use only basic salary for the calculation.
Frequently Asked Questions
How is indemnity calculated?
15 days per year for first 5 years, 1 month per year after. Based on last total salary. Max 18 months' pay.
Do I get full indemnity if I resign?
Under 3 years: none. 3-5 years: half. 5-10: two-thirds. 10+: full. Termination: always full.
Is it based on basic salary only?
No. Kuwait uses total salary including housing, transport, and all regular allowances.
What is the maximum?
1.5 years' total salary (18 months). This cap applies regardless of length of service.
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