Calculating Termination Indemnity or End of Service benefits in Kuwait
Calculating Termination Indemnity or End of Service benefits in Kuwait
Question: Is there an easy way of calculating my termination indemnity? Can you please explain how I can calculate it?
Fajer:
First of all, I would like to make it clear that it is not a lawyer’s job to do the actual calculations. Even through the legal procedures, lawyers will not usually calculate – instead experts are called in to calculate the final amount (they are usually accountants). With that said, the principle of the calculations is not that hard to master, and I suggest that you calculate it so that you have a rough idea of your termination indemnity amount.
This will depend on whether you have been terminated or you have terminated the contract.
In the event where you are terminated:
* Less than 5 years of employment – 15 days’ pay of your salary.
* Between 5 to 10 years of employment – 30 days’ pay of your salary.
* The total amount should not exceed an amount that is more than one year and a half of salary.
In the event where you have terminated your contract and it is an indefinite term contract:
Kuwait Indemnity Law
| Years of Service at the Company |
Employee is Terminated from the Company | Employee Submitted Resignation |
| Under 3 Years | 15 days salary for every year worked | Not Available |
| 3 to 5 Years | 15 days salary for every year worked | Half of the 15 days salary for every year worked |
| 5 to 10 Years | One Month salary for every year worked | two third of the 30 day salary for every year worked |
| More than 10 Years |
One Month salary for every year worked (not exceeding one year and six months of payment) | One Month salary for every year worked (not exceeding one year and six months of payment) |
* 3-5 years of employment – half of the indemnity mentioned above.
* 5-10 years – two thirds of the indemnity mentioned above.
* 10 plus years – you will be entitled to your entire indemnity.
Let me give an example. You ended your indefinite contract (with a three-month notice period) and your salary is KD 450 a month. You have been working for seven years with this company. How much is your termination indemnity? I have answered this question by breaking it down to simple steps, as follows:
1) Break down your salary into daily pay. You have 26 working days per month. Therefore, you should divide 450 by 26. This will average to KD 17.310.
2) Calculate your termination indemnity as if you were being terminated. That’s 15 days’ pay for the first five years and one month pay for the remaining two years – 15 x KD 17.310 x 5 = KD 1,298.1. 30 x KD 17.310 x 2 = KD 1,038.6. Total = KD 2,336.7
3) Calculate your termination indemnity according to the fact that you have terminated the contract. For seven years that’s 2/3 of the total above.
26 days
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Calculating Termination Indemnity or End of Service benefits in Kuwait
Question:
I am confused about how to calculate my indemnity. I am getting paid on a monthly basis and that is usually for 30 days, but my company is calculating my indemnity by dividing my total salary over 26 days. I could not find anything in the law that refers to 26 days.
Fajer:
The reason why it is calculated 26 days is because you averagely have 26 working days a month – Friday is the only non-working day a month. Saturdays in Kuwait are usually paid off days.
Kuwaiti labor law does not state how many days a week we can work, but did state that 48 hours a week maximum/eight hours a day – that would be six days then. Even if you do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.
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