Kuwait Indemnity Law 2024 | Asper Kuwait Labor Law Service Money Pay
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Kuwait Indemnity Calculator
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Kuwait Indemnity Law
In Kuwait, indemnity, also known as End of Service Benefits (EOSB), Kuwait Indemnity Law is a mandatory provision under the Kuwaiti Labor Law. It ensures that employees are fairly compensated for their years of service, regardless of the reason for termination. Here are key points to understand:
Kuwait Indemnity Law Calculation:
Indemnity is calculated based on the employee’s last basic salary and the number of years served.
Monthly vs. Daily Wages of indemnity:
For employees on monthly wages, indemnity is calculated as 15 days’ salary for each year of service up to 5 years, and 30 days’ salary for each year of service beyond 5 years. For daily wage earners, indemnity is 10 days’ wage for each year of service up to 5 years, and 15 days’ wage for each year of service beyond 5 years.
Maximum Limit of Indemnity:
The total indemnity cannot exceed 18 months’ salary, as per Article 51 of the Kuwaiti Labor Law.
Eligibility of Indemnity:
All employees, including domestic helpers, are entitled to indemnity, provided they hold an Article 20 visa and have completed at least 3 years of service.
Kuwait Indemnity Law
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Kuwait Indemnity Law Examples:
- An employee with 7 years of service on a monthly wage of 500 KD would receive an indemnity of 30 days’ salary for each year of service (210 days) minus the maximum limit of 18 months’ salary (900 KD).
- A daily wage earner with 4 years of service on a daily wage of 5 KD would receive an indemnity of 10 days’ wage for each year of service (40 days) or 200 KD.
In Kuwait, indemnity (severance pay) calculations are governed by the Kuwaiti Labor Law. The indemnity calculation differs based on whether the employee resigns or is terminated. Here are five examples illustrating how to calculate indemnity for both resigned and terminated employees according to Kuwaiti Labor Law:
1. Basic Calculation for Resigned Employees
Scenario: An employee has resigned after completing 5 years of service, with a monthly salary of KD 800.
Calculation:
- Indemnity Calculation for Resignation:
- First 5 years: The indemnity is 1/2 of the monthly salary for each year of service.
- Formula: Indemnity = (Number of years) × (1/2 of the monthly salary)
- Result: 5 years × (1/2 × KD 800) = 5 × KD 400 = KD 2,000
Indemnity: KD 2,000
2. Basic Calculation for Terminated Employees (Without Fault)
Scenario: An employee was terminated without fault after 8 years of service, with a monthly salary of KD 1,000.
Calculation:
- Indemnity Calculation for Termination:
- First 5 years: 1/2 of the monthly salary for each year of service.
- Next 3 years: 1 full month's salary for each year of service.
- Formula:
- For first 5 years: 5 × (1/2 × KD 1,000) = KD 2,500
- For next 3 years: 3 × KD 1,000 = KD 3,000
- Total Indemnity: KD 2,500 + KD 3,000 = KD 5,500
Indemnity: KD 5,500
3. Resigned Employee with Less Than 5 Years
Scenario: An employee resigned after 3 years of service, with a monthly salary of KD 600.
Calculation:
- Indemnity Calculation:
- Total Indemnity: 1/2 of the monthly salary for each year of service.
- Formula: Indemnity = 3 × (1/2 × KD 600) = 3 × KD 300 = KD 900
Indemnity: KD 900
4. Terminated Employee (At Fault)
Scenario: An employee was terminated due to misconduct after 6 years of service, with a monthly salary of KD 700. Note: If termination is due to employee fault, indemnity may not be granted unless stipulated otherwise.
Calculation:
- Indemnity Calculation:
- Since termination is at fault, generally, indemnity is not applicable. However, if the company policy or contract states otherwise, then indemnity should be calculated accordingly, but typically it is zero.
Indemnity: KD 0 (assuming termination is due to fault)
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5. Long Service with Partial Indemnity
Scenario: An employee resigned after 10 years of service, with a monthly salary of KD 1,200.
Calculation:
- Indemnity Calculation:
- First 5 years: 1/2 of the monthly salary for each year of service.
- Next 5 years: 1 full month's salary for each year of service.
- Formula:
- For first 5 years: 5 × (1/2 × KD 1,200) = KD 3,000
- For next 5 years: 5 × KD 1,200 = KD 6,000
- Total Indemnity: KD 3,000 + KD 6,000 = KD 9,000
Indemnity: KD 9,000 | Kuwait Indemnity Law 2024 | Asper Kuwait Labor Law Service Money Pay
Key Points for Calculation:
- For Resignation: Employees are generally entitled to half a month’s salary for each year of service if they resign. If they have not completed 5 years, the indemnity is calculated based on the actual years served.
- For Termination Without Fault: Employees are generally entitled to half a month’s salary for each of the first 5 years and one full month’s salary for each additional year.
- For Termination With Fault: Indemnity is usually not granted, but this depends on the employment contract or company policy.
- Indemnity for Service Beyond 5 Years: After 5 years, the calculation changes to a full month’s salary per year of service.
- Adjustments: The calculation might need adjustments based on specific employment contracts, company policies, or additional benefits provided by the employer.
Always ensure that indemnity calculations comply with the latest Kuwaiti Labor Law and any amendments that may apply. Kuwait Indemnity Law 2024 | Asper Kuwait Labor Law Service Money Pay
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