How Kuwait gratuity is calculated
Article 51 entitles a monthly-paid worker to 15 days' remuneration for each of the first five years and one month's remuneration for each subsequent year, provided the total does not exceed one and a half years' remuneration (18 months). Fractions of a year are paid pro-rata.
Following established Kuwaiti practice and court rulings, the daily rate for the 15-day tier is the monthly remuneration ÷ 26 (working days), while the later tier is simply one month's pay per year.
Article 53: if the worker resigns from an open-ended contract, the entitlement is:
| Service on resignation | Entitlement |
|---|---|
| Less than 3 years | Nothing |
| 3 to under 5 years | Half |
| 5 to under 10 years | Two-thirds |
| 10 years or more | Full |
Termination by the employer, expiry of a fixed-term contract, retirement, death, or resignation of a female worker due to marriage (within a year) all attract the full indemnity.
Formula
Worked example
Remuneration KWD 1,000, 7 years, terminated: years 1–5 = 5 × 15 × (1,000 ÷ 26) = 2,884.6; years 6–7 = 2 × 1,000 = 2,000. Total KWD 4,884.6. If resigned (5–10 yrs) × ⅔ = KWD 3,256.4.
Legal basis: Law No. 6 of 2010 (Private Sector Labour Law), Article 51.
Frequently asked questions
How is Kuwait indemnity calculated?
15 days' pay per year for the first five years (daily rate = monthly ÷ 26), then one month per year, capped at 18 months' pay, pro-rata for part years.
Why divide by 26 and not 30?
Kuwaiti labour courts calculate the daily wage on 26 working days a month, which gives a slightly higher daily rate than ÷30. Most employer calculations and the PAM guidance follow this.
What do I get if I resign after 4 years in Kuwait?
Half of the accrued indemnity. Example: KWD 800 salary, 4 years → 4 × 15 × 30.77 = 1,846 × ½ = KWD 923.
Is Kuwait indemnity based on basic or total salary?
On total remuneration — basic plus regular allowances such as housing and transport. Variable overtime and one-off bonuses are excluded.
What is the maximum indemnity?
18 months' remuneration. For KWD 1,500/month the maximum is KWD 27,000.
Do I get indemnity if I resign before 3 years?
No, unless the contract is fixed-term and expires, or the resignation is for a protected reason (e.g. marriage within one year for female workers).
Is annual leave balance added to the indemnity?
Unused annual leave is paid separately in the final settlement at the same daily rate; it is not part of the indemnity figure.