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Thursday, August 10, 2017

Steps in Calculating Indemnity and Leave Balance Payment in Kuwait

The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.   Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:  For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service. For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service. Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.   Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows: For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above. Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above. Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.  What are the steps to calculate indemnity?  Step 1. Break down your salary into daily pay. You have 26 working days per month.   The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.  Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.  Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.  Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.  IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.  Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.  For Example:  Let's say you have a monthly salary of KD300 and a rendered service of 7 years.  Condition 1: Termination Condition 2: Resignation  You can also try this nifty online calculator for estimating your End of Service Indemnity.  Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.  A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.  Here's how to calculate: Step 1. Take the number of years service, and multiply by 30 days. Step 2. Divide the total by 26 working days. Step 3. Multiply the result by the latest salary. This is your leave balance payment.  Taking the example above, for KD 300 salary and 7 years experience:  It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.





The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.

Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:
  • For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service.
  • For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service.
Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.


Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows:
  • For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above.
  • Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above.
  • Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.


What are the steps to calculate indemnity?

Step 1. Break down your salary into daily pay. You have 26 working days per month.

The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.

Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.

Step 3. Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.

Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.

IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.

Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.



For Example:

Let's say you have a monthly salary of KD300 and a rendered service of 7 years.

Condition 1: Termination
The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.   Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:  For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service. For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service. Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.   Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows: For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above. Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above. Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.  What are the steps to calculate indemnity?  Step 1. Break down your salary into daily pay. You have 26 working days per month.   The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.  Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.  Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.  Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.  IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.  Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.  For Example:  Let's say you have a monthly salary of KD300 and a rendered service of 7 years.  Condition 1: Termination Condition 2: Resignation  You can also try this nifty online calculator for estimating your End of Service Indemnity.  Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.  A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.  Here's how to calculate: Step 1. Take the number of years service, and multiply by 30 days. Step 2. Divide the total by 26 working days. Step 3. Multiply the result by the latest salary. This is your leave balance payment.  Taking the example above, for KD 300 salary and 7 years experience:  It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.

Condition 2: Resignation
The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.   Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:  For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service. For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service. Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.   Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows: For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above. Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above. Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.  What are the steps to calculate indemnity?  Step 1. Break down your salary into daily pay. You have 26 working days per month.   The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.  Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.  Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.  Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.  IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.  Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.  For Example:  Let's say you have a monthly salary of KD300 and a rendered service of 7 years.  Condition 1: Termination Condition 2: Resignation  You can also try this nifty online calculator for estimating your End of Service Indemnity.  Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.  A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.  Here's how to calculate: Step 1. Take the number of years service, and multiply by 30 days. Step 2. Divide the total by 26 working days. Step 3. Multiply the result by the latest salary. This is your leave balance payment.  Taking the example above, for KD 300 salary and 7 years experience:  It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.


You can also try this nifty online calculator for estimating your End of Service Indemnity.
The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.   Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:  For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service. For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service. Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.   Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows: For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above. Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above. Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.  What are the steps to calculate indemnity?  Step 1. Break down your salary into daily pay. You have 26 working days per month.   The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.  Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.  Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.  Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.  IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.  Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.  For Example:  Let's say you have a monthly salary of KD300 and a rendered service of 7 years.  Condition 1: Termination Condition 2: Resignation  You can also try this nifty online calculator for estimating your End of Service Indemnity.  Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.  A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.  Here's how to calculate: Step 1. Take the number of years service, and multiply by 30 days. Step 2. Divide the total by 26 working days. Step 3. Multiply the result by the latest salary. This is your leave balance payment.  Taking the example above, for KD 300 salary and 7 years experience:  It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.



Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.

A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.

Here's how to calculate:
Step 1. Take the number of years service, and multiply by 30 days.
Step 2. Divide the total by 26 working days.
Step 3. Multiply the result by the latest salary. This is your leave balance payment.

Taking the example above, for KD 300 salary and 7 years experience:
The New Kuwait Labor Law clearly states the end of service benefits for private sector workers. This will depend on whether a worker has been terminated or he/she has resigned.   Condition 1. In the instance where the worker is terminated by any of the conditions stated below, the indemnity he/she will get is as follows:  For workers with less than 5 years of employment, indemnity amount is equal to 15 days’ pay of your salary for each year of service. For workers with more than 5 years of employment, a worker gets 30 days’ pay of your latest salary for every year of service. Remember that the total amount received as indemnity should not exceed an amount that is more than 18 months of your last salary. In essence, the indemnity is capped at about 21 years of service. Any amount of time after 21 years and your end of service pay would not increase.   Condition 2. In cases where the employment was cut short due to resignation, or for any reason considered as resignation, the indemnity is as follows: For workers who served 3-5 years of employment, the calculation is half of the indemnity mentioned above. Those who worked for 5-10 years, it is two thirds of the indemnity as mentioned above. Workers who put up 10 plus years of service will be entitled to his or her entire indemnity.  What are the steps to calculate indemnity?  Step 1. Break down your salary into daily pay. You have 26 working days per month.   The reason why it is calculated as 26 days is because workers 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 some employees do not work on Saturdays, companies calculate Saturday as paid working day to save money when calculating indemnity.  Step 2. Calculate your indemnity as per Condition 1 above for the first 5 years.  Calculate your indemnity as per Condition 1 above for the remaining years after the initial 5 years.  Step 4. The total indemnity will be the sum of those two amounts; steps 2 and 3.  IF: You resigned from work, with the proper advance notice to your company, you have to follow one more step to consider Condition 2 above.  Step 5: Take the calculated indemnity from Step 4, and multiply this to 1/2 for 3-5 years employment and 2/3 for 5 to 10 years employment. Above 10 years, a worker is entitled to full indemnity.  For Example:  Let's say you have a monthly salary of KD300 and a rendered service of 7 years.  Condition 1: Termination Condition 2: Resignation  You can also try this nifty online calculator for estimating your End of Service Indemnity.  Housing allowance should be included in the calculation. Also, any remaining unused annual leave should also be paid accordingly. The annual leave balance payment has to be calculated separately from the indemnity.  A worker is entitled to 30 days leave for every year of service. The annual leave can be accumulated for more than two years with the consent of both the parties. Worker are entitled to a cash consideration of all their unused accumulated leaves upon the expiry of their contract.  Here's how to calculate: Step 1. Take the number of years service, and multiply by 30 days. Step 2. Divide the total by 26 working days. Step 3. Multiply the result by the latest salary. This is your leave balance payment.  Taking the example above, for KD 300 salary and 7 years experience:  It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.

It is clear that Kuwaiti Labor Law favors workers who finish their contract and serve longer years. As such, before deciding to end your career in Kuwait, not the amount of time served as this will greatly affect your end of service benefits.



sources: Kuwait Labor, Kuwaiti Times




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