Kuwait Indemnity Calculator: Official Labour Law Article 55 Formula
Direct Legal Rule: Pursuant to Kuwait Private Sector Labour Law No. 6 of 2010 (Article 55), daily wage must be computed by dividing monthly remuneration by 26 working days. Indemnity accrues at 15 days per year for the first 5 years and 30 days thereafter, capped at 1.5 years' salary.
Kuwait Indemnity Parameters
Statutory calculations conform to Kuwait Private Sector Labour Law No. 6/2010.
Basic + Fixed Cash Allowances
KWD
100 KWD2,500 KWD5,000+ KWD
Full years
0 Yrs15 Yrs30+ Yrs
0 to 11 months (pro-rata)
Determines Article 53 resignation tier
Statutory Entitlement
KWD0.000
Calculated via Law No. 6/2010 Art. 55
Daily Wage (Salary / 26):0.000 KWD
First 5 Years Accrual (15 days/yr):0.000 KWD
Subsequent Service (30 days/yr):0.000 KWD
Gross Uncapped Benefit:0.000 KWD
Statutory Maximum Cap (18 Months):0.000 KWD
Resignation Percentage Applied:100%
Understanding Kuwait End of Service Indemnity Under Law No. 6 of 2010
In the State of Kuwait, expatriate and private-sector terminal benefits are governed by Kuwait Private Sector Labour Law No. 6 of 2010. Commonly referred to as the Indemnity or Mukafoat Nihayat Al-Khidma, this statutory severance pay protects workers by establishing a mandatory financial accrual based on their length of uninterrupted service and final remuneration.
The Critical 26 Working Days Statutory Divisor (Article 55)
The single most frequent mistake committed by non-compliant payroll departments and generic financial calculators is dividing an employee's monthly remuneration by 30 calendar days. Article 55 of Law No. 6/2010 unambiguously mandates:
Statutory Daily Wage Formula (Kuwait Law No. 6/2010, Art. 55)
Daily Wage = Total Monthly Remuneration / 26 Working Days
Because Kuwait law treats weekly rest days as non-working days for indemnity computation purposes, dividing by 26 results in a higher, legally correct daily rate. An employee earning 1,300 KWD has a statutory daily rate of 50.000 KWD (1,300 / 26), whereas an unlawful 30-day divisor yields only 43.333 KWD, depriving the worker of 13.3% of their lawful severance.
Kuwait Indemnity Accrual Tiers and Statutory 1.5-Year Cap
Under Article 51 of the Labour Law, indemnity accumulates in two statutory tiers:
First 5 Years of Continuous Service: 15 working days' remuneration for each completed year.
Service Exceeding 5 Years: One full month (30 working days' remuneration) for each subsequent year.
Maximum Ceiling Cap: The total aggregate benefit payable under all tiers combined cannot exceed one and a half years' remuneration (18 months' salary).
When an employee working under an indefinite term contract voluntarily tenders their resignation, the full indemnity is reduced according to the statutory tenure tiers outlined in Article 53:
Continuous Service Period
Resignation Entitlement (%)
Applicable Legal Provision
Under 3 Completed Years
0% (No entitlement)
Article 53, Kuwait Labour Law
3 Years to under 5 Years
50% (Half entitlement)
Article 53, Kuwait Labour Law
5 Years to under 10 Years
66.67% (Two-thirds entitlement)
Article 53, Kuwait Labour Law
10 or more Completed Years
100% (Full entitlement)
Article 53, Kuwait Labour Law
Two Practical Case Studies
Scenario A: Resignation at 4 Years
Mid-Level Engineer Resigning After 4 Years
Monthly Salary: 1,300 KWD Daily Wage: 1,300 / 26 = 50.000 KWD Gross Accrual: 4 yrs × 15 days × 50 KWD = 3,000 KWD Resignation Deduction: Service is between 3–5 years, triggering a 50% reduction. Net Payable Indemnity:1,500.000 KWD.
What components of compensation are included in the indemnity calculation?
Under Article 55, calculation is based on the worker's latest drawn remuneration, which encompasses basic salary plus all regular, guaranteed contractual allowances (such as fixed housing, transportation, and cost-of-living allowances). Discretionary bonuses and unquantified commissions are typically excluded.
Does an employee forfeit indemnity if dismissed?
Indemnity is only forfeited in rare situations of summary dismissal under Article 41 for gross misconduct (e.g., criminal conviction, severe financial damage to the employer, or physical assault). Standard dismissal or redundancy entitles the worker to 100% full indemnity.
Are partial years calculated pro-rata?
Yes. Article 51 stipulates that workers are entitled to a proportionate fraction for fractions of the year served, calculated accurately down to completed months and days.
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