End-of-service indemnity is the single largest payment most private-sector employees in Kuwait will ever receive from an employer, yet it is also the one most often miscalculated or short-paid. This guide explains exactly how indemnity is worked out under Kuwait Labour Law No. 6 of 2010, how much you keep if you resign versus if you are terminated, and the notice, leave, working-hours and overtime rights that sit alongside it. The figures below apply to the private sector, supervised by the Public Authority for Manpower (PAM).
How end-of-service indemnity is calculated
Kuwait Labour Law No. 6 of 2010 sets a tiered indemnity that rewards longer service. The scale differs depending on how you are paid.
Monthly-paid employees earn:
- 15 days’ wage for each of the first five years of service; then
- One month’s wage for each year after five years.
- Total indemnity is capped at one and a half years’ wage (18 months).
Daily, weekly or hourly-paid employees earn 10 days’ wage per year for the first five years and 15 days’ wage per year thereafter, capped at one year’s wage.
The indemnity is based on your last drawn wage, including regular allowances that form part of the salary. To convert a monthly salary to a daily rate, Kuwait uses a 26-day working month, so your daily wage = monthly wage ÷ 26.
A worked example
Take a monthly-paid employee earning KD 600 who completes exactly seven years. Daily wage = 600 ÷ 26 = KD 23.08. The first five years pay 5 × 15 × 23.08 = KD 1,731. The two years beyond five pay 2 × one month = 2 × 600 = KD 1,200. Total indemnity is roughly KD 2,931, provided it does not exceed the 18-month cap (here KD 10,800, so the cap does not bite). Fractions of a year are paid pro rata, so partial years still count.
Eligibility: resignation versus termination
This is where many employees lose money without realising it. If your employer terminates you without a valid legal cause under an indefinite (unlimited) contract, you receive the full indemnity regardless of how many years you served. Dismissal for one of the serious causes listed in Article 41 (such as gross misconduct) can forfeit the indemnity.
If you resign from an indefinite contract, the amount is scaled by length of service:
- Less than 3 years: no indemnity.
- 3 to less than 5 years: half the calculated indemnity.
- 5 to less than 10 years: two-thirds of the calculated indemnity.
- 10 years or more: the full indemnity.
Female employees who resign within a defined period of marriage or childbirth, and cases of contract expiry on fixed-term agreements, follow separate rules, so check your specific situation. Your employer must settle all end-of-service dues, including indemnity and any unused leave, within seven days of the contract ending. Leaving a job also affects your work permit and iqama, so plan the transfer or exit alongside your Kuwait residency and work-visa status.
Notice periods
For an indefinite contract, either party ending the relationship must give three months’ written notice for monthly-paid employees (one month for those paid on other bases). During the notice period the employee keeps working and being paid, and is entitled to one paid day per week to search for new work. If either side ends the contract without serving notice, it must pay the other the wage for the un-served notice period. A fixed-term contract simply runs to its agreed end date.
Annual leave
Employees are entitled to 30 days of paid annual leave per year once they have completed the qualifying service period (commonly applied after nine months, with pro-rata leave available earlier). Official public holidays and sick leave falling inside the vacation are not counted against annual leave. Untaken leave must be paid out in cash when you leave, based on your last wage, and cannot simply be waived by the employer.
Working hours and overtime
The standard limit is 8 hours a day and 48 hours a week, generally across six days, with rest breaks so that no worker is on duty for more than five continuous hours. During Ramadan, working hours are reduced for the relevant employees. Friday is the standard weekly rest day, and every worker must get at least 24 consecutive hours of rest each week.
Overtime must be authorised in writing and is paid at a premium:
- 125% of the normal wage for extra hours on a regular working day.
- 150% plus a compensatory day off for work on the weekly rest day.
- 200% plus a compensatory day off for work on an official public holiday.
Overtime is capped at a maximum of two hours per day and is subject to annual limits.
Other core employee rights
- Sick leave: up to 15 days at full pay, then 10 days at three-quarters pay, 10 days at half pay, 10 days at quarter pay, and a final period without pay, on production of a valid medical certificate.
- Maternity leave: 70 days of paid maternity leave, plus additional unpaid leave under defined conditions.
- Timely wages: salaries must be paid through the approved wage-protection system so payments are traceable.
- Free repatriation: the employer generally bears the cost of returning an expatriate employee home at the end of service, unless the worker joins another employer.
- Dispute resolution: unresolved complaints can be filed with PAM’s labour relations department and escalated to the labour courts, which do not charge employees court fees for such claims.
These protections apply equally to Kuwaiti nationals and expatriates in the private sector. Because your indemnity is calculated on your final wage, it is worth understanding how the Kuwaiti system compares with neighbouring markets such as the UAE gratuity calculation, and factoring the lump sum into your longer-term Kuwait cost-of-living plan.
Frequently Asked Questions
Is end-of-service indemnity based on basic salary or total salary?
Indemnity is calculated on your last comprehensive wage, which includes the basic salary plus regular allowances that are treated as a fixed part of pay. One-off bonuses and reimbursed expenses are generally excluded. If your contract splits pay into many allowances, confirm in writing which components count.
Do I get any indemnity if I resign before three years?
Under an indefinite contract, resigning with less than three years of service means no end-of-service indemnity is payable. From three years you receive half, from five years two-thirds, and from ten years the full amount. You are still owed any unpaid wages and accrued annual-leave pay.
How quickly must my employer pay my indemnity?
Kuwait Labour Law requires the employer to settle all end-of-service entitlements, including indemnity and leave balance, within seven days of the contract ending. If payment is withheld, you can file a complaint with the Public Authority for Manpower, which can refer the matter to the labour courts free of charge.
