What is end of service indemnity in Kuwait?
In Kuwait, the money an employer pays you when your job ends is called "indemnity" or "end of service indemnity". In other Gulf countries people call it gratuity. It is a legal right for workers in Kuwait's private sector. Your employer cannot cancel it by writing a different rule in your contract, because the Labour Law sets the minimum and any clause that gives you less is void.
The amount depends on four things: how many years you worked, your last remuneration, how you are paid (monthly or by the day, week, hour or piece), and who ended the contract. If you resign from an open-ended contract, you may receive only part of the amount, or nothing at all if you worked less than three years.
This guide explains each rule in simple English. It also shows worked examples that match the Kuwait indemnity calculator above, so you can check your own numbers.
The legal basis: Law No. 6 of 2010
The main law is the Private Sector Labour Law No. 6 of 2010. The articles that matter most for indemnity are:
| Article | What it says (in short) |
|---|---|
| Article 51 | Sets the indemnity rates and the maximum. Allows deduction of debts owed to the employer. |
| Article 52 | Lists the cases where the worker gets the full indemnity. |
| Article 53 | Reduces the indemnity when a worker resigns from an unlimited contract. |
| Article 55 | Defines the remuneration used for the calculation. |
| Article 41 | Lists the serious faults that allow dismissal without indemnity. |
| Article 48 | Lets the worker leave without notice, with full rights, if the employer breaks the law or the contract. |
Article 51 rates
For workers paid monthly, Article 51 gives:
- 15 days' remuneration for each of the first five years of service, and
- one month's remuneration for each year after the fifth.
- Fractions of a year are paid in proportion.
- The total must not be more than one and a half years' remuneration (18 months).
For workers paid by the day, week, hour or piece, the rates are lower: 10 days' pay for each of the first five years and 15 days' pay for each later year, with a maximum of one year's pay. Our calculator is designed for monthly-paid staff, which covers most expat office, retail and technical jobs.
Amendments you should know about
Two later laws changed Article 51. Law No. 85 of 2017 and Law No. 17 of 2018 stopped employers from subtracting their social security (PIFSS) contributions from the indemnity. Before that, some Kuwaiti workers saw their indemnity reduced by these payments. Today the full indemnity is due, though the employer can still deduct proven loans or debts that you owe the company.
We checked for newer changes to Articles 51 to 55 up to October 2026 and found none. If a new amendment is published in the Kuwait Al-Youm official gazette, the rules on this page may change.
Which salary is used: basic or total?
This is one of the most common arguments between workers and employers in Kuwait. The law uses the word "remuneration", and Article 55 explains what it includes. In plain terms, it is the basic wage plus everything the worker regularly receives under the contract or company rules, such as fixed allowances, regular bonuses, grants and other cash benefits.
The social allowance and children's allowance that the state pays to Kuwaiti workers under Law No. 19 of 2000 are not included.
Under the law, the last remuneration is used. For workers paid by the piece, the average of the last three months of working days is used. For benefits paid in cash or in kind that change from month to month, an average over the last year is used.
In practice, many employers calculate indemnity on basic salary only. Some contracts are written in a way that keeps allowances low or separate. If your employer used basic salary and your allowances are fixed and paid every month, you may have a strong argument that they should be included. Our calculator lets you type whatever figure you think is right. Try it with basic only and with basic plus allowances to see the difference. If you cannot agree with your employer, ask the Public Authority for Manpower (PAM).
How to calculate indemnity in Kuwait: step by step
Step 1: Work out your total service
Count from your first day to your last working day. Our calculator counts whole years from your start date and then adds the remaining days divided by 365.
Step 2: Work out your daily rate
The law gives the first-five-year rate in days (15 days), so you need a daily rate. The law does not fix a divisor for this. Two methods are common:
Method A treats a month as 26 working days, which is widely used by employers and many guides in Kuwait. Method B treats 15 days as exactly half a month. Method A gives a slightly higher result. Your employer may use either, so check your company policy.
Step 3: Apply the Article 51 rates
After 5 years: monthly remuneration × years above 5
Step 4: Apply the 18-month cap
Step 5: Apply any resignation reduction
Resignation: how much do you lose?
Article 52 says the worker gets the full indemnity when:
- the employer ends the contract;
- a fixed-term contract ends and is not renewed;
- the contract ends for one of the reasons in Articles 48, 49 or 50, such as the worker leaving because of the employer's breach, the worker's death or disability, or the employer's bankruptcy or closure;
- a female worker ends her contract within one year of her marriage.
If you resign from an unlimited (open-ended) contract for any other reason, Article 53 cuts the amount:
| Length of service | Share of indemnity paid |
|---|---|
| Less than 3 years | Nothing |
| 3 years to less than 5 years | Half (50%) |
| 5 years to less than 10 years | Two thirds (66.7%) |
| 10 years or more | Full (100%) |
Notice the "cliffs". One day before your third anniversary you get nothing. One day after, you get half. The same jump happens at five and ten years. If you are close to one of these points, it can be worth staying a little longer before you resign.
If you resign from a fixed-term contract before it ends, the position is less clear and you may also owe the employer compensation. Get advice from PAM before you do this.
Worked examples
All examples assume a monthly-paid worker. Unless stated, they use the 26-day method. Type the same values into the calculator to see the same figures.
Example 1: Employer ends the contract after 7 years
Ahmed worked from 1 March 2019 to 28 February 2026 (7 years). His monthly remuneration is KWD 600. The employer ended his contract.
- Daily rate: 600 ÷ 26 = KWD 23.077
- First 5 years: 15 × 23.077 × 5 = KWD 1,730.769
- Years 6 and 7: 600 × 2 = KWD 1,200.000
- Full indemnity: KWD 2,930.769
With the 30-day method the first five years give 15 × 20 × 5 = KWD 1,500, so the total is KWD 2,700.000.
Example 2: Resigning after about 4.5 years
Joy worked from 1 January 2022 to 30 June 2026, about 4.496 years. Her remuneration is KWD 450. She resigned from an unlimited contract.
- Daily rate: 450 ÷ 26 = KWD 17.308
- Full indemnity: 15 × 17.308 × 4.496 = KWD 1,167.202
- Article 53 share for 3 to 5 years: half
- Payable: KWD 583.601
Example 3: Resigning after 8 years
Suresh worked from 1 June 2018 to 31 May 2026 (8 years) on KWD 900 per month. He resigned.
- First 5 years: 15 × (900 ÷ 26) × 5 = KWD 2,596.154
- Years 6 to 8: 900 × 3 = KWD 2,700.000
- Full indemnity: KWD 5,296.154
- Article 53 share for 5 to 10 years: two thirds
- Payable: KWD 3,530.769
Example 4: Long service and the 18-month cap
Fatima worked 26 years (1 January 2000 to 31 December 2025) on KWD 1,000 per month. Her employer ended the contract.
- Without the cap: about 2.885 months for the first 5 years plus 21 months = 23.885 months
- Cap: 18 months × 1,000 = KWD 18,000
- Payable: KWD 18,000.000 (cap applied)
Example 5: Resigning before 3 years
Leo worked 2 years on KWD 500 and resigned from an unlimited contract. His full indemnity would be KWD 576.923, but under Article 53 he receives KWD 0.000. If he had resigned because the employer did not pay his salary (Article 48), he would get the full KWD 576.923.
Special cases
Dismissal for serious fault
Article 41(a) lets an employer dismiss a worker without notice and without indemnity only in a short list of serious cases. These include a mistake that caused the employer a large loss, getting the job by fraud or forged papers, and revealing work secrets that caused or could cause real loss. Other disciplinary reasons, such as breaking work rules, may allow dismissal without notice, but they do not remove the indemnity.
Absence from work
If you are absent without a valid reason for a long period (for example, seven days in a row), the employer may treat you as having resigned. The Article 53 shares then apply. Always tell your employer in writing if you have to be away.
Probation
If the employer ends your contract during probation, the indemnity for the time you worked is still due. Time on probation also counts if you stay on after it.
Women who resign after marriage
A female worker who resigns within one year of her marriage gets the full indemnity, whatever her length of service. Keep a copy of the marriage certificate.
Transfer to a new employer
When you move your residence to a new employer, your old employer should settle your indemnity, unless all parties agree in writing that the new employer takes over your service. Check this before you sign.
Domestic workers
Domestic workers, such as house maids and family drivers, are not covered by Law 6/2010. They have their own law, Law No. 68 of 2015, which gives an end of service benefit of one month's wage for each year of work. This calculator does not cover that law.
Government sector
Government employees follow civil service rules, not Law 6/2010.
Indemnity and your other final dues
Indemnity is only one part of what you receive when you leave a job in Kuwait. Your final settlement usually has several separate items, and each one follows its own rule. Do not let an employer mix them together in one round number without a breakdown.
- Salary for days worked. You are paid for every day up to your last working day, including the last part month.
- Unused annual leave. Leave days you earned and did not take should be paid in cash when the contract ends.
- Notice pay. If the employer ends an unlimited contract without giving the notice the law requires, it must pay you for the notice period instead.
- Overtime and other unpaid amounts. Any overtime or allowance that was not paid during the job is still owed.
- Air ticket. Many contracts include a ticket home at the end of service. Check your contract.
Ask your employer for a written settlement sheet that lists each item with its own figure. Compare the indemnity line with the result of this calculator. If the numbers are far apart, ask HR which salary figure, which daily rate and which service dates they used. Most differences come from one of those three points.
Common mistakes
- Using one month per year from day one. The first five years earn only 15 days per year for monthly-paid workers.
- Forgetting the cap. No monthly-paid worker can receive more than 18 months' remuneration as indemnity.
- Mixing up the resignation shares. The cut-offs are 3, 5 and 10 years. Check the exact date of your anniversary.
- Accepting basic salary only without checking. Article 55 includes regular allowances in remuneration.
- Allowing a PIFSS deduction. This has not been allowed since the 2017 and 2018 amendments.
- Signing a full release without the money. Do not sign a "full and final settlement" until you have been paid what you agreed.
How to claim your indemnity and complain if unpaid
Your indemnity should be paid with your other final dues when your contract ends. If there is a problem, follow these steps:
- Ask in writing. Send HR your dates, remuneration and your own calculation. Keep copies.
- Gather proof. Contract, salary slips, bank statements, resignation or termination letter and civil ID.
- File a complaint with PAM. The Public Authority for Manpower handles labour disputes in the private sector. Its labour relations department tries to settle the case between you and the employer. If no settlement is reached, the case is sent to the labour court. PAM has also added a labour violations reporting feature to the government's Sahel app.
- Act within one year. Labour claims filed more than one year after the end of the contract may not be heard if the employer denies them.
If a court finds that the employer delayed payment without reason, the law allows it to award extra compensation for the delay. Your embassy's labour section can also help you with the process.
Practical tips
- Before you resign, check your exact service date and see if you are close to 3, 5 or 10 years.
- Keep a copy of every salary increase letter, because the last remuneration is used.
- Ask HR which daily rate method they use (26 or 30) and which pay items they include.
- Compare rules if you plan to move within the Gulf. See our Saudi End of Service Calculator, Oman End of Service Calculator and Bahrain Gratuity Calculator.
- If you are moving to the UAE, the UAE Gratuity Calculator uses a different formula based on basic salary.
Frequently asked questions
How is indemnity calculated in Kuwait?
For monthly-paid workers, Article 51 of Law 6/2010 gives 15 days' remuneration for each of the first five years and one month's remuneration for each year after that. Part years count pro rata, and the total cannot be more than 18 months' remuneration.
How much indemnity do I get if I resign in Kuwait?
On an unlimited contract, Article 53 gives nothing for less than 3 years, half for 3 to under 5 years, two thirds for 5 to under 10 years, and the full amount after 10 years.
Is Kuwait indemnity based on basic salary or total salary?
Article 55 defines remuneration as the basic wage plus regular allowances, bonuses and benefits set in the contract or company rules. The social and children allowances paid by the state are excluded. Some employers use basic salary only, so check your contract and ask PAM if there is a dispute.
What is the maximum indemnity in Kuwait?
For monthly-paid workers the maximum is one and a half years' remuneration, which is 18 months. For workers paid by the day, week, hour or piece, the maximum is one year's remuneration.
Do I get indemnity if I resign before 3 years in Kuwait?
Not normally, if you resign from an unlimited contract. The exceptions are resignation for an employer breach under Article 48 and a female worker who resigns within one year of her marriage, who both receive the full amount.
Should I divide by 26 or 30 to get the daily rate in Kuwait?
The law does not name a fixed number. Many employers and calculators use 26 working days, while others treat 15 days as half a month, which is the same as dividing by 30. Our calculator lets you choose and shows both results.
Can my employer deduct social security from my indemnity?
No. Since Law 85 of 2017 and Law 17 of 2018, the employer cannot subtract its PIFSS contributions from the indemnity. Proven debts or loans owed to the employer may be deducted.
When can an employer refuse to pay indemnity in Kuwait?
Only in the serious cases listed in Article 41(a), such as a fault that caused a large loss, getting the job by fraud, or revealing work secrets. Dismissal for other disciplinary reasons does not remove the indemnity.
Do domestic workers in Kuwait get indemnity?
Domestic workers are not covered by Law 6/2010. They have their own law, Law 68 of 2015, which gives an end of service benefit of one month's wage for each year of work.
How do I complain if my indemnity is not paid in Kuwait?
File a labour complaint with the Public Authority for Manpower (PAM). PAM tries to settle the dispute and, if it fails, refers the case to the labour court. Act within one year of the end of your contract.
Disclaimer and sources
Disclaimer: This Kuwait indemnity calculator gives an estimate only and is not legal advice. Employers may use a different daily rate method or salary basis, and courts decide disputes case by case. Always confirm your figures with your employer, the Public Authority for Manpower or a lawyer licensed in Kuwait.
Sources / references: Kuwait Private Sector Labour Law No. 6 of 2010 (Articles 41, 48–53 and 55), Law No. 85 of 2017 and Law No. 17 of 2018 amending Article 51, Law No. 19 of 2000 (social and children allowances), and Law No. 68 of 2015 on domestic workers. Official authority: Public Authority for Manpower (PAM), Kuwait.