Kuwait End of Service Indemnity: 15 Days a Year, Then One Month

The rule in short

Kuwait calls this payment the end of service indemnity, and the private sector rules sit in Labour Law No. 6 of 2010 concerning labour in the private sector. The official English translation published by the Public Authority for Manpower (PAM) shows the law as a single document with an explanatory memorandum, so it is the first place to check the wording. The core rule is in Article 51. For a monthly-paid worker, the indemnity is 15 days' wage for each of the first five years, followed by one month's wage for each year after that. Part years count in proportion, so a worker who has served five years and six months gets half a month's wage for the extra six months.

There is an overall ceiling. Article 51 caps the total indemnity at one and a half years' wage, which is 18 months of pay. The cap matters only for long service or high pay. Most of the payouts you will see fall under it.

Daily, weekly, hourly and piece-rate workers follow a different scale in the same article. They receive 10 days' wage for each of the first five years and 15 days for each later year, with a ceiling of one year's wage. This page covers monthly-paid workers, which is the most common case for office, sales, management and technical staff.

How the figure is worked out, step by step

The calculation has five steps. Each one depends on a fact you can find in the contract, the payslips and the leaving date.

1. Work out the wage base. Article 55 defines wage as basic pay plus everything set in the contract or the employer's rules and regulations. The same article adds allowances, remunerations, commissions, grants, donations and cash privileges that the worker receives on a regular basis. The English text of the article excludes the social allowance and children's allowance paid to Kuwaiti staff under Law No. 19 of 2000. Housing, transport and other recurring allowances therefore usually count. Some free online calculators use basic salary only. That approach does not follow the wording of Article 55, so this page and its calculator use the total regular wage.

2. Check whether the wage has changed. Article 62 averages cash and in-kind benefits over the last 12 months of service, or over the actual service if it was shorter than a year. A worker who received a raise in the final months may have a different base from the one shown on the contract.

3. Turn the monthly wage into a daily wage. Most Kuwaiti practice divides the monthly wage by 26. That divisor is settled practice in the courts and calculators, not a figure written into the statute. Use it for working out daily amounts, and note it on the calculation sheet.

4. Apply the scale to the years of service. Count 15 days' wage for each of the first five years. Then count one month's wage for each full year after that. Add the pro-rata share for any part year.

5. Apply the cap and the resignation share. Compare the total with 18 months' wage. If the employee resigned from an open-ended contract, apply the Article 53 share from the table below. Then record the result as the indemnity before any other payments, such as unused leave.

Keep the working in writing. A calculation sheet should show the wage used, the years and months of service, the daily rate, each block of days or months, the cap check and the final figure. If someone later disputes the sum, the steps are easy to follow.

One worked example with real numbers

Take a monthly-paid office manager who works under an open-ended contract. Her basic salary is KWD 500 a month. She also receives a housing allowance of KWD 100 and a transport allowance of KWD 50, both paid every month under her contract. Her total regular wage is therefore KWD 650. She works for eight years and three months. The employer ends the contract.

The daily rate is KWD 650 divided by 26, which is KWD 25 a day. For the first five years, the entitlement is 5 × 15 days, or 75 days. That gives 75 × KWD 25, which is KWD 1,875. For years six, seven and eight, she receives one month's wage each year: 3 × KWD 650, which is KWD 1,950. The extra three months are a quarter of a year, so the pro-rata share is one quarter of KWD 650, which is KWD 162.50.

The total is KWD 1,875 plus KWD 1,950 plus KWD 162.50, which equals KWD 3,987.50. The cap is 18 months of KWD 650, which is KWD 11,700. The cap does not apply here.

Because the employer ended the contract, the full amount is payable. If she had resigned instead, Article 53 would give her two thirds of the figure, which is KWD 2,658.33. The same case calculated on basic salary alone would produce about KWD 3,067 before resignation. The gap of roughly KWD 920 is the cost of using basic salary instead of the full wage. That gap is the main reason the wage base needs to be settled before anyone signs a final settlement.

The cases that change the answer

Resignation is the biggest change. Article 53 applies to a worker who resigns from an indefinite-term contract. The scale is set by length of service at the date of resignation. The shares in the table below are the ones most guides cite from the article.

Contract type matters too. The reductions apply to open-ended contracts only. When a fixed-term contract ends naturally without renewal, the worker is generally owed the full indemnity. Article 52 lists the cases where the full amount is payable, including when the employer ends the contract, when a fixed-term contract expires without renewal, and certain cases where the employer breaches the contract or the business closes. A female employee who ends her contract within one year of marriage is also covered by this list. Read the full text of Article 52 before you decide which share applies.

Absence can also count as resignation. Article 42 lets an employer treat a worker as having resigned after seven consecutive days of unexcused absence, or 20 separate days of unexcused absence in one year. If that happens, the Article 53 shares can apply. Many disputes start here, so the attendance record matters as much as the resignation letter.

Minimum service is less clear than many calculators suggest. Some tools state that one year is the minimum. A 2026 corporate guide on Kuwait's termination rules reads Article 51 as pro-rating part years without a general one-year threshold. The wording is what counts, so ask HR or a lawyer to confirm how the Arabic text applies to a worker with less than a year.

Caps and separate payments are the next point. The 18-month cap applies to the indemnity itself. Unused annual leave is a separate payment, so it does not reduce the cap. Sources differ on the article number for leave payout: one guide cites Article 70 and another cites Article 73. Confirm the number against the official text before you quote it to an employee.

Exclusions and deductions need care. Article 55 leaves out the social and children's allowances paid to Kuwaiti staff under Law No. 19 of 2000. The indemnity is not reduced by the employer's social security contributions to PIFSS, according to a 2026 guide on Kuwait's end of service rules. Loans and credits the worker owes can be deducted, but that should be recorded in writing.

Domestic workers and oil sector workers fall under separate regimes. This page does not cover them. Government employees are also outside the scope of Law No. 6 of 2010.

Common mistakes

The most common error is using basic salary when the contract includes regular allowances. Article 55 is wider than many payroll templates assume. A second error is using 30 days a month instead of 26 for the daily rate, which overstates the figure. A third is forgetting the cap at high salaries or long service. A fourth is applying the Article 53 reduction to a fixed-term contract that ended on its own date.

Part years are often rounded to the nearest year. Article 51 treats part years in proportion, so a worker with eight years and three months should get a quarter of a year's pay for the extra months. Rounding down by three months removes a real amount.

Finally, many employers send a final settlement that combines the indemnity, leave and salary into one number. Each item has a different rule. Keep them on separate lines so the worker, HR and payroll can check each one.

What to check with HR or a lawyer

Start with the reason the employment ended. The payout depends on it. Confirm the contract type, the date of the last working day and whether any notice was given in the required form. Pull the last twelve months of payslips and check which allowances were paid regularly. Confirm whether any unpaid leave or unexcused absence affects the service count.

Ask HR to confirm how the wage base was defined in the contract and in the employer's own rules. If there is a dispute, the Public Authority for Manpower handles labour complaints, and the Labour Court hears cases that cannot be settled. One 2026 guide notes that a claim under the Labour Law is not heard if filed more than one year after the contract ends and the employer denies it, citing Article 144. Check that point against the official text before relying on it.

The automated calculator cannot decide why the employment ended, whether a dismissal was lawful, or whether an absence counts as resignation. Those are judgement calls for HR and, where the amount is large or disputed, a lawyer. The calculator produces the arithmetic. A person still checks the inputs and signs the result.

This explains the rule in general terms; it is not legal or tax advice for your case.

Doing this work with AI workers

Many employers spend time each month on the same routine HR and payroll tasks: checking start and end dates, pulling allowance lines, rebuilding settlement sheets and chasing missing records. AI workers can take that routine work off the team. They read the data from the HR and payroll system, apply the rules the business has approved, produce a draft calculation sheet and flag any missing item for a person. The HR or payroll lead still decides on the reason for leaving, approves the figure and signs the final settlement.