Aqid ERPThe formula (article 51)
That is the rule for a worker paid by the month. A worker paid by the day, week, hour or piece earns ten days' remuneration for each of the first five years and fifteen days for each year after, capped at a year's remuneration.
- Fifteen days' remuneration for each of the first five years of service.
- A month's remuneration for each year after the fifth.
- The total may not exceed a year and a half's remuneration.
- Parts of a year count in proportion.
A worked example
Nine years of service and a monthly remuneration of KWD 1,200. The Labour Law works a day's pay as the monthly wage divided by the actual working days, without the weekly rest days; with a six-day week that is about 26:
| Daily pay: 1,200 ÷ 26 | KWD 46.154 |
|---|---|
| First 5 years: 5 × 15 days | KWD 3,461.538 |
| Next 4 years: 4 × one month | KWD 4,800.000 |
| Indemnity (under the cap of KWD 21,600) | KWD 8,261.538 |
When the worker resigns
Under article 53 as PAM publishes the 2010 text, a worker who resigns from an open-ended contract receives half the indemnity after three and under five years of service, and two-thirds after five and under ten.
In August 2020 the National Assembly passed a new last paragraph for article 51, giving the full indemnity on the comprehensive wage without deducting PIFSS contributions. Whether it has been promulgated, and how it treats resignation, we could not confirm on an official page: check the text in force with the Public Authority for Manpower before the final settlement.
Kuwaiti staff and PIFSS
Kuwaiti nationals are covered by the Public Institution for Social Security (PIFSS), with monthly contributions from employer and employee, set out in its own article on this blog. Their end-of-service position follows those rules alongside the Labour Law.
How Aqid ERP helps
Kuwait has no VAT, so payroll is where most of the compliance work is. Aqid ERP's payroll handles PIFSS contributions and accrues the indemnity every month, with amounts kept to three decimals of the dinar.