All about Kuwait Gratuity Law and How to Calculate it

Gratuity is the amount that an employer is legally obliged to pay to an employee and depends on two main factors: the last salary received and years of service. This is usually calculated at the time of withdrawal or exit. If someone has resigned from the company or has got terminated, then the gratuity amount will be very useful for him to find the next job or plan his future. Hence, knowing the gratuity formula and calculation is very important. HR Chronicle is the leading Human Resource and Payroll Management Software in the GCC Region. It is considered one of the best HR SaaS software as per the client feedback.

Article -51 of Kuwait Labor Law
The worker shall be entitled to an end-of-service benefit as follows:

• The worker shall be entitled to a 10 days remuneration for each of the first five years of service and a 15 days remuneration for each year thereafter. The total of the end of service benefit shall not exceed one-year of remuneration for employees who are paid on a daily, weekly, hourly or piecework basis.
• The worker shall be entitled to a 15 days remuneration for each of the first five years of service and one month’s remuneration for every year thereafter. The total of the end of service benefit should not exceed one-and-a-half-year remuneration for employees who are paid on a monthly basis. The worker shall be entitled to a benefit for the fraction of the year in proportion to the period of service. Loans and credits owed by the worker shall be deducted from the due end of services benefit. The provisions of the Social Security Law shall be taken into consideration in this regard.
• The worker shall be entitled to the end of service benefit in full upon the end of his service with the entity he works for without deducting the amounts borne by such entity against the worker’s subscription to the Public Institution for Social Security during his work term. This provision shall apply as of the effective date of the referred-to Law No. 6 of 2010.

Article -53 of Kuwait Labor Law
The worker shall be entitled to half of the end of service benefits stipulated in Article 51 in the event that he terminates the work contract which has an indefinite term and the period of service reaches not less than three years and not more than five years. In the event that the period of service reaches five years and less than 10 years, the worker shall be entitled to two-thirds of the benefit and if the period of service exceeds 10 years, the worker shall be entitled to his entire benefit.

Article (55) – The remuneration
Article (55) The remuneration means the basic payment the worker receives or should receive in consideration of his work in addition to all elements stipulated in the contract or the employer by-laws. Without prejudice to the social allowance and the children allowance granted by virtue of Law No. 19 of the year 2000, the remuneration shall include the payments made to the worker on a periodic basis such as bonuses, benefits, allowances, grants, and endowments, or cash benefits.

As per article 55; the gratuity calculation will be done on the full recurring salary excluding Social Allowance and Child Allowance.

Reference Link: https://www.manpower.gov.kw/docs/LaborLaw/KuwaitLaborLaw-English.pdf

For legal advice always consult a legal professional like a lawyer or the Ministry. The contents of this article do not constitute legal advice.

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