How Kuwait indemnity is calculated
Kuwait Private Sector Labour Law No. 6 of 2010 sets the end-of-service indemnity for every expatriate worker in the private sector. The accrual structure is a two-band formula. For each of the first five years of continuous service the worker accrues fifteen days of salary, treated in practice as half a month of the monthly wage. From year six onwards each completed year of service accrues one full month of salary. The raw award is then capped at eighteen months of the last salary regardless of how long the tenure runs. Partial years prorate by month.
The wage base used is the last total monthly salary, defined as base plus regular allowances that are paid as part of the monthly wage on the payslip. One-off bonuses, variable commission and reimbursement-style allowances are excluded. The Public Authority for Manpower (PAM) holds the official wage record tied to the worker's Civil ID. Any indemnity dispute hinges on the PAM-registered wage, so it is worth checking that figure regularly through PAM's e-service portal. For broader context on the Civil ID and exit framework, read the Kuwait Civil ID renewal guide.
Resignation tier reductions
Unlike Qatar and the UAE, Kuwait still applies tiered reductions when an employee resigns rather than being terminated by the employer. The reductions are designed to encourage longer tenure with a single employer. Resignations under three years of continuous service give no indemnity at all. Resignations between three and five years pay half the calculated award. Between five and ten years the payout is two-thirds. From ten years onwards the resigning employee receives the full award. Termination by the employer pays the full award at every tenure level except in specific gross-misconduct cases.
The reductions apply to the raw indemnity award after the 18-month cap. So a worker with a raw award of 22 months of salary, capped to 18 months, who resigns inside the five-to-ten-year bracket, receives two-thirds of 18 months, that is twelve months of salary. Always run the cap check before the resignation fraction.
Worked examples
Example 1: Seven years, KWD 1,000 salary, resignation. Years one to five accrue half a month each, that is 2.5 months. Years six and seven accrue one full month each, that is 2 months. Raw award is 4.5 months of salary, KWD 4,500. The 18-month cap is far above; no cap applied. Resignation in the five-to-ten-year bracket pays two-thirds, so the payable amount is KWD 3,000.
Example 2: Two and a half years, KWD 900 salary, resignation. Raw accrual is 2.5 times half a month, that is 1.25 months, equal to KWD 1,125. Resignation under three years gives no entitlement, so the payable amount is zero. Termination by the employer in the same case would pay the full KWD 1,125.
| Tenure bracket | Resignation fraction | Termination fraction |
|---|---|---|
| Less than 3 years | 0 | Full |
| 3 to 5 years | 1/2 | Full |
| 5 to 10 years | 2/3 | Full |
| 10+ years | Full | Full |
Example 3: Twelve years, KWD 1,500 salary, resignation. Years one to five accrue 2.5 months. Years six to twelve accrue 7 months. Raw award is 9.5 months, that is KWD 14,250. The 18-month cap (KWD 27,000) is not hit. Resignation in the ten-plus bracket gives the full award, so the payout is KWD 14,250.
The 18-month cap in practice
The cap is 18 months of the last salary. The raw 15-day-then-one-month formula crosses the cap at roughly year 15 and a half of unbroken service. Tenures above that point continue to qualify for notice pay, leave conversion and contractual extras but the statutory indemnity itself plateaus. The cap is calculated on the raw award before the resignation fraction; the fraction is then applied to the capped figure.
Edge cases and traps
Article 51 termination by the worker
Article 51 of Law 6 of 2010 allows the worker to terminate the contract on certain grounds (employer non-payment, breach of contract, work conditions that endanger health) and still claim the full indemnity even though the contract is ending at the worker's initiative. The reductions in Article 51 apply only to true voluntary resignations without those grounds. Document the trigger with the labour office before invoking Article 51.
Unpaid leave and absences
Unpaid leave does not count toward service for indemnity purposes. Paid annual leave, statutory sick leave and maternity leave all count. Repeated unauthorised absences can both interrupt the service clock and provide grounds for misconduct dismissal.
Domestic workers
Domestic workers are governed by Law 68 of 2015, a separate statute with its own indemnity terms and a different complaint process. The calculator above applies the Law 6 of 2010 private-sector formula only.
Gross misconduct
Article 41 of Law 6 of 2010 lists the misconduct categories that allow the employer to dismiss without notice and without indemnity. The categories include fraud, repeated unauthorised absence, breach of confidentiality and physical assault. The employer must follow due process, document the case and notify the worker in writing. A bare allegation will not strip the indemnity.
What to do next
If you are leaving Kuwait after settlement, pair the indemnity figure with the Kuwait overstay fine calculator so your exit flight is timed cleanly against the visa cancellation. For the broader Kuwait residence and work-permit picture, see the Kuwait work permit service and the Kuwait Civil ID renewal guide. Comparing across the Gulf? Run the same scenario through the Qatar end-of-service calculator and the Oman gratuity calculator.