Kuwait end-of-service indemnity: how it is calculated (2026)
In Kuwait a monthly-paid employee earns an end-of-service indemnity of 15 days' wage for each of the first five years and one month's wage for each year after, capped at one and a half years' wage (Article 51). It is worked out on the full wage, including periodic allowances, and is paid without deducting the employer's social-security contributions. An employee who resigns gets nothing under three years, half from three to five years, two thirds from five to ten years and the full amount from ten years (Article 53).
End-of-service indemnity in Kuwait
- Indemnity on wage, allowances included
- Article 53 resignation shares
- No offset of PIFSS contributions
Kuwait's no-deduction rule for the indemnity now reaches back to 2010
What happened
Law No. 17 of 2018, published in Kuwait Al-Yawm on 6 May 2018, re-enacted the last paragraph of Article 51. The worker receives the indemnity in full, without deducting what the employer paid to the Public Institution for Social Security. The rule now applies from the date Law No. 6 of 2010 took effect.
What it means for you
An employer cannot offset its PIFSS contributions for a Kuwaiti employee against the indemnity, for any period of service since 2010. Loans the employee owes the employer can still be deducted.
Dates to know
- 9 July 2017Law No. 85 of 2017 published in Kuwait Al-Yawm, Issue 1348, replacing the last paragraph of Article 51
- 6 May 2018Law No. 17 of 2018 published in Kuwait Al-Yawm, Issue 1391, applying the rule back to 2010
Source: Public Authority for Manpower, Kuwait. We check this page every week. Last checked .
The end-of-service indemnity is a lump sum the employer pays when employment ends in Kuwait's private sector. Law No. 6 of 2010 calls it the end of service benefit. It is not a pension fund: the employer pays it directly. Every worker covered by the Labour Law earns it, Kuwaiti or expatriate. For expatriates it is the main statutory payment on leaving, because they are not insured with the Public Institution for Social Security (PIFSS). The amount depends on length of service, the last wage, how the employee was paid and how the contract ended.
How is the end-of-service indemnity calculated in Kuwait?
For monthly-paid staff, Article 51 gives 15 days' wage for each of the first five years of service and one month's wage for each year after that. The total cannot exceed one and a half years' wage. Part years count in proportion to the time worked.
Staff paid by the day, week, hour or piece earn 10 days' wage a year for the first five years and 15 days' wage a year after that, capped at one year's wage. Article 62 says entitlements are worked out on the last wage received. For piece-rate staff it is the average over the working days of the last three months.
What is a worked example of the Kuwaiti indemnity?
Our arithmetic: a monthly-paid employee leaves after 8 years when the employer ends an open-ended contract. The indemnity is 5 × 15 days = 75 days' wage for the first five years, plus 3 × 1 month = 3 months' wage for the next three. If the same employee had resigned, Article 53 would pay two thirds of that, which is 50 days' wage plus 2 months' wage.
Whatever the length of service, the total cannot go above the cap of one and a half years' wage, which is 18 months' wage. To turn days into money you need a daily wage. Article 67 says a worker's daily pay for working out rights is the wage divided by the actual working days, not counting the paid weekly rest days.
What counts as wage for the indemnity?
Not just basic pay. Article 55 defines the wage as the basic pay plus everything set in the contract or the employer's rules, including bonuses, benefits, allowances, grants and cash benefits paid periodically. The social allowance and children's allowance paid to Kuwaiti staff under Law No. 19 of 2000 are left out.
Article 62 adds that cash and in-kind benefits are averaged over the worker's last 12 months, or over the actual service if it is shorter than a year. A wage cannot be reduced for any reason during service (Articles 28 and 62), so the indemnity base only moves up with pay rises.
How much does an employee get after resigning?
Under Article 53, an employee who resigns from an open-ended contract gets half the indemnity with three to five years' service, two thirds with five to ten years, and the full indemnity from ten years. Article 53 grants no share below three years' service.
Article 42 lets the employer treat an employee as having resigned after 7 consecutive days, or 20 separate days in a year, of absence without a valid excuse. The Article 53 shares then apply. These reductions apply to open-ended contracts only.
When is the full indemnity due?
Article 52 makes the full indemnity due when the employer ends the contract, when a fixed-term contract ends without renewal, and in the cases in Articles 48 to 50. It is also due when a female employee ends her contract within a year of her marriage.
Article 48 lets an employee leave without notice and keep the full indemnity if the employer breaks the contract or the law, assaults the employee, defrauds them about the terms, wrongly accuses them of a crime they are cleared of, or if staying would endanger their health. Article 49 covers death, incapacity and long sickness, and Article 50 covers bankruptcy and permanent closure. An employer that ends the contract during probation also owes the indemnity for the time worked (Article 32).
Can dismissal remove the indemnity?
Only in three cases. Article 41(a) lets the employer dismiss without notice, compensation or indemnity if the employee made a mistake that caused a large loss, got the job by fraud, or disclosed secrets that caused or could cause real losses.
Dismissal for the other grounds in Article 41(b), such as a crime of honour or trust, assault at work, breach of duties or repeated breach of instructions, does not take away the indemnity. Before any penalty the employee must be told in writing and heard (Article 37). An employee found by a final court ruling to have been dismissed arbitrarily is owed the indemnity plus compensation.
Can social-security contributions or loans be deducted?
Social-security contributions cannot. Since Law No. 85 of 2017, and back to 2010 under Law No. 17 of 2018, the worker receives the indemnity in full without deducting what the employer paid to PIFSS. Loans and credits the worker owes can be deducted (Article 51).
Before 2017 an employer could reduce a Kuwaiti employee's indemnity by its own PIFSS contributions. That offset is gone. In practice the rule matters for Kuwaiti staff, because expatriates are not insured with PIFSS.
When must the indemnity be paid, and how long can a claim wait?
The Labour Law does not set a separate deadline in days for the indemnity. Wages must not be paid later than seven days after they fall due (Article 56), and unused annual leave is paid in cash when the contract ends (Article 73). A worker's claim under the Labour Law is not heard if filed more than one year after the contract ends, where the employer denies it (Article 144).
A worker must first apply to the Labour Department, which tries to settle the dispute and otherwise refers it to court within a month. If the court finds the employer made difficulties over paying entitlements, it can award 1% of their value for each month of delay from the application date (Article 146). The employer must also give an end of service certificate stating the length of service, the job and the last wage (Article 54).
Key figures
| Detail | Value |
|---|---|
| Monthly-paid rate, Article 51(b) | 15 days' wage for each of the first five years, then one month's wage for each later year, capped at one and a half years' wage. Part years count in proportion. (source) |
| Daily, weekly, hourly and piece-rate staff, Article 51(a) | 10 days' wage for each of the first five years, then 15 days' wage for each later year, capped at one year's wage. (source) |
| No deduction of PIFSS contributions | The indemnity is paid in full without deducting the employer's contributions to PIFSS. Loans and credits owed by the worker can be deducted. Applies from the start of Law No. 6 of 2010. (source) |
| Full indemnity, Article 52 | Due when the employer ends the contract, when a fixed-term contract expires without renewal, in the cases in Articles 48 to 50, and when a female worker ends her contract within a year of marriage. (source) |
| Resignation shares, Article 53 | Open-ended contract: half with three to five years' service, two thirds with five to ten years, full from ten years. No share below three years. (source) |
| Wage for the indemnity, Article 55 | Basic pay plus all elements in the contract or employer rules, including periodic bonuses, benefits, allowances, grants and cash benefits. Excludes the social and children's allowances under Law No. 19 of 2000. (source) |
| Last wage and averaging, Article 62 | Entitlements use the last wage. Piece-rate pay is averaged over the last three months of working days. Cash and in-kind benefits are averaged over the last 12 months, or actual service if shorter. (source) |
| Loss of indemnity, Article 41(a) | Only for a mistake causing a large loss, getting the job by fraud, or disclosing secrets that caused or could cause real losses. Other dismissals under Article 41(b) keep the indemnity. (source) |
| Deemed resignation, Article 42 | Absence without valid excuse for 7 consecutive days or 20 separate days in a year lets the employer treat the worker as resigned, with Article 53 shares applying. (source) |
| Claims and late payment, Articles 144 and 146 | Claims filed more than one year after the contract ends are not heard if the employer denies them. A court can award 1% of unpaid entitlements a month where the employer made difficulties paying. (source) |
Frequently asked questions
Is the Kuwaiti indemnity worked out on basic salary only?
No. Article 55 includes periodic allowances, bonuses, benefits and other cash payments in the wage. Only the social and children's allowances paid under Law No. 19 of 2000 are left out.
Does an employee who resigns after two years get any indemnity?
Not on resignation from an open-ended contract. Article 53 grants a share only from three years' service: half up to five years, two thirds up to ten, and the full amount from ten years.
Can an employer deduct its PIFSS contributions from a Kuwaiti's indemnity?
No. Article 51, as amended by Law No. 85 of 2017 and Law No. 17 of 2018, requires the full indemnity without deducting the employer's PIFSS contributions, for service back to 2010. Loans the employee owes can be deducted.
Is the indemnity owed if the employer ends the contract during probation?
Yes. Article 32 lets either side end the contract during probation without notice, but if the employer does it, the indemnity for the time worked must be paid.
Do expatriates in Kuwait get the indemnity?
Yes. Articles 51 to 53 apply to every worker under the Labour Law, whatever their nationality. For expatriates it is the main statutory payment on leaving, because they are not insured with PIFSS.
Each of the six Gulf states writes its own labour law, its own end-of-service rules and its own quota for hiring citizens. When Teamed is your legal employer, we apply the right rules for the country each person works in and update your contracts, policies and payroll as the law changes, so you never have to read a statute to stay compliant.
