How to Calculate Your Indemnity in Kuwait?

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How to Calculate Your Indemnity in Kuwait

There are different terms used in law and by the general public to refer to Termination Indemnity, some of our readers use “End of service benefits” and termination indemnity interchangeably, and because I want to make this as simple as possible I will not get into the specifics of each term and instead just use “Termination Indemnity”.

I decided today to write about termination indemnity as I have received multiple questions on the matter. I put together the most frequently asked questions, in hopes that my readers could benefit from reading the answers.

1) My company refuses to pay termination indemnity, claiming that termination indemnity is only for foreigners, is this true?

Everyone working in the private sector should be considered for termination indemnity, regardless of their nationality. Unfortunately, from experience, I can tell you that some companies are very sneaky when it comes to paying termination indemnity for both Kuwaitis and in-Kuwaitis.

I know of big million companies that unlawful claim to their Kuwaiti employees that are not entitled to termination indemnity because the company is paying their social security. That is not true. Social security is a Monthly payment that companies and employees each pay a percentage of every month. Companies are legally required to pay a certain percentage of the full social security amount. If the company decides to pay the full amount that is their choice, so unless there is an agreement that the company will pay on benefits of the Kuwaiti employee and therefore deduct those payments from the termination indemnity, those companies need to pay up.

2) If I terminated my contract, do I still deserve termination indemnity for the years that I have worked?

The answer to this question depends on the type of contract as well as how many years of service you have with the company. if you end a fixed-term contract you could possibly owe the company money and therefore that will be deducted from your final termination indemnity. With that said, after three years of service, your contract shall be considered legally as an open term contract, even if your contract is a fixed term.

If you have less than three years of service, you don’t deserve termination indemnity regardless if your contract has a fixed term or not. As for employees that have more than three years of service, please read the answers to question 3.

3) How do I calculate my termination indemnity?

Although usually lawyers don’t do the calculations and allow accountants the honor of crunching in the numbers, I think the formula to calculate your termination indemnity can be mastered by anyone. I will try my best to explain in the simplest of forms in a table that is easy to read. This is for employees that get paid on a monthly basis, which from experience is the most common method of payment in Kuwait.

Indemnity Law in Kuwait

Article By: Attorney Fajer Ahmed

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