How the Kuwait indemnity is calculated
The rule sits in Article 51 of Law No. 6 of 2010 concerning Labour in the Private Sector, in the English text published by ILO NATLEX. It sets two scales, one for monthly paid workers and one for everybody else, and a different ceiling for each.
- Take the last monthly wage and divide it by the working day count to get a daily wage.
- Monthly paid workers, Article 51(b): fifteen days' wage for each of the first five years, then one month's salary for each year after that.
- Workers paid per day, week, piece or hour, Article 51(a): ten days' wage for each of the first five years, then fifteen days' wage for each year after that.
- A part year is paid in proportion to the period of service, so the accrual starts from the first month rather than the first anniversary.
- Check the total against the cap: one and a half years' wage for monthly paid workers, one year's wage for the others.
- Apply the Article 52 or Article 53 treatment for the way the employment ended, then deduct any debts the worker owes the employer, which Article 51 expressly allows.
| Pay basis | Years 1 to 5 | Year 6 onward | Cap |
|---|---|---|---|
| Monthly paid, Article 51(b) | 15 days' wage a year | One month's salary a year | One and a half years' wage |
| Day, week, hour or piece, Article 51(a) | 10 days' wage a year | 15 days' wage a year | One year's wage |
Which wage, and what it includes
Kuwait does not narrow the indemnity to basic salary the way some of its neighbours do. Article 55 defines wage as the basic salary received or due for the work, together with all the elements stipulated in the contract or in the employer's rules, and it adds that allowances, remuneration, commissions, grants, donations and cash privileges received periodically are counted within the wage. The explanatory memorandum to the law puts the other side of the line: voluntary bonuses and grants are not wage, and neither are amounts that meet the actual expenses of the work, such as a car allowance for work trips, accommodation provided to watchmen or transport laid on for staff in remote areas.
Article 62 settles which wage. The last salary paid to the worker is the basis for calculating dues. Piece rate work is estimated on the average wage actually paid for the hours worked in the last three months, and cash or in kind incentives are assessed on the average of the last twelve months, or on the proportion of the period served if service is under a year. So the figure to enter above is the last monthly wage on that definition, not the basic line on the contract.
The daily wage divisor, 26 or 30
The law does not state a divisor for turning a monthly wage into a daily one, which is why two Kuwaiti calculators can disagree on the same facts. The 26 day month that practitioners use comes from Article 67, which says the worker's dues, including the daily wage and leave, are calculated by dividing the salary by the number of actual working days without counting the weekly off days, even though those days are paid. This calculator defaults to 26 and lets you switch to 30, and it shows the divisor in the working so a settlement can be reconciled either way.
The divisor only moves the days based part of the award. The second band is one month's salary a year whatever divisor you pick, so on a wage of KWD 650 the sixth and seventh years are worth KWD 1,300 on both settings, while the first five years are worth KWD 1,875 on 26 days and KWD 1,625 on 30.
When the full indemnity is due
Article 52 lists the endings that pay the Article 51 amount in full: the employer terminates the contract, a limited term contract expires without being renewed, the contract ends under Articles 48, 49 or 50, or a female worker ends the contract because of her marriage within one year of that marriage. Article 48 covers a worker walking out for cause, among them the employer breaking the contract or the law, an assault, fraud at the time of contracting, or work that threatens the worker's safety or health on a decision of the medical arbitration committee.
Article 41 is the exception. An employer may dismiss without notice, indemnity or remuneration in three cases: a fault by the worker that caused a gross loss, fraud or cheating used to obtain the work, and disclosure of the firm's secrets. The article then lists five further grounds for dismissal, including conviction of a crime affecting honour and repeated disobedience, and states expressly that in those cases the termination decision does not deprive the worker of the indemnity. A dismissed worker may challenge the decision before the labour circuit, and an arbitrary dismissal restores the indemnity and adds compensation.
Article 42 is worth knowing before you treat an absence as a walkout: a worker who stops work without an acceptable reason for seven consecutive days, or twenty interrupted days in one year, may be deemed to have resigned, and the Article 53 scale below then applies to the indemnity.
The Article 53 resignation scale
Article 53 reduces the indemnity when the worker ends an unlimited period contract himself. There is no reduction for a limited term contract that runs to its end, and nothing at all under three years of service.
| Service on resignation | Share of the Article 51 indemnity |
|---|---|
| Under three years | Nothing |
| Three years to under five | Half |
| Five years to under ten | Two thirds |
| Ten years or more | The full amount |
The fraction is applied to the Article 51 indemnity, so the cap is checked first and the fraction second. On the numbers that ordering never changes an answer: a monthly paid worker does not reach the eighteen month ceiling until about twenty years of service, and by ten years the resignation scale is already paying in full.
Kuwaiti nationals, PIFSS and the net difference
The last paragraph of Article 51 applies the Social Security Law to Kuwaiti workers and obliges the employer to pay the net difference between the amounts it pays towards the worker's social security subscription and the indemnity due. In practice that is an offset: the employer counts what it has already paid to the Public Institution for Social Security and settles only the balance, if there is one.
PwC Worldwide Tax Summaries, last reviewed on 22 July 2026, sets out the monthly rates: the employer contributes 11.5% and the employee 8% of the monthly salary up to a ceiling of KWD 2,750, and an additional employee contribution of 2.5% has applied since 1 January 2015 up to a separate ceiling of KWD 1,500. The same source states there are currently no social security obligations for expatriate workers in Kuwait, which is why the calculator only shows the offset for a Kuwaiti national.
| Contribution | Rate | Monthly ceiling |
|---|---|---|
| Employer | 11.5% | KWD 2,750 |
| Employee | 8% | KWD 2,750 |
| Additional employee share, since 1 January 2015 | 2.5% | KWD 1,500 |
Because the employer share runs every month, the contributions over a long period of service often exceed the indemnity, and the net difference is nil. That is the design of the rule rather than a quirk of the arithmetic. If the calculator has to estimate the contributions it applies today's employer rate across the whole service period, which will not match a real PIFSS statement where the salary or the rate changed, so enter the figure from the records when you have it. PIFSS also defines its own contributory salary, which is not always the labour law wage above.
Worked example
A monthly paid expatriate on KWD 650 a month, seven years of service from 1 January 2019 to 31 December 2025, on a 26 day divisor, whose employer ends the contract. Press "Load the worked example" in the calculator to see the same lines live.
| Line | Working | KWD |
|---|---|---|
| Daily wage | 650 / 26 | 25.000 |
| Years 1 to 5 | 5 x 15 = 75 days x 25 | 1,875.000 |
| Years 6 and 7 | 2 x one month = 52 days x 25 | 1,300.000 |
| Cap check | 18 x 650 = 11,700, not reached | |
| Indemnity under Article 52 | 127 days x 25 | 3,175.000 |
| If the same worker resigned instead | Article 53 at seven years pays two thirds of 3,175 | 2,116.667 |
Assumptions and exclusions
- Private sector employment under Law 6 of 2010. Government employment, the oil sector's own arrangements and domestic workers, who have their own law, are outside this tool.
- The wage entered is the last monthly wage on the Article 55 definition. Article 62 governs piece rates and incentives, and those averages have to be worked out before the figure is entered.
- The daily wage is the monthly wage divided by 26 or 30, a convention rather than a figure stated in the law. The second band is one month's salary a year in both settings.
- A part year is valued as whole months divided by twelve plus leftover days divided by 365.
- Law 6 of 2010 does not exclude unpaid leave from service, so the excluded days field starts at zero. Use it only where a contract or a policy provides for it, and expect to justify it.
- The Article 51 cap is applied before the Article 53 fraction, because Article 53 gives a share of the indemnity stipulated in Article 51.
- Debts the worker owes the employer, which Article 51 allows to be deducted, are not modelled here, and neither is notice pay, accrued leave, an air ticket or anything a contract adds above the statutory minimum.
- For a Kuwaiti national the estimate applies the current employer rate across the whole service period unless you enter the actual PIFSS figure. It is not a statement of the pension entitlement.
How Axion People tracks the indemnity
In Axion, the People box carries the end of service rules per country and works the liability out from the employee record: start date, current wage and the reason a contract ended feed the accrual, so a Kuwaiti settlement is visible as it builds rather than discovered on the last day. It sits with payroll runs, leave and social insurance estimates in the same box, in Arabic and English. Axion reports the figure; it does not pay indemnity, file with PIFSS or produce a Kuwaiti salary file.
Frequently asked questions
How is end of service indemnity calculated in Kuwait?
Article 51 of Law 6 of 2010 gives a monthly paid worker fifteen days' wage for each of the first five years of service and one month's salary for each year after that, and the total indemnity cannot exceed one and a half years' wage. A worker paid by the day, week, hour or piece gets ten days' wage a year for the first five years and fifteen days a year after that, capped at one year's wage. Part years are paid in proportion to the time served, and any debts the worker owes the employer are deducted.
Do I get the full indemnity if I resign in Kuwait?
Only after ten years. Article 53 says a worker who ends an unlimited period contract himself gets half the Article 51 indemnity once service reaches three years and is under five, two thirds from five years to under ten, and the full amount at ten years or more. Nothing is due under three years. The scale does not apply when the employer ends the contract, when a limited term contract expires without renewal, when the contract ends under Articles 48, 49 or 50, or when a female worker resigns within one year of her marriage: Article 52 pays those in full.
Is there a maximum indemnity in Kuwait?
Yes. Article 51 caps the total indemnity at one and a half years' wage for monthly paid workers, which is eighteen months, and at one year's wage for workers paid by the day, week, hour or piece. On a 26 day divisor a monthly paid worker only reaches the eighteen month ceiling after about twenty years of service, so most settlements sit below it.
Is the indemnity worked out on basic salary or total salary?
On the wage as Article 55 defines it, which is wider than basic salary. Wage means the basic salary plus every element stipulated in the contract or the employer's rules, and allowances, remuneration, commissions, grants, donations and cash privileges received periodically are included in it. The explanatory memorandum excludes voluntary bonuses and payments that cover actual expenses of the work, such as a car allowance for work trips or transport provided in remote areas. Article 62 then sets the basis: the last salary paid is used for the worker's dues, piece rate work is assessed on the average wage for the actual hours worked in the last three months, and incentives on the average of the last twelve months.
Do Kuwaiti nationals receive the indemnity as well as their PIFSS pension?
Not on top. The last paragraph of Article 51 applies the Social Security Law to them and obliges the employer to pay the net difference between what it pays towards the worker's social security subscription and the indemnity due. Because the employer contributes 11.5% of the monthly salary every month, the contributions across a long period of service often exceed the indemnity, in which case the net difference is nil. Expatriate workers have no social security obligations in Kuwait, so their indemnity is paid in full.
Is indemnity due for less than one year of service?
Article 51 gives the worker the indemnity for any part of a year in proportion to the period of service, and it sets no minimum period, so a worker whose contract the employer ends after six months accrues half of a first year at fifteen days. Some summaries of Kuwaiti practice state that indemnity only starts after three years; that threshold matches the Article 53 resignation scale rather than the Article 52 cases. This calculator follows the text of the law and shows which article produced the answer.
Related tools and guides
- End of service gratuity across the GCC in 2026, the guide behind this calculator, with all six states side by side.
- UAE gratuity calculator, for the 21 and 30 day bands on the last basic wage.
- Saudi end of service calculator, for the half month and full month award, and the GOSI calculator for Saudi social insurance.
- GCC payroll compliance in 2026, on wage protection, social insurance and end of service across the region.
- All Axion tools, the Axion features and the Axion FAQ.
Sources
All sources checked on 5 September 2026.
- ILO NATLEX, Kuwait Law No. 6 of 2010 concerning Labour in the Private Sector, English text: Articles 41, 42, 48 to 55, 62 and 67, and the explanatory memorandum
- PwC Worldwide Tax Summaries, Kuwait individual other taxes: social security contribution rates and ceilings, last reviewed 22 July 2026
This calculator gives an estimate based on the English text of Law 6 of 2010 and the divisor you choose. It is not legal advice and it is not a government tool. Contracts, company policies and settlement agreements can pay more than the statutory minimum, the Arabic text of the law governs, and the Ministry of Labour and the courts decide disputes. Check the final figure with a qualified adviser before relying on it.