Gratuity Pay Calculation
Calculating the end-of-service gratuity for private sector employees (Kuwaitis and non-Kuwaitis)
General basis of calculation:
The bonus is calculated based on the number of years of service and the method of receiving wages (monthly, daily, weekly, or by piece)
For employees who receive monthly salaries:
- 15 days for each year (the first five years).
- 30 days for each year “the following years”.
For employees who receive monthly salaries:
- 10 days for each year (the first five years).
- 15 days for each year “the following years
For Kuwaitis:
- The calculation is based on the previous mechanism, with a deduction of 1,500 dinars from the monthly salary when determining the daily wage. This is in accordance with the Social Insurance Law. The bonus is calculated based on the remaining wage after the deduction.
Gratuity Pay Calculation Rules for Everyone
Daily wage calculation:
The monthly salary is divided by 26 days, not 30 days, according to Article 67 of the law.
Maximum reward:
The bonus may not exceed one and a half years’ salary for employees who receive their salaries monthly.
Bonus calculation for fractions of a year:
The worker is entitled to a bonus proportional to the period of work he has completed, even if it is less than a full year.
Conditions for entitlement to the bonus for Kuwaitis:
If a Kuwaiti worker’s salary is less than 1,500 dinars, he or she is not entitled to an end-of-service gratuity, as the entire salary is included in social insurance contributions.
Example of a non-Kuwaiti worker who receives a monthly salary:
Length of Service: 8 years, 2 months, and 14 days.
Monthly Salary: 1,300 dinars.
Calculating the Daily Wage: Divide the monthly salary by 26, resulting in 50 dinars.
Calculating the Bonus:
- For the first five years, 15 days are calculated for each year, resulting in 3,750 dinars.
- For the next three years, 30 days are calculated for each year, resulting in 4,500 dinars.
- For the additional two months, divide the number of months by 12, then multiply the result by 30 days and the daily wage, resulting in 250 dinars.
- For the fourteen days, divide the number of days by 365, then multiply the result by 30 days and the daily wage, resulting in 16.43 dinars.
Total Bonus Due:
The resulting amounts are added together to give a total of 8,516.43 dinars, provided that the bonus does not exceed one and a half years’ salary, as required by law.
When is an employee entitled to the full end-of-service gratuity
01.
If the contract term ends due to the death of the worker, the employer, or the closure of the facility.
02.
If the fixed-term contract expires without being renewed.
03.
If the contract term ends due to the death of the worker, the employer, or the closure of the facility.
04.
If the worker terminates the contract on her own initiative due to her marriage within one year from the date of marriage.
05.
If the worker terminates the employment contract on his part and his service period reaches 10 years.
01.
If the contract is terminated by the employer.
02.
If the fixed-term contract expires without being renewed.
03.
If the contract ends due to the death of the worker, the employer, or the closure of the facility.
04.
If the worker terminates the contract on her own initiative due to her marriage within one year from the date of marriage.
03.
If the worker terminates the employment contract voluntarily and his service period reaches 10 years.
Cases that do not deserve an end-of-service gratuity or are entitled to a portion of an end-of-service gratuity according to the private sector labor law
Ineligibility cases
- If the worker commits an error that results in a significant loss for the employer.
- If it is proven that the worker obtained the job through fraud or deception.
- If the worker discloses the establishment’s secrets, causing or likely causing him a real loss.
Partial entitlement cases
- If an employee terminates an indefinite-term employment contract voluntarily and has served for no less than three years and no more than five, he is entitled to half the gratuity.
- If his service is five years but less than ten, he is entitled to two-thirds of the gratuity.
For employees in the private sector, the end-of-service gratuity is calculated as follows:
It applies only to Kuwaiti workers. Non-Kuwaitis working in the oil sector are subject to the bonus system for private sector workers, as per the previous rules.
The bonus is calculated for the first five years at 30 days, and for the following five years at 45 days.
Ineligibility cases
- Expiration of the contract term.
- Termination of the worker’s service by the employer.
Partial entitlement cases
- An employee resigns following notice from the employer. He is entitled to half the gratuity if he has worked for more than two years but not more than five years.
- ¾ of the gratuity if his employment period exceeds five years but not more than ten years.
- The full gratuity is due if he resigns after ten years of employment. “Term of employment” refers to the continuous period of employment with a single employer.