A complete guide to Kuwait's end-of-service indemnity: how it accrues, the wage it is based on, when it is paid in full, and how resignation reduces it.
Summaries verified against the Arabic text on 2026-08-29 (three-source cross-validation: almohami.com full text, eastlaws consolidated text, mohamah.net attorney citations).
End-of-service indemnity — مكافأة نهاية الخدمة — is the lump sum a worker in Kuwait is legally owed when the employment relationship ends. It is separate from, and additional to, other end-of-service entitlements such as payment for unused annual leave and any notice-period pay. It is not a gratuity the employer decides on: it is a statutory right, calculated by formula.
Which statute applies depends on where you work. Most private-sector employees fall under Kuwait Labor Law No. 6 of 2010, which deals with the indemnity in Articles 51 to 53 and defines the wage in Articles 55 and 62. Oil-sector employees fall under the older, separate Labor Law No. 28 of 1969, whose Article 18 sets out its own indemnity regime.
One principle runs through both statutes: the indemnity is earned by the mere fact of service. When the relationship ends — whatever the reason — the accrued indemnity is owed, subject only to the resignation reductions discussed below and to the statutory cap.
For a worker paid by the month, the accrual schedule is simple: fifteen days' wage for each year of the first five years of service, then one full month's wage (thirty days) for each additional year.
Example: after 8 years at a total monthly wage of 900 KWD, the accrual is (5 × 15) + (3 × 30) = 165 days' wage. The daily wage is 900 ÷ 26 = 34.62 KWD, so the gross indemnity is 165 × 34.62 ≈ 5,711.54 KWD. The 18-month cap would only bind far beyond that — at this rate, after roughly two decades of service.
A second, less generous schedule exists for workers paid by the day, week, hour, or by piece rate: ten days' wage per year for the first five years and fifteen days' wage per year thereafter, capped at twelve months' wage. Our calculator does not yet support this schedule; the figures above apply to monthly-paid workers, which covers the overwhelming majority of queries.
Partial years accrue proportionally — six months of service in the first band earns half of a year's 15 days' wage. The calculator computes this from your exact dates (total days ÷ 365).
This is the single most consequential rule, and the one most free online calculators get wrong: the indemnity is calculated on your last TOTAL wage — not the basic salary printed in your contract.
"Total wage" means the basic wage plus everything the employer pays regularly as part of the wage: fixed monthly allowances (housing, transport), regularly paid bonuses and subsidies. Irregular one-off bonuses and expense reimbursements are not part of the wage. The test is regularity: if a payment arrives every month as a fixed component, the settled approach is that it counts.
Two courtroom conventions matter here. First, the daily wage is conventionally derived as the total monthly wage divided by 26 — established practice of the Court of Cassation rather than statutory text. Second, the total-wage reading itself rests on Articles 55 and 62 of Law No. 6 of 2010 as applied by the Cassation Court (Labor Appeal No. 204/2001 — الطعن 204/2001 عمالي).
Practical effect: an employee with a 500 KWD basic salary and 400 KWD of regular monthly allowances has a 900 KWD wage base — an indemnity nearly twice what a basic-salary-only calculator would show. This is the number one source of understated results online.
The line between counted and not-counted payments is ultimately drawn case by case, but the principle — last total wage, not basic salary — is not controversial in the Kuwaiti courts. If a calculator asks only for a "basic salary", its output will understate your entitlement.
Article 52 lists the cases where the full indemnity is payable. A reduction enters only in the specific case of resignation from an unlimited contract (Article 53); in every case below, everything accrued is paid in full:
In other words, the resignation schedule is the exception, not the rule. If your employer ends the relationship — for any reason, including misconduct — your accrued indemnity survives in full.
Where a worker under an unlimited contract (عقد غير محدد المدة) resigns, Article 53 scales the indemnity down by length of service:
The reduction applies only to resignation from an unlimited contract. The law contains no explicit provision for a worker who resigns early from a fixed-term contract — in practice these cases are settled case by case or by agreement, and our calculator's full-amount figure for that situation is flagged as indicative only.
Two further points are worth knowing. First, the tiers cut the accrued amount — they do not restart accrual: a worker with 6 years of service has already accrued (5 × 15) + (1 × 30) = 105 days' wage and receives two thirds of that. Second, an older common reading of Article 53 gave one third for 3-5 years of service; the verified text says one half (نصف). Calculators and articles repeating the one-third figure are out of date.
Oil-sector employment is governed by its own statute with its own, more generous indemnity regime. Under Article 18 of Law No. 28 of 1969, the indemnity accrues at thirty days' wage per year for the first five years and forty-five days' wage per year thereafter. There is no statutory cap on the total.
Resignation reductions exist in the oil sector too, on different thresholds: below 2 years — nothing; 2 to under 5 years — one half; 5 to under 10 years — three quarters; 10 years or more — full.
Two caveats shape how these figures should be read. First, Article 18 addresses resignation after the employer has issued notice under Article 17; the ratio applicable to an ordinary voluntary resignation outside that scenario is subject to legal interpretation. Second, employer regulations — for example those of KOC — prevail where they are more favorable than the statutory minimums.
You will sometimes read that oil-sector workers receive the full indemnity even when they resign. No provision of Law No. 28 of 1969 says that — the statute contains the reduction tiers above. If a company practice of paying in full on resignation exists somewhere, it comes from company-level regulations (which prevail where more favorable), not from the law itself. The safe approach: treat the statutory tiers as a floor, then check your own employer's regulations and employment contract.
Under Article 42, a worker who is absent without pay for seven consecutive days, or for twenty non-consecutive days within a contract year, may be treated as having resigned. That matters because it brings the resignation schedule into play: the statutory treatment follows the same reduction-by-length-of-service path as a voluntary resignation. (Verified summary, 2026-08-29.)
There is no explicit statutory provision. The reduction applies only to unlimited contracts, and the law is silent on what a fixed-term worker receives when resigning before the end date. Outcomes are set case by case or by agreement; treat any calculator output for this scenario as indicative.
A widespread claim holds that the employer must pay the indemnity within seven days "or you lose it". The seven-day period in Article 56 concerns the payment of the wage due — it is not a statutory deadline for the indemnity, and nothing in the indemnity articles makes the amount disappear because it was not paid within a week. In practice the indemnity is settled within the end-of-service settlement; if it is withheld, the route is a complaint to the Ministry of Social Affairs and Labor (MOSAL) and, if unresolved, the labor courts.
Two later laws amended the 2010 indemnity rules in the worker's favor, and they explain why you will find conflicting figures in older articles:
The PIFSS point matters in practice: before the amendment, employers routinely reduced the indemnity by the social-security amounts they had paid; today that deduction has no legal basis. Any older guide or settlement template that nets the employer's PIFSS contributions out of the indemnity is out of date.
In the private sector (unlimited contract) it depends on your length of service: less than 3 years — nothing; 3 to under 5 years — one half of the indemnity; 5 to under 10 years — two thirds; 10 years or more — the full amount. The reduction tiers apply only to unlimited contracts: there is no explicit statutory provision for early resignation from a fixed-term contract (typically treated as case by case). If you are terminated by your employer — even for cause — or your fixed-term contract simply expires, the full indemnity is always payable.
The oil sector has its own law: Law No. 28 of 1969, Article 18. Accrual is more generous — 30 days' wage per year for the first 5 years and 45 days' wage per year thereafter, with no statutory cap. Resignation tiers are also different: less than 2 years — nothing; 2 to under 5 years — one half; 5 to under 10 years — three quarters; 10 years or more — the full amount. Two caveats: the statutory tiers address resignation after the employer's notice under Art. 17, and if your employer's regulations (e.g. KOC) are more favorable, those prevail. This is the single most common calculation error found in generic calculators.
Partial years count proportionally. The daily wage is derived from the total monthly wage, and each day of service accrues its proportional share: in the private sector, 15 days' wage per year of service in the first 5 years and 30 days' wage per year (one month) thereafter; in the oil sector, 30 and 45 days' wage per year respectively. For example, 3.5 years of private-sector service accrues 15 days' wage per year for the first 3 full years plus half of a year's accrual for the remaining 6 months.
The indemnity is calculated on your last TOTAL wage — the basic salary plus regularly paid allowances, bonuses and subsidies (Art. 55/62 of Law No. 6 of 2010, as confirmed by Cassation case law) — not on the basic salary alone. Most free calculators online use only the basic salary and understate the result. The daily wage is conventionally derived as the total monthly wage divided by 26, following established Cassation practice rather than the statutory text.
Everything the employer pays regularly as a fixed part of the wage counts: the basic wage, fixed monthly allowances (housing, transport) and regularly paid bonuses or subsidies. Irregular one-off bonuses and expense reimbursements are not part of the wage. The test is regularity: if a payment arrives every month as a fixed component, the settled approach — confirmed by the Cassation Court — is that it counts toward the indemnity base. Genuinely borderline items are decided case by case, so keep payslips showing every regular component.
A second, less generous schedule applies: ten days' wage per year for the first five years of service and fifteen days' wage per year thereafter, with the total capped at twelve months' wage (rather than the 18-month cap for monthly-paid workers). The accrual is based on your actual wage. Note that our calculator currently implements the monthly-paid schedule only, so its output will not match this schedule for daily-, weekly-, hourly- or piece-rate workers.
There is no statutory cap: Article 18 of Law No. 28 of 1969 sets the accrual (30 days' wage per year for the first 5 years, 45 days' wage per year thereafter) without any ceiling. The claim that oil-sector workers receive the full indemnity even when they resign has no statutory basis — the statute contains resignation reduction tiers (below 2 years: nothing; 2 to under 5 years: one half; 5 to under 10 years: three quarters; 10 years or more: full), which address resignation after the employer's notice under Article 17. If a company pays in full on resignation, it does so under its own regulations (e.g. KOC), which prevail where they are more favorable — so check your employer's regulations as well as the law.
No — as to the employer's own contributions. Under the amendments introduced by Law No. 85 of 2017, as followed by Law No. 17 of 2018 with retroactive effect to the 2010 law, the employer may not deduct from the indemnity the social-security contributions it made to PIFSS on the worker's behalf. Deductions for genuinely separate obligations — such as a worker's personal debt under a court order — are a different matter. An older settlement template that nets the employer's PIFSS contributions out of the indemnity is out of date.
For monthly-paid workers the indemnity accrues at fifteen days' remuneration for each year of the first five years of service and at one month's remuneration (30 days) for each additional year; the total may not exceed one and a half years' wage (أجر سنة ونصف). It is calculated on the last total remuneration (basic wage plus regularly paid allowances — see Art. 55/62 and Cassation case law), with partial years prorated. (Verified summary, 2026-08-29.)
The full indemnity is payable in four cases: (a) the employer ends the contract; (b) a fixed-term contract expires without renewal; (c) the contract ends under Articles 48, 49 or 50 (the employer's breach, death or loss of capacity, bankruptcy or closure); (d) a female worker ends the contract because of her marriage within one year of it. Dismissal — even for serious fault under Article 41 — does not forfeit the accrued indemnity. (Verified summary, 2026-08-29.)
Where a worker under an UNLIMITED contract (العقد غير محدد المدة) resigns, the indemnity is reduced by length of service: below 3 years — no indemnity; 3 to under 5 years — one half (نصف); 5 to under 10 years — two thirds (ثلثي); 10 years or more — the full amount. The reduction does not apply to resignation from a fixed-term contract. (Verified summary, 2026-08-29; an earlier common reading of "one third" for 3-5 years is incorrect.)