How to Calculate Gratuity in Kuwait?

How to Gratuity Calculation in Kuwait: The Formula

If you're leaving a Kuwaiti job — resigned, terminated, or contract ended — you're probably owed end-of-service indemnity. Here's how to gratuity calculation actually works under the Kuwait Labour Law, with the split most people miss.

Quick answer

Under Law No. 6 of 2010 (Private Sector Labour Law), Art. 51, your gratuity in Kuwait is calculated on your last remuneration. For the first 5 years, you get 15 days' pay per year. From year 6 onward, you get one full month's pay per year. Partial years count pro-rata. For monthly-paid workers, "day" means your monthly salary ÷ 26. Total gratuity is capped at 1.5 years' pay. Resignation reduces what you actually receive on a sliding scale.

The formula, step by step

Start with your last basic salary plus any regular allowances treated as part of remuneration (housing, transport allowance if fixed and continuous). Exclude one-off bonuses and overtime.

Then apply the split:

• Years 1–5: 15 days × (monthly salary ÷ 26) × number of years
• Year 6 onward: 30 days × (monthly salary ÷ 26) × number of years beyond 5
• Partial years: pro-rated by actual days worked

Example. You worked 8 years. Last monthly salary: KD 800.

Daily wage = 800 ÷ 26 = KD 30.77.

First 5 years: 15 × 30.77 × 5 = KD 2,307.75. Next 3 years: 30 × 30.77 × 3 = KD 2,769.30. Total gratuity: KD 5,077.05.

Simple math. The trap is what counts as "salary" — argue for inclusion of fixed allowances, because they usually qualify under Art. 55.

Resignation cuts your gratuity — a lot

This is where people slip up. If you resign (rather than being terminated without cause), Art. 51 applies a scale for indefinite-term contracts:

• Less than 3 years' service: no gratuity
• 3 to less than 5 years: one-half of gratuity
• 5 to less than 10 years: two-thirds
• 10 years or more: full gratuity

So the same 8-year employee above, if resigning, receives two-thirds of KD 5,077 = roughly KD 3,385. Losing about KD 1,700 for using the wrong exit route.

For fixed-term contracts, the rules differ: resigning before the term ends generally forfeits gratuity unless the employer breached the contract. Completing the fixed term entitles you to the full amount.

If you're terminated without a legitimate reason under Art. 41, or dismissed for reasons the employer can't justify, you get 100% — plus potentially compensation for arbitrary dismissal.

What gets deducted, and what doesn't

The employer can deduct any debts you owe the company — advances, loans, damages proven under Art. 43. They cannot deduct notice period pay owed to you, unused leave (Art. 70 requires this be paid out separately), or arbitrary "administrative fees."

Unused annual leave is paid on top of gratuity, at the same daily rate. Same for any unpaid wages, overtime, or commissions earned before your last day.

One more thing worth knowing: gratuity for domestic workers falls under Law No. 68 of 2015, not Law No. 6 of 2010, and the calculation differs. Don't apply the private-sector formula to a domestic worker case.

When you should actually be paid

Art. 55 requires the employer to settle all end-of-service dues on the last working day, or within 7 days if you resigned. If they drag their feet, you can file a labour complaint at the Public Authority for Manpower (PAM) — free — and if unresolved within a reasonable period, escalate to the Labour Court, which waives court fees for workers claiming under KD 500 and generally moves faster than civil claims.

Keep your salary slips, contract, and any allowance letters. Without documentation, the employer's version of "basic salary" tends to win, and your how to gratuity calculation math falls apart before it starts.