Calculating Indemnity In Kuwait - Frequently Asked Questions

12 August 2019 Indemnity

The Labour Law defines the Termination of Services and Employees term it as per their convenience. People call it “Benefits after End of Service”, since I want to make it simple, I am listing it’s Process and related Calculations, for the benefit of the General Public.

The Employees have lot of Doubts on this Termination Indemnity, they often consult under signed for clearing their doubts, Today, I am trying to cover all of their FAQs, so the the people can take benefits by getting knowledge on these terms and condition of the Employers.

1) The Most common Question of any employee working in Kuwait is, whether he is eligible for claiming Termination Indemnity, specially Foreign Nationals

As per Labour Law Any Employee working in Private Sector, Be it Kuwaiti National or Foreign National, is eligible for claiming Termination Indemnity. But some of the Organisation, try to not to pay it to their employees by passing false statements, which is not correct in eyes of law. Another game which some organisation plays with its Employee is that since they are paying some contribution in employees Social Security Funds. Though as per the law, the Social Security fund of any employee is credited by a part from Employee and another by Employer. There is a Fix Percentage from the Parties, the Employee and the Employer. Sometimes, the Organisation decided to pay the sum of Social Security in full with an agreement with the Kuwaiti Nationals that they can deduct the Employees Share of Social Security Fund, from Termination Indemnity. This kind of understanding between the two is not Legal, Organisations can not bargain with the employees in this manner.

Organisations are supposed to Share the fix percentage in the Social Security Fund of any employee and to pay the Termination Indemnity as well.

2) Second, frequently asked question is, if any employee terminates the Contract from his side, whether he is eligible for termination Indemnity?

The Contract Type is the most important factor in this, if you are under fixed contact and leaves the Organisation within 3 years from the date of joining; it is obvious that you have to pay to the company either by adjustment in your Full and final Settlement or adjustment in termination Indemnity. Whereas you have continued your services with the Organisation for consecutively for 3 years, your Employment Contract will be Legal automatically and will be open too. If any employee does not complete his/her 3 years with the organisation, he/she will not be entitled for Termination Indemnity. The contract type doesn’t come under this purview of Services less than 3 years.

For employees, whose services to any organisation, goes beyond 3 years, need to check the 3 rd point for more clarification.

3)  How any employee can calculate his/her Termination Indemnity amount?

Calculating the same is not rocket science. Generally, Accounts professionals do it for the people but anyone can learn in some easy steps from the Table (Mentioned below); I prepared this table for the readers for their ready reference. Any Employee, who is paid the remuneration monthly, can get benefit from this table.

Indemnity Law in Kuwait

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