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Is yearly bonus & various allowances such as housing, telephone are included in the calculation of indemnity?

We would like to know — as per Kuwait Labor Law — if the yearly bonus and various allowances such as housing, telephone are included in the calculation of indemnity. After a certain number of years it was mentioned in our contract that bonus won’t be included in the calculation of indemnity. But before this clause was added to the contract nothing was mentioned about bonus in the calculation of indemnity. So what is the correct way to calculate the indemnity?

Name withheld
All the allowances, including the bonus, that is paid regularly must be included in the calculation of the indemnity. According to the Kuwait Labor Law, the calculation of indemnity is based on “remuneration” which the Labor Law has defined as the basic pay plus all the allowances paid regularly and the bonus.

For the definition of remuneration, you must have a look at Article 55 of the Kuwait Labor Law enacted on Feb 20, 2010 which states as follows: “Remuneration means the basic payment the worker receives or should receive in consideration of his work in addition to all elements stipulated in the contract or the employer by-laws. “Without prejudice to the social allowance and the children allowance granted by virtue of Law No.19 of the year 2000, the remuneration shall include the payments made to the worker on periodic basis such as bonuses, benefits, allowances, grants, endowments or cash benefits. “In the event where the worker’s remuneration is a share of the net profits and the establishment did not make any profits or made little profits in such a way that the worker’s share is not proportionate to the work he performed, his remuneration shall be estimated based on the remuneration determined for a similar job or according to the profession custom or the prerequisites of fairness”. By putting something in the contract which goes against the Labor Law only results in the contract becoming invalid.

So, it does not matter if something against the said law has been included in the contract. Just file a complaint against the company with the Labor Office in your area and action will be taken against the firm. Please always remember that the Kuwait Labor Law, enacted on Feb 20, 2010, lays down the minimum that can be given to employees. The companies can give more if they wish but not less.

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