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Entitlement calculations

Our company doesn’t use the last salary in the calculation of the annual leave salary or the indemnity. It says there is no provision in the Kuwait Labor Law on this issue. Is this true? May friends say the last salary or remuneration must be used in these calculations. So who is right... the company or my friends? What does the Labor Law say on the issue?


Name withheld
In this regard you must have a look at Article 62 of the Kuwait Labor Law. This article makes things very clear and leaves no doubt whatsoever that the latest remuneration must be used in the calculations of a worker’s entitlements. You must also draw the attention of your company to this article.

Article 62 of the Labor Law states as follows: “The calculation of the worker’s entitlements shall be made on the basis of the last remuneration received by the worker. In the event where the worker is paid on piece work, his remuneration shall be defined by the average of the remuneration earned by him during the actual working days in the last three months. “The cash and in-kind benefits shall be calculated by dividing the average of the amount earned during the last 12 months by the entitlements.

In the event where the period of service is less than one year, the average shall be calculated according to the period of his actual service. The worker’s remuneration may not be reduced for any reason during the period of service”. Now, from the above article, two things are very clear:

1. The latest remuneration must be used for calculation of all the worker’s entitlements like annual leave, indemnity etc.

2. The law again focuses on remuneration and not basic salary. Remuneration, according to the Kuwait Labor Law, means the basic salary and all the other benefits that the worker receives throughout the year. So, please bring the above article to the notice of your company if they have not seen it earlier.

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