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Indemnity calculation

I joined a company on March 1, 2008 as a trailer driver. My salary on the work permit was KD 250, but in my contract the company made it in two parts: KD 225 as basic salary and KD 25 allowance.

Food allowance was also provided at KD 20 per month but this was paid in cash so that it did not appear on the bank deposit slip with my monthly salary.

After 5 years, I completed the contract exactly on March 1, 2013. An extension of 1 year was given by the government contractor since the new contractor was not ready yet with the equipment & manpower. So, all in all I worked for 6 years and 9 days with the company.

The company made us sign a resignation paper 3 months before the end of the extension period which was until April 9, 2014 as a pre-requisite for us to be released for transfer according to the coordinator.

The company also calculated my end of service as: Leave pay: KD 355.500, Indemnity: 494.589, minus KD 108.330 for the 2-year visa extension. I will be getting KD 741.760. Obviously, the company based the calculation of my indemnity on my basic salary instead of the total monthly remuneration.

How do I arrive at the right calculation since I resigned and what action should I take to let them base the calculation on the total remuneration which is KD 270 per month?

Name withheld

Answer: According to Kuwait Labor Law, the company is totally wrong on many issues and we will detail the same with the action you can take in each case.

First of all, the company should not have forced you to sign a resignation letter because now you will get only two-thirds of your indemnity instead of the full amount as is the case on termination or services.

But you can take the case to the Labor Office in your area if you have proof that you were forced to resign.

Secondly, if we even take your resignation into account, the company has to work out your indemnity by basing its calculation on your latest remuneration and not the basic salary.

So your indemnity calculations will be as follows (based on six years service):

15 days pay for each of the first five years = 75 days

These 75 days have to be divided by 26 = 2.88 months salary

One months salary for each year after the first five years = 1 months salary

Total indemnity = 3.88 months salary  = 3.88 x KD 270  = KD 1,048

But as you are considered to have resigned after more than five years but less than 10 years service you should get only two-thirds of the above amount = KD 1,048 x 0. 666 = KD 698

So the total amount that you should get (including your pending leave salary) = KD 698 + KD 355.500 = KD 1,053.500.

Please also remember that the company can’t deduct any amount as residence fees. These have to be paid by the company.

If you don’t get your rights, you can file a case with the Labor office in your area. 

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