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Friday , December 4 2020

Company calculating indemnity on lower amount

I am working with a company for the past 11 years. My last drawn salary is KD 715 per month which is sent as one figure to the bank. In addition to that I have regular incentives which are also transfered to the bank. I have resigned and served 3 months as notice peiod.
My company says they will calculate my indemnity on KD 480. My Izneamal shows salary as KD 550. Can you please help me with the following:
a. My indemnity calculation (as per law should it be based on KD 715 or 480)?
b. If I go legally can the periodic incentives be added for indemnity calculation?
c. What legal implications can there be for the company when they have one figure as actual salary (going to bank) second figure on izneamal and third for calculation

Name withheld

Answer: Before answering your question let’s have a close look at the word remuneration which is what should be used – according to the Kuwait Labor Law – for all calculations linked to overtime pay, annual leave pay and indemnity.

Article 55 of the Kuwait Labor states that ‘remuneration’ means the basic payment the worker receives or should receive in consideration of his work in addition to all the elements stipulated in the contract or the employer by-laws without prejudice to the social allowance and the children’s allowance granted by virtue of Law 19 of the year 2000, the remuneration shall include the payments made to the worker on periodic basis such as bonuses, benefits, allowance, grants, endowments or cash benefits.

Article 62 of the Kuwait Labor Law says ‘the calculation of the worker’s entitlements shall be made on the basis of the last remuneration received by the worker’ Unfortunately, most companies are interpreting the law according to the whims and caprices and hence calculating the indemnity of their employees only on the basic pay which is totally wrong. Having gone to pains to explain the nittygritties of indemnity calculation, we now turn to your specific questions.

(a). Your indemnity calculation as per the law should be based on KD 715 and not KD 480
(b). Yes the periodic incentives you get should be added as part of your remenuration if it is already not part of the KD 715 you earn monthly.
(c). There won’t be any legal implications for the company so long as the calculations are done in accordance with the law.

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