Monday , October 15 2018

Indemnity Calculation

I have an inquiry regarding indemnity calculation. I’m working with my company since Jan 3, 2011 and I have decided to resign in June 2017. My salary now is KD 366.000 and I will have almost 20 days annual leave as of June 30, 2017. I have decided to stay till the last date of my notice period June 30, 2017. Kindly advise as to how much indemnity I will receive. Awaiting your reply and thanks in advance.

Name withheld

Answer: By June 30, 2017, you should have put in about 6.5 years of service.

Your indemnity calculation will therefore be as follows: 15 days salary for each of the first 5 years of service = 75 days but this has to be divided by 26 (working days in a month) = 2.88 months salary.

For the next 1 year 6 months one month salary for each year of service = 1.5 months. Total = 2.88 + 1.5= 4.38 months salary.

You multiply 4.38 by KD 366 (your monthly salary) = KD 1,603.08. But you are resigning with over 5 years but less than 10 years of service, you are entitled to two-thirds of this total = KD 1,068.72.

For the leave balance of 20 days you divide this by 26 = 0.769 month pay = 0.769 x 366 = KD 281.454.

So your total settlement will be KD 1,068.720 + KD 281.454 = KD 1,350.174.

Good day … I am a regular reader of your legal column … this time I need your help for the correct calculation of my indemnity … I joined my company on 1st August 2002 and was given 3 months notice which expired on March 15, 2017. My contract is unspecified … job is petroleum inspector in KNPC refineries my latest salary is 800 KD food allowance 40 KD and receive annual bonus of 750 KD my nature of work is in the oil industry on contract with Kuwait Petroleum Corporation and our company is involved in oil, gas and chemicals work I am qualified in the oil sector. Pls help me to calculate my indemnity base in the Kuwait Labor law many thanks in advance and more power to your column.

Name withheld

Answer: According to the Labour Law your indemnity will be calculated taking into consideration the latest renumeration which means the basic salary in addition to all allowances you receive on a regular basis. In your case your indemnity should be calculated on KD 840 (basic salary of KD 800 + KD 40 food allowances as follow): 15 days pay for each of the first 5 years =75 days pay but these 75 days have to be first divided by 26 (working days in a month) = 2.88 months pay. One month pay for every year after the first 5 years =9.5 months pay. Total = 2.88+9.5 =12.38 months salary = 12.38 x KD 840 = KD 10, 399.2. You will therefore get the whole of the above amount regardless of whether you resigned or your services were terminated.

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