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Monday , August 2 2021

# Indemnity calculation for those who resign from Pvt. Company

I have resigned from a company which I’ve worked for 3 years and 6 months. I was getting a salary of KD 425 but in the work permit it says my salary is KD 250. They are saying that I will only get KD 210 indemnity because I resigned. On top of that, they also said that the company will pay my 31 days remaining leave balance in addition to my indemnity. I am confused with their computation. How much will I be getting and what is the computation of my indemnity based on the Kuwait Labour Law?

Name withheld

Answer: When calculating end of service benefits which include indemnity the word ‘remuneration’ comes into play and must be used. This is according to the Kuwait Labour Law enacted on Feb 20, 2012. Unfortunately however a number of companies are interpreting the law wrongly.

Article 62 of the Labor Law says that ‘The calculation of the worker’s entitlements shall be made on the basis of the last remuneration received by the worker.’ After the above explanation, we must specifically tackle your case and state that the KD 425 you receive monthly should be basis of calculating your indemnity and not the KD 250 shown on your work permit. Your indemnity should therefore be calculated as follows: Total pay KD 425, service 3.5 years.

For first five years, indemnity is calculated on the basis of 15 days pay for each year = 75 days but you have done 3.5 years so yours will be 15 x 3.5 = 52.5 days but these days must be divided by 26 (working days in a month) = 2.019 months salary. Your indemnity = 2.019 x KD 425 = KD 858.75. But since you have resigned, you will be entitled to half this amount = KD 429.0375
This amount (indemnity) should be paid to you in addition to payment of the 31 days unused leave. The amount of KD 210 the company says it will be paying you is completely off the amount you are entitled to get.

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