Indemnity & Transfer

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First of all I would like to thank the Arab Times for giving free legal advice to its readers. Secondly, I am grateful to the Legal Clinic for answering my earlier question. Now I am re-sending the same question with some changes / updates so that I can act on the same quickly.

I got a job offer on 15-2-2006 and joined the company as an engineer on March 11, 2006 and was gradually elevated to the position of Company Executive and also served as a Project Manager for the company’s various projects. To meet my own level of satisfaction I thought to quit and join another company, so I resigned with effect from Jan 2, 2016 by giving a 3-month notice, expecting the benefits of 10 years as per Kuwait Labor Law with end date of March 10, 2016.

The project to which I was assigned is in the completion stage and nearing commissioning. My notice period of 3 months and project completion is quite matching.

Morally, I am not bound by anything and I refused to take any more assignments since I had verbally informed the company in September 2015 that I would quit after the current project completion. My 10 calendar years of service will be completed on 11th March 2016. My basic salary is KD 1,125 and with other allowance I get KD 1,550 per month. In the last 10 years of service I have taken a total leave of approximately 14 months.

Q1: How will my indemnity be calculated and how much should I get ?

Q2 : I am willing to get a local transfer visa to join the other company without cancelling my own residence and that of my family so as to avoid going back to my own country, redo the medical check up and come again since I am already 51 years old.

Q3: I want to pay back to my company and get an early release after 11th of March 2016 since the other company is pressurizing me to join the firm quickly. I will be highly obliged if the Legal Clinic offers me advice to all my above queries. I am in dilemma and badly need some suggestions to solve my problems.

Name withheld
Answer: We answered your earlier question very recently and we will answer the “changed” question again plus the other question although we will amend our answer a little so that your Question 1 on calculation of indemnity is re-answered. We will, however, use most of our previous answer for the purpose of answering

Question 1. Although you have “completed” 10 years service, things could become complicated for you if your company takes a close look at your annual leave record. We say this because many companies take the annual leave availed over the service period into account while calculating the indemnity.

A close look at your record reveals that you have taken four months over and above your entitlement of 10 months annual leave for 10 years service. Some companies ignore this fact, but most don’t … If your company takes these “extra 4 months” into account, you will not be able to complete your 10 years service.

These four months will be deducted from your service …so, your service at the end of the three-month notice period with be 9 years 8 months.

This will drastically affect your service because if you don’t complete the 10 years service, you will only get two-thirds of your total indemnity. But we will work on the scenarios of both the situations (full indemnity and two thirds indemnity) so that you know how much you will get regardless of the method adopted by your company.

Please note that the Situation 1 from the previous answer will remain unchanged although we will reprint it below. But before we go on and work on the calculation of your indemnity, please understand that your indemnity, according to the Kuwait Labor Law, must be calculated according to your remuneration and not on your basic pay.

Article 55 of the Kuwait Labor Law 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 the 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, allowances, grants, endowments or cash benefits”.

Now, we need to have a look at Article 62 of the Kuwait Labor Law which says “The calculation of the worker’s entitlements shall be made on the basis of the last remuneration received by the worker”. Unfortunately, as we said earlier, most of the companies are interpreting the law according to their own liking and calculating the indemnity of their employees only on the basic pay, which is totally wrong.

After having said all the above we come specifically to your case and your indemnity, if done correctly with the use of remuneration ( basic pay plus allowances), should be calculated as follows: Situation 1 Service = 10 years Pay = KD 1,550 (basic pay plus all allowances)

So, for the first 5 years you must get 15 days pay for each year of service = 75 days But these 75 days must be divided by 26 (working days in a month) = 2.88 months pay

For the next 5 years you must get one month’s pay for each year of service = 5 months pay Total indemnity = 7.88 months pay = 7.88 x KD 1,550 = KD 12,214

So, you should get this full indemnity (KD 12,214) if the company accepts your service of 10 years, not considering the extra leave you took.

Situation 2 Service = 9.67 years (after deducting the extra 4 months you took as annual leave ) Pay = KD 1,550 (basic pay plus all allowances) So, for the first 5 years you must get 15 days pay for each year of service = 75 days

But these 75 days must be divided by 26 (working days in a month) = 2.88 months pay For the next 4.67 years you must get one month’s pay or percentage for each year of service = 4.67 months pay

Total indemnity = 7.55 months pay = 7.55 x KD 1,550 = KD 11,702.500 But as your service is less than 10 years you will get two-thirds of the above indemnity = KD 11,702.500 x 2/3 = KD 7,801.670

In reply to your second question, we would like to state that as you have worked such a long time for a private sector company you will not have any difficulty in transferring locally to another.

In other words you won’t have to leave the country and will be able to complete all the transactions easily. As a result, the residence of your family will not be affected and they will also not have to leave the country.

If their residencies expire you can get these renewed for the same duration as yours. As far as your third question is concerned, it all depends on your negotiations with the company. You should get the release papers finalized before your notice period is over so that there is no delay in joining the new company. The company, if it wishes, can also allow you to leave before the completion of the three-month notice period.

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