I am working in a multinational company, and my monthly salary pay structure is Basic + HRA (House Rent Allowance). HRA is set by the company as 40% of the basic salary, e.g. the Basic is KD 100 and the HRA (40%) is KD 40 so the total salary for the month is KD 140.
My question is that as per Kuwait Labor Law how should the overtime pay be calculated?, should the overtime pay be calculated on the basic salary only or on the gross salary (including HRA) in my case.
My company is using only the basic salary for the overtime pay calculation. Not taking into account the HRA for overtime calculation.
Please clarify with an example and reply as per Kuwait Labor Law.
Answer: Sometimes one is misled by translations of the Kuwait Labor Law, the Labor Law itself and interpretations of the “so-called experts” who know nothing of the law. Now, if one were to read Articles 62 to 68 of the Kuwait Labor Law in isolation one would likely be misled because everywhere it has been mentioned that the calculation of overtime should be based on the latest “remuneration”, which means the basic salary plus all the allowances received at regular intervals.
But the ground reality is totally different. Sometimes, one has to seek legal advice to get a clear picture of the law and in this case the advice, which can’t be contested, comes from the Legal Department of the Ministry of Social Affairs and Labor.
Before we go on, you have to remember that there is a difference between a salary that an employee receives as a “package” and salary which is broken up every month into basic salary and every other allowance.
Now, if a person were receiving a “package”, in which there was no breakdown of the various components, then the overtime calculation would be based on that package. But in case, the salary is broken down into various components, then one should look at the following for the overtime calculation.
According to the Legal Department of the Ministry of Social Affairs and Labor, the overtime pay of such employees should be calculated as follows:
a) 1.25 times the basic hourly rate for excess hours worked on ordinary days
b) 1.50 times the basic hourly rate for all hours worked on the weekly off days
c) Twice the basic hourly rate for all hours worked on public holidays From the above it is clear that the company is correct and the overtime pay should be calculated on basic salary.
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