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Wednesday , August 21 2019

# Will housing allowance included in my Indemnity payment?

I would like you to compute my indemnity. I am planning to finish my work contract in April 2017. I have been working for 18 years in a private company and my basic salary is KD 435 only and I have a housing allowance of KD 50 only. I just want to know if my housing allowance will be included in the computation of my indemnity.

Name withheld

Answer: The Kuwait Labor Law clearly mentions that the calculation of indemnity will be made on the “last remuneration”. The stress is on the word remuneration. The law, in this connection, doesn’t use words like basic salary, salary or pay.

Now the word “remuneration”, as defined by the Labor Law, includes the basic salary plus all the allowances paid to an employee regularly. As such, for the calculation of indemnity the figure of KD 485 will be used i.e. the basic salary plus the allowance.

This is how your indemnity will be calculated:

Total salary: KD 485 Service: 18 years

For the first five years service you get 15 days pay for each year = 75 days

But these 75 days have to be divided by 26 (working days in a month) = 2.88 months salary

For the remaining 13 years service you get one month’s salary for each year = 13 months salary

Total = 13 + 2.88 = 15.88 months salary = 15.88 x KD 485 = KD 7,701.800

As you have completed over 10 years service, you will get the full above amount regardless whether you resign or your services are terminated.