Indemnity Kuwait Indemnity Calculation In Kuwait, Question and Answers
What is Indemnity?
Indemnity is also known as End of Service benefits which will be paid when you are leaving a company. Every individual working in Kuwait has the right to get end of service benefits.
Expats in Kuwait are not much aware of the labor law, how the indemnity will be calculated, in this article we will discuss about who are eligible to get indemnity and how the indemnity will be calculated
The Employees often consult legal consultants to clear their doubts regarding Termination Indemnity. . We will try to cover queries related to indemnity as much as possible, so the people can take benefits by getting knowledge on these terms and condition of Indemnity
Who is Eligible To Get Indemnity
According to Kuwaiti Labor Law, any employee working in the private sector, whether Kuwaiti or foreign, is eligible to claim Termination Indemnity. However, some organizations pass false statements to avoid paying it to their employees, which is illegal under the law.
for Kuwaitis Some organizations play another game with their employees since they pay some contributions to their Social Security Funds. The Social Security fund of any employee is credited by both the employee and employer according to the law. Each party, the employee and the employer, pays a fixed percentage. The Organization sometimes decided to pay the Social Security in full with an agreement with Kuwaiti Nationals that the Employees Share of Social Security Fund could be deducted from Termination Indemnity. This kind of understanding between the two is not Legal, Organizations can not bargain with the employees in this manner.
Organizations are supposed to Share the fix percentage in the Social Security Fund of any employee and to pay the Termination Indemnity as well.
How Indemnity is Calculated
It is not rocket science to calculate the same. It is generally done by Accountants for the people, but anyone can learn in some easy steps from the Table (Mentioned below); I prepared this table for the readers for their ready reference. Any Employee who is paid the remuneration monthly,This table can be useful to you.
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Indemnity, Kuwait Indemnity , Calculation In Kuwait, Question and Answers
Indemnity Rules
Indemnity calculations for daily-paid workers
1. Employees who work for less than three years are not eligible for indemnity
2. IF the employee works with the current company for more than 3 years and less than 5 years then he is eligible for 1/3 of monthly salary * no of years worked
3. If the employee works with the current company for more than 5 years and less than 10 years then he is eligible for 1/2 of monthly salary * no of years worked
4. If the employee works with the current company for more than 10 years then he is eligible for Monthly salary * No of years worked
Indemnity Calculation for the workers who are paid on monthly basis
1. A worker is entitled to 15 days of indemnity during the first five years, and one month after that.
2. Employees who resign without completing three years with their employer are not entitled to an indemnity.
3. If the employee completes three to five years and resigns, then he is entitled to half of the indemnity, if he completes five to ten years, then he is entitled to two-thirds.
4. Upon resigning after completing 10 years of work, the worker is entitled to full indemnity, which equals one month’s salary per year spent at work. This should not exceed 18 months.
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Indemnity For Below 3 Yrs Of Service
I have resigned from a company which I have worked for 1 year 11 months 27 days. I was getting salary of KD 550 per month. I came here one year visa after completion of 1 year visa, I renewed for another 1 year; Another renewal due on March 25. I have however resigned; so how much indemnity will get for these 2 years. Please reply as soon as possible.
Name withheld
Answer:
Unfortunately, you don’t qualify for indemnity because you have not put in the minimum three years of service required by the labour law. However if you have unused leave days, you have to be compensated in monetary terms for that.
Indemnity, Kuwait Indemnity , Calculation In Kuwait, Question and Answers
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I am working with a company for the past 11 years. My last drawn salary is KD 715 per month which is sent as one figure to the bank. In addition to that I have regular incentives which are also transferred to the bank. I have resigned and served 3 months as notice period.
My company says they will calculate my indemnity on KD 480. My Izneamal shows salary as KD 550. Can you please help me with the following:
a. My indemnity calculation (as per law should it be based on KD 715 or 480)?
b. If I go legally can the periodic incentives be added for indemnity calculation?
c. What legal implications can there be for the company when they have one figure as actual salary (going to bank) second figure on izneamal and third for calculation
Name withheld
Answer:
Before answering your question let’s have a close look at the word remuneration which is what should be used – according to the Kuwait Labor Law – for all calculations linked to overtime pay, annual leave pay and indemnity.
Article 55 of the Kuwait Labor 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 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, allowance, grants, endowments or cash benefits.
Article 62 of the Kuwait Labor Law says ‘the calculation of the worker’s entitlements shall be made on the basis of the last remuneration received by the worker’ Unfortunately, most companies are interpreting the law according to the whims and caprices and hence calculating the indemnity of their employees only on the basic pay which is totally wrong. Having gone to pains to explain the nittygritties of indemnity calculation, we now turn to your specific questions.
(a). Your indemnity calculation as per the law should be based on KD 715 and not KD 480
(b). Yes the periodic incentives you get should be added as part of your remenuration if it is already not part of the KD 715 you earn monthly.
(c). There won’t be any legal implications for the company so long as the calculations are done in accordance with the law.
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.
SOURCE : ARABTIMES