How is end of service calculated in Kuwait?

Under Labor Law No. 6 of 2010, monthly-paid workers earn 15 days’ wage per year for the first 5 years of service and a full month’s salary per year after that, capped at 18 months’ salary in total. Workers paid daily, weekly, hourly, or by the piece earn 10 days’ wage per year for the first 5 years and 15 days’ wage per year after that, capped at 12 months’ salary.

Is there a maximum cap on end-of-service gratuity?

Yes, the statutory cap is 18 months’ wage (1.5 years’ pay), regardless of how many years were worked. Source: Labor Law No. 6/2010, Article 51.

Is gratuity calculated on gross salary or basic salary?

It is calculated on the last wage actually received: Article 62 counts recurring allowances and periodic cash and in-kind benefits (averaged over the relevant period for variable pay), while one-off and expense-reimbursement allowances are generally excluded. How a specific allowance is classified can depend on the contract and, in disputes, on the labor courts — confirm with a licensed Kuwaiti lawyer before relying on a number for a real claim. Source: Labor Law No. 6/2010, Article 62.

When is end-of-service gratuity paid?

It becomes due in full when the employment relationship ends, without deducting the social-security contributions the employer paid during the service period. Source: Labor Law No. 6/2010, Article 51.

Kuwait End-of-Service Gratuity: How Your Indemnity Is Calculated

The legal basis — Article 51

End-of-service gratuity (mukafaat nihayat al-khidma) is a statutory right for every private-sector employee in Kuwait, governed by fixed formulas under Labor Law No. 6 of 2010. Article 51 sets two formulas depending on how wages are paid.

Monthly-paid employees (the vast majority of private-sector staff): 15 days of wage for each of the first 5 years of service, then a full month’s wage for each year after that — capped at a total of 18 months’ pay (1.5 years’ wage). Source: Labor Law No. 6/2010, Article 51.
Daily/weekly/hourly/piece-rate workers: 10 days’ wage per year for the first 5 years, then 15 days’ wage per year after that, capped at one full year’s wage. Source: Labor Law No. 6/2010, Article 51.

The calculation for a monthly-paid worker

A working month is treated as 26 days for the purpose of converting monthly salary into a daily rate. The gratuity is calculated on the last wage the worker actually received — which under Article 62 includes recurring allowances and periodic cash benefits, not just the basic-salary line in the contract. Many employers use basic salary alone as a simplified proxy; the statutory basis is broader. Source: Labor Law No. 6/2010, Article 62.

Worked examples

4 years of service, monthly wage KD 400: daily rate = 400 ÷ 26 = KD 15.38; gratuity = 15 days × 4 years = 60 days × 15.38 ≈ KD 923.

8 years of service, monthly wage KD 500: first 5 years = 75 days × (500 ÷ 26) ≈ KD 1,442; remaining 3 years = 3 full months = KD 1,500; total ≈ KD 2,942.

20 years of service, monthly wage KD 600: the uncapped formula would exceed 18 months’ pay, so the legal cap applies — final gratuity = 18 × KD 600 = KD 10,800, regardless of the extra years worked. Source: Labor Law No. 6/2010, Article 51.

When resignation changes the percentage

The full formula above applies when the contract ends for reasons other than the employee’s own resignation (contract expiry, arbitrary dismissal, death, etc.). If the employee resigns from an indefinite-term contract, Article 53 reduces the payout by service tenure — see the dedicated resignation guide for the full breakdown of tiers.

Calculate your own number

Use the free end-of-service calculator to apply these rules to your own salary and dates.

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Common questions

How is end of service calculated in Kuwait?: Under Labor Law No. 6 of 2010, monthly-paid workers earn 15 days’ wage per year for the first 5 years of service and a full month’s salary per year after that, capped at 18 months’ salary in total. Workers paid daily, weekly, hourly, or by the piece earn 10 days’ wage per year for the first 5 years and 15 days’ wage per year after that, capped at 12 months’ salary.
Is there a maximum cap on end-of-service gratuity?: Yes, the statutory cap is 18 months’ wage (1.5 years’ pay), regardless of how many years were worked. Source: Labor Law No. 6/2010, Article 51.
Is gratuity calculated on gross salary or basic salary?: It is calculated on the last wage actually received: Article 62 counts recurring allowances and periodic cash and in-kind benefits (averaged over the relevant period for variable pay), while one-off and expense-reimbursement allowances are generally excluded. How a specific allowance is classified can depend on the contract and, in disputes, on the labor courts — confirm with a licensed Kuwaiti lawyer before relying on a number for a real claim. Source: Labor Law No. 6/2010, Article 62.
When is end-of-service gratuity paid?: It becomes due in full when the employment relationship ends, without deducting the social-security contributions the employer paid during the service period. Source: Labor Law No. 6/2010, Article 51.

Sources

Kuwait Labor Law No. 6 of 2010 (Private Sector), Article 51 — end-of-service gratuity formula and cap
Kuwait Labor Law No. 6 of 2010, Article 62 — wage basis for entitlements: the last wage actually received, including periodic cash and in-kind benefits
Kuwait Labor Law No. 6 of 2010, Article 53 — resignation gratuity tiers
Public Authority for Manpower — official English text of the Labor Law

This guide provides general information, not legal advice. For advice specific to your situation, consult the Public Authority for Manpower (PAM), the Ministry of Interior, or a licensed lawyer.