I have completed 12 years with my company.
Article 51 (b) of Kuwait Labor Law says a worker is entitled to 15 days ‘remuneration’ for each of the first five years and one month remuneration of each year after that.
Somebody told me that after completing 10 years, the company should calculate my indemnity one month = 26 days for all 12 years.
He is quoting Article 53, where it says if the period exceeds 10 years, the worker shall be entitled to his entire benefit.
Is he correct and is the Article number he is referring to correct also or is there any other Article which I can quote to my company.
Name withheld
Answer: You need to understand Articles 51 & 53 properly before commenting on them.
The indemnity is ‘calculated’ according to Article 51 and the eligibility is according to Article 53.
Even though you have put in 12 years service, the calculation will be as follows.
15 days for each of the first 5 years = 75 days ÷ 26 = 2.88 months salary.
One month’s salary for each of the next 7 years = 7 months salary
Total indemnity = 9.88 months salary.
It is here Article 53 is implemented. Earlier, before the implementation of Kuwait Labor Law for the Private Sector on February 2010, if you resigned you would get only 50 percent of the above amount. But now you get the full amount for 9.88 months. This is what is meant by ‘full indemnity’. It does not mean you get one month’s salary for each of the 12 months.
The indemnity will always be calculated according to Article 51 even if you work for one year or 20 years.
It is only after the calculation has been worked out that you look at Article 53 and decide how much has to be given, depending on the length of the service and whether the person was terminated or had resigned.


Indemnity


I have read many articles about indemnity in the Arab Times - that indemnity has to be calculated on the last drawn total salary. My total salary is KD 350 (basic + house allowance + transportation).
In Article 55, it is clearly mentioned that the remuneration shall include all bonuses, benefits, allowances, grants, endowments or cash benefits.
But my company says that indemnity will be calculated on basic pay + housing allowance only.
I have been working with this company (local hire) from 05-06-2006. And now they have terminated me (I didn’t resign) and given me a 3-month notice.
My questions are:
What can I do if my company doesn’t calculate indemnity on my total salary?
And how it will be calculated because they terminated me not that I have resigned?
Name withheld
Answer: The law is very clear on the subject and says that indemnity should be calculated on the ‘last remuneration’. Article 55 has also clearly defined remuneration to include all the allowances you have mentioned above. So the company is wrong and you are right.
If it doesn’t calculate according to the Labor Law, then you can file a complaint with the Labor Office in your area.
Secondly, as you will have worked 6-1/2 years the end of the notice period your indemnity will be calculated as follows:
15 days for each of the first 5 years + 75 days ÷ 26 = 2.88 months salary.
One month’s salary for each year after that = 1.5 months salary
Total indemnity = 4.38 months salary.
Now, if you had resigned you would have got 2/3 of the above but as you have been terminated you should get the whole 4.38 months salary.


Indemnity


I have been terminated by an investment company here in Kuwait and am serving my 3-month notice period. When I inquired abut my indemnity, they said that they would give me the indemnity calculations when I am leaving and that the payments for my indemnity would be done over the next 3 years as the company is having financial problems. They have asked me to sign a letter to that effect that I approve of this when I don’t. What should I be doing?
Name withheld
Answer: The question here is whether you trust the company. Many local firms are resorting to the above and most of them are making these payments while some are not.
The decision is totally yours. If you feel that you can’t trust the company, you should not sign the letter and file a complaint with the Labor Office in your area.



Calculations

I would like to clarify the following points with regards the calculation of leave salary, indemnity and normal salary.
1. For calculation of leave salary and indemnity, will the period of service of an employee start from the date of joining duty or from the date iznamal (work permit) as some companies consider the iznamal date as the start period of service of an employee.
2. Will leave and indemnity be calculated on the basic salary or will the allowances be added to the basic salary.
3. At the time of calculation of the leave salary and indemnity will the salary be divided by 26 or 30 days?
Name withheld
Answer: The date of service must be considered from the day a person joins a firm not the day the work permit is signed.
Secondly, the leave pay and indemnity will be based on the last ‘remuneration’ and not the basic salary. The Kuwait Labor Law is very clear on this subject.
And lastly, the leave salary and indemnity involve different calculations.
For the leave salary the salary must be divided by 26.
For the indemnity, the number of days of the first five years must be divided by 26 and multiplied by the salary while for the rest of the years, the whole month’s salary must be used.