The end of service calculator in Kuwait is a tool that helps you to estimate the amount that you are entitled to when you terminate your employment in Kuwait, according to the Kuwaiti labor law.
This guide explains how the calculator works, what criteria are used for the calculation, and what is new in Kuwait’s labor law for the year 2024. If you want to know your rights and obligations at the end of your employment contract in Kuwait, this guide is for you.
Concept of End of Service in Kuwait
It is a compensation given by a company or entity to workers who terminate their employment relationship. The amount of the end-of-service payment depends on the length of service, the type of contract, and the employee’s salary.
According to Kuwait’s labor law, there are two types of contracts: permanent and temporary. Indefinite contracts are those that do not have a specific end date, while temporary contracts are those that have a fixed duration or are based on the completion of a task or project.
Indefinite-term contract workers calculate the end-of-service payment as follows:
- 10 days’ salary for each year of service during the first five years.
- 15 days’ salary for each year of service during the following five years.
- One month’s salary for each year of service after the first ten years.
Temporary contract workers calculate the end-of-service payment as follows.
- If the contract is terminated before five years, the employee will receive one-half of one month’s salary for each year of service.
- The company will pay one month’s salary for each year of service if they terminate the contract after five years.
The end-of-service calculator Kuwait salary payment is subject to a maximum limit of 18 months’ salary. In addition, the employee is entitled to end-of-service payment if he/she resigns after three years of continuous service, or if he/she is dismissed without just cause.
End of service calculator in Kuwait is a right that protects workers and guarantees them compensation at the end of their employment relationship. However, end of service calculator in Kuwait also entails a cost for employers, who must set aside funds to cover this expense.
Importance of End Of Service For Both Employees And Employers
The end of the employment relationship between employees and employers is a key moment to define the rights and obligations of both parties. As well as, to evaluate the performance, satisfaction and learning obtained during the employment relationship.
An effective termination process helps reduce the likelihood of misunderstandings, conflicts or lawsuits between the employee and the employer. In addition, termination can have an impact on organizational reputation, culture and climate, as well as the employee’s network and opportunities.
The importance of the end of the employment relationship lies in the fact that it is an opportunity to close a cycle in an orderly. Transparent and respectful manner, recognizing the employee’s contribution and trajectory. As well as, providing him/her with a fair compensation in accordance with the law.
Likewise, the end of the employment relationship is an opportunity to gather valuable information about the organization’s strengths and weaknesses. Areas for improvement, expectations and needs of employees, through exit surveys, interviews or feedback.
Finally, the end of the employment relationship is a time to maintain or strengthen the bond with the employee. Offering support, guidance or references for their professional future, and fostering a relationship of trust and loyalty that can generate mutual benefits in the long term.
Eligibility Criteria For Receiving End Of Service Benefits
The criteria for receiving end-of-service benefits are as follows:
- The worker must have terminated his labor relationship with the employer. Either by dismissal, resignation, mutual agreement, expiration of the contract or any other legal cause.
- The worker must have completed a minimum period of service. Which varies according to the type of contract and the sector of activity.
- For example, in the private sector, the minimum time is one year for permanent contracts and six months for temporary contracts. In the public sector, the minimum time is two years for permanent contracts and one year for temporary contracts.
- The worker must have paid contributions to the social security system during the period of service. And, be up to date in the payment of his own and his employer’s contributions.
- The worker must request the end-of-service benefit within 60 working days following the date of termination of the contract. Presenting the documents proving his identity, his employment relationship and his unemployment situation.
- The end-of-service benefit consists of the payment of an amount equivalent to one month’s salary for each year of service or fraction of more than six months. With a maximum limit of 12 months’ salary. The salary taken as a basis for the calculation is the average of the last six months of service, including variable remunerations and bonuses.
- The company intends the end-of-service benefit to compensate the employee for the loss of income resulting from the termination of their employment relationship. And, to facilitate his reinsertion in the labor market.
Basic Criteria
The basic criteria for end-of-service benefits are as follows:
- They must meet a real need of the employee, i.e., cover those areas in which the loss of income or unemployment situation affects his or her well-being and quality of life.
- Consider them without paternalism, while respecting the autonomy, dignity, and responsibility of the employee. And, encouraging his or her active participation in the search for solutions to his or her situation.
- They must be proportional to the time of service, the type of contract and the worker’s salary. Guaranteeing fair compensation in accordance with the law, and avoiding discrimination or favoritism.
- They must be transparent, clear and accessible, informing the worker of his or her rights and obligations. The requirements and procedures for requesting and receiving the benefit, and the control and follow-up mechanisms.
- Likewise, they must be complementary to and coordinated with other benefits or services, both public and private. That can contribute to improving the worker’s situation, such as social security, training, guidance, intermediation or job placement.
Exceptions and Special Cases
Exceptions and special cases of termination benefits are those situations in which rules other than the general ones apply to determine the entitlement, amount or duration of the benefit. Some examples are:
- The workers who are in a situation of temporary disability, risk during pregnancy, risk during breastfeeding, maternity or paternity. If their contract is terminated during such situations, they may receive the termination benefit, provided they meet the requirements.
- Second, workers who have been dismissed for objective reasons or due to force majeure. Will be entitled to receive the severance benefit even if they have not completed the minimum length of service. Provided that they have paid at least three months of Social Security contributions.
- Next, the workers who have been dismissed for disciplinary reasons or who have voluntarily resigned from their jobs will not be entitled to receive the severance benefit. Unless they can prove a justifiable cause of force majeure, violence, harassment or discrimination.
- Besides, workers who have been transferred to another country by their employer may choose to receive the severance benefit at the time of the transfer or at the end of their employment relationship abroad, provided that the transfer occurred no more than four years ago.
- And, workers who are affiliated to the Spanish Social Security system or covered by a special agreement with the Social Security may receive the severance benefit if they are rendering services abroad for Spanish or foreign companies.
- Workers performing transportation services, leasing of means of transport, or services related to real estate. Must apply special rules for the location of the services rendered for VAT purposes, which may vary depending on the type of recipient. The service performed in the place, or the closing clause or effective use clause exists.
Types of End Of Service Calculations Applicable in Kuwait
The types of end-of-service calculations applicable in Kuwait are as follows:
The worker’s salary taken as a base is the average of the last 36 months of salary received. The worker is paid the end of service calculator Kuwait together with a retirement pension, provided that the worker has completed 30 years of service or 50 years of age.
Basic Salary Based
The minimum salary established by law for each category of workers in Kuwait depends on the sector and type of contract. They express the base salary in Kuwaiti Dinars (KWD), which is the official currency of the country.
According to web search results, the base salary in Kuwait varies according to the following criteria:
- For Kuwaiti citizens, the base salary is 60 KWD per day, which is equivalent to about 2000 KWD per month or €219.2 per month. The Government periodically reviews this base wage, which applies to private and public sector workers.
- For non-Kuwaitis, the base salary is 45 KWD per month, which is equivalent to about 49.3 euros per month. The Ministry of Social Affairs and Labor established this base wage in 2010 for private sector workers.
- Domestic workers, the base wage is 60 KWD per month, which is equivalent to about €65.8 per month. The Ministry of Interior set this base wage in 2016 for workers who perform cleaning, cooking, childcare, or elderly care.
Mixed Salary Based
The mixed salary in Kuwait is a type of remuneration that combines a fixed base salary with a variable salary that depends on the employee’s performance, results or incentives. The mixed salary aims to motivate and reward the worker for his effort, productivity or quality, and at the same time guarantee a minimum level of income.
Besides, the mixed wage in Kuwait applies mainly to workers in the private sector, especially those engaged in commercial, sales or service activities. The mixed wage may vary depending on the type of contract, sector, company or position of the worker.
For example, according to a web search, the mixed salary of a sales manager in Kuwait can be KWD 1,500 base salary plus 10% commission on sales, which is equivalent to about €1,650 per month.
The blended salary for a human resources consultant in Kuwait can be KWD 1,000 base salary plus 20% target bonus, which is equivalent to about €1,100 per month.
The mixed salary in Kuwait has some advantages and disadvantages for both the employee and the employer. Among the advantages, one can mention greater flexibility, greater satisfaction, and greater competitiveness. Greater adaptation to market conditions and greater alignment of the interests of both parties.
Disadvantages include greater uncertainty. Greater pressure, greater complexity, greater difficulty in calculating social benefits and greater possibility of conflicts or claims.
See More: Importance Of Payroll Management For Small Business
Kuwait Labor Law End of Service Benefits
For the end-of-service calculator Kuwait labor law benefits. Compensation is given to workers who terminate their employment relationship with a company or entity. The amount of the end-of-service payment depends on the length of service, the type of contract and the worker’s salary.
According to Kuwait’s labor law end of service, there are two types of contracts: indefinite and temporary. Indefinite contracts are those that do not have a specific end date. While temporary contracts are those that have a fixed duration or are based on the completion of a task or project.
For workers with indefinite-term contracts, calculate the end-of-service payment as follows:
- 10 days’ salary for each year of service during the first five years.
- 15 days’ salary for each year of service during the following five years.
- One month’s salary for each year of service after the first ten years.
Temporary contract workers calculate the end-of-service payment as follows:
- The company pays one-half of one month’s salary for each year of service if they terminate the contract before five years.
- Pay each year of service with one month’s salary if we terminate the contract after five years.
- The end-of-service payment. The company imposes a maximum limit of 18 months’ salary. If the employee resigns after three years of continuous service or is dismissed without just cause, he/she is entitled to end-of-service payment.
- The end-of-service payment in Kuwait. Is a right that protects workers and guarantees them a severance payment at the end of their employment relationship. However, the end-of-service payment also entails a cost for employers, who must set aside funds to cover this expense.
How to Calculate End Of Service in Kuwait?
To calculate the end of service benefits Kuwait, you must follow these steps:
- Identify the type of contract you have: indefinite or temporary.
- Calculate your daily salary by dividing your monthly salary by the days of the month.
- Calculate the years of service you have rendered to the company by subtracting the start date of your contract from the end date of your contract.
- Apply the formula corresponding to your type of contract, according to Kuwaiti labor law:
- If you have a permanent contract. Multiply 10 days’ salary for each year of service for the first five years. 15 days’ salary for each year of service for the next five years. And one month’s salary for each year of service after the first ten years.
- You should multiply half of one month’s salary for each year of service if the contract is terminated before five years, and you need to multiply one month’s salary for each year of service if the contract is terminated after five years.
- Apply the maximum limit of 18 months of salary, if applicable. The result is the amount of your end-of-service payment.
How Does Payroll Middle East Help You in EOS Kuwait?
Payroll Middle East is a company that offers payroll services in middle east with other countries in the Middle East. Payroll Middle East can help you with end of service calculator Kuwait in the following ways:
- If you have a legal entity in Kuwait. Payroll Middle East can take care of setting up and managing your payroll in Kuwait. As well as fulfilling all the legal, tax and labor obligations involved.
- If you do not have a legal entity in Kuwait. Payroll Middle East can act as your employer of record and hire your local employees on your behalf. Paying them through their payroll and assuming all legal and tax liability for them.
Your employees’ end of service is calculated based on their contract type, salary, and years of service with Payroll Middle East. Apply the 18-month salary cap.
End-of-service payments can be managed by us. Issue receipts and certificates for bank transfers, checks and cash.
Our end of service calculators are comprehensive and efficient. Your business and your employees will benefit from saving time, money, and resources. If you want to know about the best payroll practices that make your work easy then you should be concerned with payroll experts.
If you want to know more about the end of service calculator in Kuwait, how to claim compensation in Kuwait, and other topics, please visit our website.
FAQ’s
How is end of service calculated in Kuwait?
Calculating end-of-service benefits in Kuwait depends on several factors, including your salary type (daily, weekly, monthly), years of service, and termination reason.
What is the maximum limit for end-of-service benefits?
There’s a cap on how much you can receive. For monthly paid employees, it’s one-and-a-half years’ worth of your last salary, not base salary. For daily/weekly/hourly paid employees, it’s capped at one year’s worth.
What documents do I need to claim my end-of-service benefits?
This depends on your specific situation. Generally, you’ll need your passport, work contract, proof of termination, salary certificates, and sometimes additional documents depending on the termination reason. Check with your employer or legal counsel for an accurate list.
What if I disagree with the calculated end-of-service amount?
If you believe the calculation is incorrect, you can negotiate with your employer or file a case with the Ministry of Labor. Legal advice is crucial in such situations.
Do I get any additional benefits besides the end-of-service payment?
You might be entitled to additional benefits like accumulated leave pay or gratuity depending on your company policies and pension scheme regulations.
