our payroll experts in Kuwait take you through a set of questions and answers that will help in clearing all your doubts related to end of service gratuity in Kuwait.

1. All about End of services Gratuity in
Kuwait
Article 51 of Kuwait Labour Law explains an end of service benefits as follows:
I. The workers who are paid on daily, weekly hourly or piecework basis shall be
entitled to 10 days for each of the first five years of service and a 15 days
remuneration for each year thereafter. The total end of service benefit shall not
exceed one-year remuneration.
II. The workers who are paid on monthly basis shall be entitled to 15 days for each
of the first five years of service and one-month remuneration for each year
thereafter. The total end of service benefit shall not exceed one-and-a-half-year
remuneration.
The worker shall be entitled to a benefit for the fraction of the year in
proportion to the period of service. Loans and credits owed by the worker shall
be deducted from the end of services benefit. The provisions of the Social
Security Law shall be taken into consideration in this regard, and the employer
shall pay the net difference between the amounts accrued due to the
subscription of the worker in social security and to the end of service benefit.
Gratuity is the amount of money an employer is lawfully required to pay their
employee and it is mainly dependent on two factors: last drawn salary and
number of years of service. It is usually calculated at the time of resignation or
termination. Here, our payroll experts in Kuwait take you through a set of
questions and answers that will help in clearing all your doubts related to end
of service gratuity in Kuwait.
1. What is Gratuity?
Gratuity is a monetary payment eligible to an employee as a lump sum
at the end of his tenure. Gratuity payment is a liability to the employer
which accrues as the employee service period progresses.

2. 2. Who is entitled to a Gratuity?
Employees who are not beneficiaries of the social Insurance Law, are
entitled to an end of service gratuity
3. When does an employee become eligible for gratuity payment?
Employees are eligible for gratuity pay at the end of their service period,
upon the death of the worker, by a disability preventing his work
performance, by a period of sickness which exceeds his entitlement to
sick leave, the bankruptcy of the employer or if the establishment was
permanently closed. If the female worker terminates the contract
because of her marriage within a year after the date of marriage, she is
also eligible for Gratuity.
4. What is the basis amount that is used to calculate gratuity?
As per Article 62 Kuwait Labour Law, the calculation of worker’s
entitlements shall be made based on the last remuneration received by
the worker. In the event where the worker is paid based on a daily
basis, his remuneration shall be defined by an average of remuneration
earned by him during the actual working days in the last three months.
5. What is the number of days used to accrue gratuity?
15 days wages for each year of the first five years of service and one-
month wage for each year of service thereafter

3. Below given table shows the calculation of accrual at a given time;
6. What is the effect of unpaid leave taken during the period of service?
Any period taken by the employee as unpaid leave is excluded when
determining the service period. That means unpaid leave days are
excluded when accruing gratuity. The period of service is reduced by
the number of days served as unpaid leave.
7. Can an employer withhold gratuity payment?
As per Article 41 Kuwait Labour Law, the employer may terminate the
services of a worker without notice, compensation, or benefit in the
event where the worker has committed any of the following acts:
I. If the worker has committed a mistake that resulted in a large loss for the
employer.
II. If it was found that the worker obtained employment through cheating or
fraud.
III. If the worker divulged secrets related to the establishment which caused or
would have caused real losses.

4. 8. What is the maximum limit of gratuity paid to an employee, at the time
of final settlement?
The total end of service benefit should not exceed one-and-a-half-year
remuneration for employees who are paid monthly. The total end of
service benefit shall not exceed one-year remuneration for employees
who are paid on a daily, weekly, hourly or piecework basis.
9. Does type of termination of an employment contract make any
difference in gratuity payment?
Yes. If an employer terminates the contract of an employee
(Termination by employer), the employee is eligible to receive gratuity
as mentioned in Article 51. If an employee terminates the contract
(Resignation of an employee), the employee is entitled to gratuity as
specified in Article 53 of Kuwait Labour Law. The following table shows
the treatment of Gratuity in these two scenarios:
Please see the below example for a better understanding

5. Table shows the calculation of gratuity payment in case of
Termination
Table shows the calculation of gratuity payment in case of
Resignation

6. 10. In addition to termination, what are the types of separation in
which employee is eligible for entire end of service benefits?
The worker shall be entitled to the entire end of service benefits as
stated in the below-mentioned cases:
o If the duration of the contract expires without being renewed.
o If the female worker terminates the contract as a result of her marriage
within a year after the date of marriage.
o If the work contract shall be terminated by the death of the worker or in the
event where the worker is proven incapable of performing his work, or due
to a sickness that uses up all the worker’s sick leave entitlements as

7. evidenced by a medical report approved by competent official medical
bodies
o If a final verdict was issued declaring bankruptcy of the employer
o If the establishment was permanently closed
o If worker terminates the contract as per Article 48 i.e.
i. If the employer does not abide by the terms of the contract or the
provisions of the law;
ii. If the worker was assaulted by or by provocation from either the employer
or his deputy;
iii. If continuing work will endanger his safety and health pursuant to the
decision of the medical arbitration committee at the Ministry of Health.
iv. If the employer or his deputy committed an act of cheating or fraud with
regard to work conditions upon signing the contract.
v. If the employer has accused the worker of committing a punishable act and
the final verdict acquitted him.
vi. If the employer or his deputy commits an act that violates public morals
against the worker
Whether you are someone who has resigned from work, or has been
terminated by the employer, the gratuity that you are eligible to receive at the
end of your service can be of great help while transitioning to your next job.
Hence, it is important to be aware of the gratuity payment policies and any
changes to it.
For information on the payroll process in Kuwait click on this link
Payroll Process in Kuwait
The process of payroll is a little complicated and time-consuming; hence it is
always recommended to outsource your company’s payroll function.
Outsourcing payroll will ensure the assistance of a team of trained payroll
professionals and it frees up the time of the organization, helping them focus
on other projects that add value to their business.
One should be extra vigilant while selecting their payroll provider, as payroll
data is highly sensitive, and one should opt for a provider that can ensure high
levels of data security.

8. As a leading payroll outsourcing company, HLB HAMT can help solve your
payroll complexities through customized strategies. We take care of our
clients’ entire payroll cycle that includes preparation of payroll reports,
processing salary payment with WPS compliance, accrual management
including Gratuity, pension funds, an online portal for accessing payslips, and
many more. Our leadership team spends the necessary hours in every
project, ensuring our clients get refined consulting services to take your
business forward.
To know more about our payroll process, click here
Disclaimer:
Whilst every effort has been made to ensure the accuracy of this information,
HLB HAMT will not accept any liability arising out of errors or omissions.
Please note that this blog is not all-inclusive. Our guidance is designed only to
give general information on the issues/topics covered. It is subjected to
change and not intended to be a comprehensive summary of all laws which
may be applicable to your situation, treat exhaustively the subjects covered,
provide legal advice, or render a legal opinion.
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9. All about End of services Gratuity in
Kuwait
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates. Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
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