Employment Termination Compensation in Kuwait: Entitlements, Calculation and Claim Procedures
By Lawyer Ahmed Al-Fadly / November 02, 2026
Employment Termination Compensation in Kuwait: Entitlements, Calculation and Claim Procedures
Employment termination compensation in Kuwait is not a fixed amount automatically payable to every employee when employment ends. A final settlement may include end-of-service benefits, payment in lieu of notice, compensation for wrongful early termination or unfair dismissal, outstanding wages, and payment for unused annual leave.
Eligibility for each item depends on the contract type, length of service, applicable wage, and reason for termination.
This article addresses employees covered by Kuwait’s Private Sector Labour Law No. 6 of 2010, as amended. Domestic workers and government employees are subject to separate provisions.
What Is the Difference Between Termination Compensation and End-of-Service Benefits?
End-of-service benefits are calculated according to the employee’s wage, length of service, and reason the contract ended. Termination compensation arises from a legal breach connected with termination or harm that warrants compensation.
Financial entitlement | Basis of entitlement | Calculation basis |
|---|---|---|
End-of-service benefits | Employment ends in circumstances qualifying under the law | Wage, length of service, and applicable entitlement percentage |
Payment in lieu of notice | Failure to observe the required notice period | Wage for the unobserved notice period |
Compensation for early termination of a fixed-term contract | Termination without legal justification before expiry | Harm suffered, capped at wages for the remaining contract term |
Unfair dismissal compensation | Unfair dismissal and resulting harm are established | Assessment by the court |
Outstanding wages and unused annual leave pay | Unpaid wages or an outstanding leave entitlement | Employment records and supporting documents |
Several entitlements may be included in one claim if the requirements for each are met, without duplicating compensation for the same harm.
When Is an Employee Entitled to Termination Compensation in Kuwait?
Failure to Observe the Required Notice Period
Article 44 sets the minimum notice period for an indefinite-term contract at three months for monthly paid employees and one month for other employees.
If the required notice period is not observed, the other party is entitled to payment equivalent to the wage for the unobserved period.
If the employer releases the employee from attending work during notice, employment continues until the notice period ends, with entitlement to wages for that period under the law.
Early Termination of a Fixed-Term Contract
If either party terminates a fixed-term contract without legal justification, Article 47 governs compensation for the injured party. Compensation must not exceed the employee’s wages for the remaining contract term.
Illustrative example: If four months remain and the applicable monthly wage is KWD 600, KWD 2,400 represents the ceiling for this compensation under those assumptions. It is not an automatic entitlement to the full amount; the harm and circumstances of termination must be assessed.
Established Unfair Dismissal
Compensation may be claimed where the employer’s unfair dismissal and the resulting material and non-material harm are established under the applicable provisions.
The law prohibits termination because an employee claims lawful rights, participates in trade union activities, or on grounds of sex, origin, or religion.
Paying in lieu of notice does not, by itself, establish that the reason for dismissal was lawful.
How Are End-of-Service Benefits Calculated in Kuwait?
Article 51 establishes the following basic rules:
Wage payment method | First five years | Subsequent years | Maximum benefit |
|---|---|---|---|
Monthly pay | 15 days’ wages for each year | One month’s wages for each year | One and a half years’ wages |
Daily, weekly, hourly, or piece-rate pay | 10 days’ wages for each year | 15 days’ wages for each year | One year’s wages |
Fractions of a year qualify proportionately to the period worked. The applicable entitlement percentage is then determined by the reason the contract ended.
Basic salary alone should not automatically be treated as the calculation basis. Certain regularly payable components may form part of the legally applicable wage, depending on their nature, the contract, and workplace regulations.
Is an Employee Entitled to End-of-Service Benefits After Resigning?
Article 53 provides the following percentages where an employee terminates an indefinite-term contract:
Length of service | Benefit entitlement |
|---|---|
Less than three years | Article 53 does not provide a benefit for this situation, subject to any more favourable entitlement or specific legal ground |
Three years to less than five years | Half of the calculated benefit |
Five years to less than ten years | Two-thirds of the calculated benefit |
Ten years or more | The full calculated benefit |
An ordinary resignation differs from termination by the employee on a statutory ground under Article 48, such as the employer’s failure to fulfil obligations, provided the legal requirements are established.
Does Disciplinary Dismissal Remove the Right to End-of-Service Benefits?
Describing a termination as “disciplinary dismissal” does not automatically remove the employee’s entitlement.
Article 41 distinguishes between grounds permitting dismissal without end-of-service benefits and other grounds that do not deprive the employee of those benefits.
The alleged misconduct and compliance with legal procedures must be examined. The employee may challenge the dismissal before the competent authority.
Documents Required to Claim Termination Compensation
A well-organised file helps identify and substantiate the claims. Useful documents include:
The employment contract, amendments, and renewals.
The employee’s Civil ID and work permit.
The termination letter or resignation and evidence of its delivery date.
Bank statements, payslips, and allowance records.
The unused annual leave statement and final settlement.
Correspondence, warnings, and investigation records relating to termination.
Any signed settlement release and evidence of amounts received.
Documents supporting the alleged harm when compensation is claimed.
Procedures for Claiming Employment Entitlements
Start by reviewing the contract and preparing an itemised calculation separating end-of-service benefits, notice pay, wages, annual leave pay, and compensation. Deduct amounts proven to have been paid.
Under Article 146, a request must be submitted to the competent labour department before bringing a labour lawsuit, allowing an attempt at an amicable settlement.
If settlement fails, the dispute is referred to the competent court. Enforcement procedures may then be pursued once an enforceable judgment has been issued.
What Is the Time Limit for Claiming End-of-Service Entitlements?
Article 144 provides that claims brought by employees under the Labour Law will not be heard, where denied, after one year from the date the employment contract ended, subject to the related legal provisions.
Employees should therefore act promptly and should not assume that informal negotiations alone preserve the claim deadline in every case.
Lawyers and Contact Details at Ineqad Law Firm
Contact Ineqad Law Firm for Legal Consultancy to request a review of your termination documents and arrange assignment of the matter according to its nature.
Lawyer or legal consultant | Contact through the firm |
|---|---|
Lawyer Fahad Al-Saeed | +965 6666 8811 |
Lawyer Riyadh Al-Fadhli | +965 6666 8811 |
Lawyer Ahmed Al-Fadhli | +965 6666 8811 |
Legal Consultant Ahmed Mohamed Naguib Abdelhadi | +965 6666 8811 |
Ahmed Salah Al-Serri | +965 6666 8811 |
This is the firm’s shared contact number for enquiries and appointments, rather than a separate personal number for each individual.
Frequently Asked Questions
Does Every Termination Entitle the Employee to Additional Compensation?
No. Additional compensation requires a separate legal basis, such as failure to observe notice, termination without legal justification, or established unfair dismissal and resulting harm.
Is an Employee Automatically Entitled to All Wages for the Remaining Fixed-Term Contract?
No. Wages for the remaining term represent the ceiling for compensation under Article 47. The harm and requirements for liability must still be assessed.
Does Resignation Remove All Employment Entitlements?
No. The end-of-service benefit percentage depends on the applicable resignation rules and length of service. Wages and other entitlements are assessed separately.
Legal Advice on Employment Termination Compensation in Kuwait
For a review of your final settlement, employment entitlements, and appropriate legal procedure, contact Ineqad Law Firm for Legal Consultancy:
Phone and WhatsApp: +965 6666 8811
Website: ineqad.com
Email: info@ineqad.com
This article provides general information. The legal position in an individual case depends on a review of the employment contract and termination documents.
