End-of-Service Benefits in Kuwait 2026: Eligibility and Calculation Under Kuwait Labor Law

End-of-service benefits in Kuwait are among the most important financial entitlements employees should understand when their employment relationship ends, whether due to resignation, termination by the employer, or the expiry of an employment contract.

The amount of end-of-service benefits does not depend solely on salary. Several factors may affect the final calculation, including the employee’s length of service, the legally applicable wage, the reason for termination, and the type of employment contract.

Kuwait’s Private Sector Labor Law No. 6 of 2010 regulates the main rules governing end-of-service benefits and how they are calculated.

This guide explains how to calculate end-of-service benefits in Kuwait, the difference between resignation and termination, the wage used for calculation purposes, and other important considerations, with practical examples and frequently asked questions.

What Are End-of-Service Benefits in Kuwait?

End-of-service benefits are financial entitlements payable to an employee upon the termination of the employment relationship, subject to the conditions and rules established under Kuwait Labor Law.

There is no single fixed amount applicable to all employees. The amount varies depending on several factors, including:

• Length of service.

• Wage used for the calculation.

• Reason for termination.

• Whether the employee resigned or was terminated by the employer.

• Type of employment contract.

• Allowances, commissions, and other financial components that may form part of the wage.

• Fractions of a year included in the total period of service.

Therefore, answering the question “How much is the end-of-service benefit in Kuwait?” requires reviewing the circumstances of each employment relationship.

Who Is Entitled to End-of-Service Benefits in Kuwait?

Entitlement generally depends on the employee’s length of service and the manner in which the employment relationship ended.

It is particularly important to distinguish between two situations:

Termination by the Employer

When an employer terminates an employee’s services, the end-of-service benefit is considered in accordance with the applicable provisions of Kuwait Labor Law, including the general calculation rules under Article 51, while taking into account the reason and circumstances of termination.

Employee Resignation

When an employee resigns, the proportion of the end-of-service benefit payable may vary depending on the employee’s length of service and the legal provisions applicable to the case.

Therefore, identifying the legal reason for termination of employment is an essential step before calculating the final amount.

How to Calculate End-of-Service Benefits in Kuwait

For an employee who receives a monthly wage, the general rule under Article 51 is based on:

15 days’ wage for each year of the first five years of service, and one month’s wage for each subsequent year, subject to the statutory maximum.

First Five Years of Service

The employee’s benefit is calculated on the basis of 15 days’ wage for each of the first five years of service.

Service Exceeding Five Years

For each year following the first five years, the calculation is based on one month’s wage, subject to the applicable legal rules.

Maximum End-of-Service Benefit

For employees paid on a monthly basis, the total end-of-service benefit is subject to the statutory limit and may not exceed one and a half years’ wage, in accordance with the applicable legal provisions.

End-of-Service Benefit Calculation Formula

For explanatory purposes, the calculation for a monthly paid employee may be simplified as follows:

For the first five years:

(Monthly wage ÷ 26) × 15 × Number of years of service

For years exceeding five years:

(Monthly wage ÷ 26) × 30 × Number of additional years

The two amounts are then added together, subject to the applicable rules concerning the reason for termination, entitlement percentage, and statutory maximum.

Important: This formula provides a general estimate. The final calculation may require consideration of allowances, commissions, fractions of a year, the type of employment contract, and other circumstances.

Example of End-of-Service Benefit Calculation in Kuwait

Suppose an employee’s applicable monthly wage is KWD 1,000, the employee has completed 10 years of service, and the employment relationship ends under circumstances entitling the employee to the full benefit.

First Five Years

1,000 ÷ 26 × 15 × 5 = approximately KWD 2,884.62

Following Five Years

1,000 ÷ 26 × 30 × 5 = approximately KWD 5,769.23

Approximate Total

2,884.62 + 5,769.23 = approximately KWD 8,653.85

The final legal amount remains subject to the employee’s actual wage components, employment status, and the circumstances surrounding termination.

Is the End-of-Service Benefit Calculated on Basic Salary or Total Salary?

One of the most common questions is whether end-of-service benefits in Kuwait are calculated based on basic salary or total salary.

The calculation should not automatically be limited to the basic salary stated in the employment contract.

Determining the legally applicable wage may require reviewing different components of the employee’s remuneration, which may include, depending on their nature and conditions:

• Basic salary.

• Regular allowances.

• Commissions.

• Regular financial payments.

• Certain financial benefits that legally form part of the wage.

It is therefore important to review the employment contract, salary records, bank transfers, allowances, and commissions before determining the final calculation.

End-of-Service Benefits Upon Resignation in Kuwait

End-of-service benefits upon resignation may differ from benefits payable in certain cases of termination by the employer.

Under the rules contained in Article 53, where applicable, the employee’s entitlement depends on the length of service.

Example of End-of-Service Benefits Upon Resignation

Suppose the original calculated benefit is KWD 4,500, and the employee resigns after seven years of service in circumstances where the above rule applies.

The employee would fall within the five-to-less-than-ten-year category and would therefore be entitled to two-thirds of the benefit:

4,500 × 2 ÷ 3 = KWD 3,000

This demonstrates why the reason for ending the employment relationship should be determined before calculating the employee’s final entitlement.

Are Partial Years Included in the Calculation?

Yes. End-of-service benefits are not necessarily limited to completed years of service.

Article 51 provides for entitlement in respect of fractions of a year in proportion to the period actually worked.

For example, if an employee has worked for six years and six months, the additional six months should not simply be disregarded. They are considered proportionally in accordance with the applicable legal rules.

Does an Employee Receive the Full Benefit Upon Resignation?

Not necessarily.

The percentage payable upon resignation may depend on the employee’s length of service and the legal provisions applicable to the particular situation.

In addition, simply describing the end of employment as a “resignation” may not always be sufficient in a legal dispute. Circumstances surrounding the employee’s departure or the employer’s conduct may affect the legal characterization of the termination and the resulting rights.

End-of-Service Benefits and Fixed-Term Contracts

The type of employment contract should also be considered when determining an employee’s rights.

The natural expiry of a fixed-term employment contract is legally different from termination by either party before the agreed expiry date.

Early termination may result in additional rights or obligations depending on the terms of the contract and the circumstances of the case.

Employees should therefore review their employment contracts carefully before terminating a fixed-term employment relationship.

End-of-Service Benefits for Kuwaiti and Expatriate Employees

For Kuwaiti employees, consideration should also be given to the relationship between end-of-service benefits and Kuwait’s social security system.

Certain cases involving Kuwaiti employees may therefore require reviewing social security obligations alongside the provisions of Kuwait Labor Law to determine the appropriate final settlement.

For expatriate employees, the applicable Labor Law provisions, employment contract, wage, length of service, and reason for termination should be reviewed when determining entitlement.

What Other Rights May Be Due After Employment Ends?

End-of-service benefits may not be the employee’s only financial entitlement when employment ends.

Depending on the circumstances, additional rights may include:

• Outstanding salaries or wages.

• Cash compensation for unused annual leave, where applicable.

• Contractual financial entitlements.

• End-of-service certificate.

• Outstanding commissions or other payments.

• Other rights provided under the employment contract or applicable law.

It is therefore advisable to review the employee’s full final settlement, rather than focusing exclusively on the end-of-service benefit.

Common Mistakes When Calculating End-of-Service Benefits

Errors in calculating end-of-service benefits can result in significant differences in the amount payable. Common issues include:

• Using an incorrect wage for the calculation.

• Ignoring allowances or financial components that may form part of the applicable wage.

• Failing to account for fractions of a year.

• Applying resignation percentages incorrectly.

• Failing to distinguish between fixed-term and indefinite-term contracts.

• Failing to examine the reason for termination.

• Signing a final settlement before verifying all outstanding entitlements.

Employees should therefore review the calculation and relevant employment documents before signing any final settlement confirming receipt of their rights.

Documents Needed to Review End-of-Service Benefits

For a more accurate assessment, it is useful to have the relevant employment documents available, including:

• Employment contract.

• Employment start date.

• Employment termination date.

• Salary statements.

• Bank salary transfers.

• Details of allowances and commissions.

• Resignation or termination letter.

• Annual leave balance.

• Correspondence relating to termination of employment.

Frequently Asked Questions About End-of-Service Benefits in Kuwait

How Do I Calculate End-of-Service Benefits in Kuwait?

The applicable wage and length of service are determined first. For monthly paid employees, the general calculation is based on 15 days’ wage for each of the first five years and one month’s wage for each subsequent year, subject to the other applicable legal provisions.

How Much Is the End-of-Service Benefit After Five Years?

There is no fixed amount because the benefit depends on the employee’s applicable wage and the reason for termination. Generally, the first five years are calculated on the basis of 15 days’ wage for each year for a monthly paid employee.

What Percentage of the Benefit Is Payable Upon Resignation?

Under the Article 53 rule, where applicable, an employee may receive half of the benefit after three years but less than five years of service, two-thirds after five years but less than ten years, and the full benefit after completing ten years or more.

Are Allowances Included in End-of-Service Benefits?

Certain allowances and other financial components may form part of the wage used for calculation depending on their nature, regularity, and conditions of payment. The employee’s actual remuneration structure should therefore be reviewed.

Are Additional Months Included in the Calculation?

Yes. Fractions of a year are taken into account proportionally in accordance with the applicable provisions.

What Is the Maximum End-of-Service Benefit in Kuwait?

For a monthly paid employee, the benefit is subject to a statutory maximum of one and a half years’ wage, in accordance with the applicable legal rules.

Conclusion

End-of-service benefits in Kuwait depend on several factors, particularly the employee’s length of service, legally applicable wage, reason for termination, and type of employment contract.

For monthly paid employees, the general calculation is based on 15 days’ wage for each year of the first five years and one month’s wage for each subsequent year, while taking into account fractions of a year and the statutory maximum.

In cases of resignation, the percentage payable may vary according to the employee’s length of service and the legal provisions applicable to the case.

Because differences in the applicable wage, length of service, or reason for termination can significantly affect the final amount, employment documents and calculations should be carefully reviewed before signing a final settlement.