When a job ends in Kuwait, one question comes up before almost any other: how much end-of-service gratuity is owed, and does it change if the worker resigns or is dismissed? The Private Sector Labour Law (Law No. 6 of 2010) sets a statutory formula, a scale for workers who resign, and a short list of situations in which the gratuity is lost or reduced. This guide explains how the entitlement works in practice, how to calculate it with a worked example, and what employees and employers should document. It builds on our earlier guides to the notice period and termination and to labour rights and obligations in Kuwait.
Who is entitled to end-of-service gratuity?
The gratuity is a statutory right of employees in the private sector, whatever their nationality. It accrues with each year of service and is payable when the employment relationship ends, subject to the rules below. It sits alongside, not instead of, other final dues such as unpaid wages and accrued annual leave, which are covered in our guide to annual and sick leave. Employers with at least five workers are also required to pay wages through local financial institutions, which makes the payment trail easy to prove.
The statutory formula (Article 51)
Article 51 of the Labour Law distinguishes between two groups of workers.
- Monthly-paid employees: fifteen days’ wage for each year of service during the first five years, and one month’s wage for each year after that. The total gratuity cannot exceed one and a half years’ wage.
- Daily, weekly, hourly or piece-rate workers: ten days’ wage for each of the first five years and fifteen days’ wage for each later year, capped at one year’s wage.
Part-years count in proportion to the time actually worked. The article also allows the employer to deduct from the gratuity any debts or loans the employee owes, and it requires coordination with the social insurance system, so that the employer pays the net difference between what it contributed to social insurance for the employee and the gratuity otherwise due.
A worked example
Suppose a monthly-paid employee with a last wage of KD 600 leaves after seven years and the employer ended the contract. The calculation runs as follows:
- Years one to five: half a month’s wage per year, which is 2.5 months in total.
- Years six and seven: one month’s wage per year, which is 2 months in total.
- Total: 4.5 months of wage, or KD 2,700, well below the cap of eighteen months.
The figure is illustrative. The wage used is the full “wage” as the law defines it, which includes the basic pay and the regular allowances, bonuses and cash benefits that are paid periodically, so always check what your contract and payslips actually treat as wage.
When is the full gratuity payable?
The law grants the full gratuity in several situations, including when the employer ends the contract, when a fixed-term contract expires without renewal, when the contract ends for the reasons listed in the articles on bankruptcy or permanent closure of the establishment, death, or proven inability to work, and when a female employee ends the contract because of her marriage within one year of the marriage date. It is also payable in full when the employee leaves without notice for one of the employer-fault reasons the law lists, such as the employer’s breach of the contract or the law, an assault by the employer or someone acting for the employer, a danger to the employee’s health or safety confirmed by the Medical Arbitration Committee, fraud in the contract terms, or conduct against decency directed at the employee.
Resignation: the sliding scale (Article 53)
If a worker on an open-ended contract resigns on their own initiative, Article 53 applies a scale based on length of service:
- Less than three years: no gratuity.
- Three years or more but less than five: half of the gratuity.
- Five years or more but less than ten: two-thirds of the gratuity.
- Ten years or more: the full gratuity.
Continuing the example above, the same employee who resigns after seven years would receive two-thirds of the KD 2,700, which is KD 1,800. Proper notice also matters when resigning, which we explain in our guide to the notice period.
Dismissal and loss of gratuity
An employer may dismiss without notice, compensation or gratuity only where the employee has committed one of the serious acts the law lists, such as causing the employer a grave loss through error, obtaining the job by fraud or deceit, or disclosing the establishment’s secrets in a way that causes or could cause a certain loss. For other dismissal grounds listed in the same article, such as a final conviction for a crime involving honour or honesty, an assault on a colleague or the employer, repeated violations of instructions, or failure to meet contractual duties, the law expressly says that dismissal does not deprive the worker of the end-of-service gratuity.
A dismissed employee may challenge the decision before the competent labour circuit. If a final judgment establishes that the employer abused its right to dismiss, the employee is entitled to the gratuity plus compensation for material and moral damage. Employers must also notify the Ministry of the dismissal decision and its reasons. A related point is that discipline must follow a proper procedure; see our guide on disciplinary penalties.
End-of-service certificate and practical steps
Article 54 gives every employee whose contract has ended the right to an end-of-service certificate stating the length and nature of service and the last wage received. The certificate must not contain expressions that could harm the employee or reduce their job prospects, and the employer must return any documents, certificates or tools the employee deposited with it.
- Keep your contract and payslips. They fix the wage base and the start date for the calculation.
- Put resignation and termination in writing, with dates, so the length of service is not disputed.
- Request a written final settlement showing gratuity, leave pay and any deductions, and do not sign a full release until you understand the figures.
- Check deductions. Only debts and loans may be deducted from the gratuity, and social insurance adjustments must follow the law.
- Act promptly if payment is refused. Raise a complaint with the labour authorities and, if needed, bring a claim before the labour circuit.
Frequently Asked Questions
Is gratuity calculated on basic salary only?
No. The law defines wage broadly to include basic pay plus allowances, bonuses and cash benefits that are paid periodically, so regular allowances usually count towards the calculation.
Do I get gratuity if I resign after two years?
Not if you are on an open-ended contract and resign on your own initiative, because the scale gives nothing below three years of service. Different rules apply when you leave because of the employer’s own breach of the contract or the law.
Can my employer deduct money I owe from the gratuity?
Yes. The law allows the employer to deduct debts or loans the employee owes from the gratuity. The employer must still document the amount and the basis for it.
What if I was dismissed for misconduct?
Most dismissal grounds do not remove the gratuity. Only the serious acts that allow dismissal without notice, compensation or gratuity do, and even then you can challenge the decision before the labour circuit.
This article is general legal information and does not replace advice on your own facts. If you are unsure about your end-of-service entitlement or have been denied it, you can contact our office through the booking page or call +965 2220 4490.
Need Legal Advice?
Contact Attorney Meshari Al-Enezi — over 10 years of experience in Kuwaiti courts