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Calculation Of Indemnity As Per Article 67 Of The Kuwait Labor Law Category: Legal
Kuwaitlocal Kuwaitlocal

I have read your previous posts about the calculation of the end of service indemnity as per Article 51 of the Kuwait Labor Law.

That is the 15 days per year for the first five years of service shall be paid out based on 26 working days per month, or effectively a six-day working week.

For five (5) years of service, the indemnity is computed as 75 days/26 = 2.88 months remuneration and this is the current stance of my employer.

However my employment agreement clearly defines my working week as “five (5) days, 48 hours workweek from Sunday to Thursday (9.6 hours per day)”.

Given that I work five (5) days per week and not six (6), do I have an argument that my per annum indemnity should instead be calculated based on three (3) working weeks (15 days per Article 51 / 5 days per working week)?

For five (5) full years of service, this methodology would see me receiving 3 weeks/year * 5 years = 15 weeks remuneration instead of 2.88 months.

It is interesting to note that my 30 days annual holiday has been granted to me by my employer based on a five (5) day working week rather than the 6-day working week – so I have been receiving six (6) full weeks of holiday per year.

The employer’s historical calculation of my annual leave days is not consistent with their current stance regarding the indemnity.

Please also note that I was given my 3-month notice by my employer due to project completion and I did not resign.

Name withheld 
Answer: The employer is correct in the calculation of the indemnity because according to Article 67 of the Kuwait Labor Law you are required to work 6 days a week and get one day off.

Now the law allows companies to have a five-day working week and the companies do this by equally dividing the 6th day’s working hours over the other five days.

This effectively means that you have a 6-day working week, according to the law. You are lucky your company is calculating your annual leave according to a 5-day working week. It would not be wrong if it gave you only 30 working days leave, according to a 6-day week.

You see any employee is entitled to only one day off every week and only 30 working days paid leave every year. The company can give you more than 30 working days, not less in any condition, if it so desires but it is not bound to do so unless you have a contract which says otherwise.

The contract, after a mutual agreement, can specify more than 30 working days annual leave. In every condition, unless otherwise specified, you are entitled to only 15 days pay as indemnity for each of the first five years of service, which after being divided by 26 (because a working month has defined as 26 days, not more, not less) works out to 2.88 months pay.

So, the employer is correct.

Now, coming to the payment of the annual leave — regardless of how it is being calculated, on a 5-day or 6-day week — you will find that you are being paid for only 30 working days per year, not even a day more.

You see, if calculations were based on a 5-day week for calculation of payment for annual leave the 30 days would first have been divided by 22 instead of 26 as your employer is doing. The employer is only giving you one extra day off per week, he is not paying you more.

Secondly, you are still working 48 hours a week and under the law you cannot be made to work over 8 hours a day.

Your one day’s 8 hours have been equally divided over 5 days to enable you to have a 2-day weekend. So, practically you are still doing a 48-hour week regardless of how many days weekend you are getting, so the employer is right in his calculation of your service indemnity.

And lastly on the question of your services having been terminated because of completion of your project, you are entitled to full indemnity regardless of your period of service. This will be based on 15 days pay for each of the first 5 years of service and one month’s pay for each year of service after the first 5 years.

We would like to stress again that the 75 days of the first 5 years will be divided by 26 to give you 2.88 months pay as indemnity for that duration and one month’s pay for each year of service will simply be added to that total.

Had you resigned you would have been entitled to only half the indemnity if your service was three years or more but less than five years; you would have got two-thirds indemnity if the service would have been five years or more but less than 10 years ; and the full indemnity only if your service had been 10 years or more.

Source - Arabtimes
Note - All the answers were provided by Arab Times Legal Clinic.

Report 0 10 Jun, 2016, 02:39 PM
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10 Jun, 2016, 02:39 PM
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