Indemnity Calculation With Allowances
Category: Legal

I have been working in a private company for over 15 years and I resigned recently. I just want to know if my housing allowance will be included in the calculation of my indemnity.

Will the calculation be as follows: Indemnity = (basic salary + housing allowance) x (2.88 + 10 months). Is this correct? Are there any other items to be included in the calculation?

Name withheld

Answer: There are two things here … one is the law and second is what some of the companies practice without any check.

According to the law, all allowances paid regularly must be included in the calculation of indemnity … something only the good companies while all the others calculate indemnity on the basic salary … which is very, very wrong.

For the first five years you get 15 days pay for each year but these 75 days have to be first divided by 26 (working days in a month) So you get 2.88 months salary for the first five years

After that, you get one month’s salary for each year of service

In your case, it will be 10 months pay

So the total indemnity is worked out as follows: (2.88 x total salary) + 10 months salary

That’s the correct equation.

With the brackets in the wrong places, the answer works out differently.

I came to Kuwait on 23-02-08 on a private company visa Article18 and until now am working with the same company. I would like to submit my resignation in September 2016.

If I resign what will be my indemnity (benefits) and will the company give me an air ticket.

My current salary is KD 362.000

Food Allowance KD 25.000

Total: KD 387.000 by bank transfer to my account.

The company is also providing accommodation and transport.

Name withheld

Answer: If you resign in September, your service (including the notice period ) with be approximately 8 years 10 months.

As such, as you are resigning, you will be entitled to two-thirds of the total indemnity because your service will be over 5 years but less than 10 years.

Please also remember that according to the law, the full salary: the basic salary plus all the allowances that you are getting on a regular basis must be used in the calculation of the indemnity.

If you are getting accommodation plus transport, the company must work out a sum for these facilities for the calculation of your indemnity.

As such, as you have not provided these figures we can’t work out your indemnity.

But here is the method to calculate the same

For the first five years you get 2.88 months salary

For the next 3 years 10 months you get one month’s salary for each year = 3.83 months salary

So, the total indemnity will be 2.88 x 3.83 = 6.71

Multiply 6.71 by your total salary to get the full indemnity

Once you get the full indemnity, work out two-thirds of that figure

Which can be done by multiplying full indemnity x 2/3.

This is your entitlement.



13 Sep, 2016 0 1047
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