Kuwait Indemnity Formula Explained: Why ÷365 Is Correct (Not ÷26 or ÷30)
Last updated: May 2026 · Legal reference: Kuwait Labour Law No. 6 of 2010, Articles 51–54
Quick Summary
Most Kuwait indemnity calculators use the wrong daily rate formula. The legally correct method under Kuwait Labour Law No. 6 of 2010 is basic salary × 12 ÷ 365 — not ÷26 or ÷30. Using ÷26 inflates results by hundreds of KWD. Knowing the correct formula protects you in any dispute with your employer.
If you have used more than one Kuwait indemnity calculator and got different numbers, you are not alone. The difference almost always comes down to one step: how the daily rate is calculated. Get that step wrong and every number downstream is wrong too.
The three formulas in use
Method 1 — Divide by 365 (annual) ✅ Correct
Daily rate = Basic salary × 12 ÷ 365
This is the method specified by Kuwait Labour Law. It treats a year as 365 days regardless of working days or calendar months.
Method 2 — Divide by 30 (monthly) ❌ Incorrect
Daily rate = Basic salary ÷ 30
Assumes every month has exactly 30 days. A common shortcut. Produces a slightly higher daily rate than the correct method.
Method 3 — Divide by 26 (working days) ❌ Incorrect
Daily rate = Basic salary ÷ 26
Assumes 26 working days per month — a payroll convention. Produces a significantly higher daily rate and inflates the indemnity figure.
What the law actually says
Kuwait Labour Law No. 6 of 2010, Articles 51–54 states that end of service indemnity is calculated at 15 days of basic salary per year for the first 5 years, and 30 days per year beyond that. The reference to "days of basic salary" is calculated on an annual basis — meaning the full yearly salary divided by 365 days. The law does not reference working days or 30-day months.
Side-by-side comparison
Basic salary: KWD 500/month. Years of service: 7 years.
| Method | Daily rate | Total indemnity | Status |
|---|---|---|---|
| ÷ 365 (annual) | KWD 16.44 | KWD 2,219.18 | ✅ Correct |
| ÷ 30 (monthly) | KWD 16.67 | KWD 2,250.00 | ❌ Incorrect |
| ÷ 26 (working days) | KWD 19.23 | KWD 2,596.15 | ❌ Incorrect |
The full correct calculation (step by step)
Basic salary: KWD 500/month. Years of service: 7 years.
Step 1 — Daily rate = 500 × 12 ÷ 365 = KWD 16.44/day
Step 2 — First 5 years = 5 × 15 days × 16.44 = KWD 1,232.88
Step 3 — Next 2 years = 2 × 30 days × 16.44 = KWD 986.30
Total indemnity = KWD 2,219.18
Cap check: 18 months × 500 = KWD 9,000 — not reached.
Frequently asked questions
Why do different Kuwait indemnity calculators give different results?
The difference comes from how the daily rate is calculated. The correct method under Kuwait Labour Law is: basic salary × 12 ÷ 365. Many calculators incorrectly use basic ÷ 26 (assuming 26 working days per month) or basic ÷ 30 (assuming 30-day months). These produce different — and legally incorrect — results.
What is the correct Kuwait indemnity formula?
Daily rate = basic monthly salary × 12 ÷ 365. Then: Years 1–5 = 15 days × daily rate × years served. Years beyond 5 = 30 days × daily rate × years beyond 5. Cap = 18 months basic salary. This is the formula specified under Kuwait Labour Law No. 6 of 2010, Articles 51–54.
Is dividing by 26 correct for Kuwait indemnity?
No. Dividing by 26 assumes 26 working days per month, which is an accounting convention. Kuwait Labour Law specifies an annual calculation (× 12 ÷ 365), not a working-day calculation. Using ÷ 26 produces a higher daily rate and therefore overstates your entitlement.
How much difference does the formula make?
On a KWD 500 basic salary over 7 years, the ÷365 method gives KWD 2,219.18 while the ÷26 method gives KWD 2,884.62 — a difference of KWD 665.44. The ÷26 result is not what the law entitles you to.
Which Kuwait labour law article covers indemnity calculation?
Kuwait Labour Law No. 6 of 2010, Articles 51 to 54 govern end of service indemnity for private sector employees. The law specifies 15 days basic salary per year for the first 5 years and 30 days per year thereafter, calculated on an annual basis.
Key Takeaways
- ✓ The correct daily rate formula is: basic salary × 12 ÷ 365
- ✓ Dividing by 26 or 30 is legally incorrect under Kuwait Labour Law
- ✓ The ÷26 method overstates your entitlement by hundreds of KWD
- ✓ Ministry of Labour uses the ÷365 method in all disputes
- ✓ GulfWise calculator uses the exact legally correct formula
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This guide is for informational purposes only and does not constitute legal advice. Legal reference: Kuwait Labour Law No. 6 of 2010, Articles 51–54.