Is Kuwait Gratuity Based on Basic or Gross Salary?
Written by Usama Afzal, Founder & Editor, GratuityHisab. Last updated: October 2026. Based on the Kuwait Labour Law; not legal advice.
Kuwait gratuity is based on basic salary only — not your gross or total pay. Under Article 53 of the Kuwait Labour Law, housing allowance, transport allowance, overtime, bonuses and commissions are all excluded from the gratuity calculation. If your contract shows KD 700 total pay but KD 500 basic salary, your gratuity is calculated on KD 500.
What Article 53 says about basic salary
Article 53 of the Kuwait Labour Law (Law No. 6 of 2010) bases the end-of-service gratuity on the worker's wage — and Kuwaiti practice interprets this as the basic salary stated in your employment contract. The logic is simple: allowances can change, be withdrawn, or vary month to month, while the basic salary is the stable contractual figure. Every part of the Kuwait gratuity calculation — the ÷ 26 daily wage, the 15 days per year, the one-month-per-year tier — runs on basic salary.
Basic vs gross: a KD 700 pay package worked out
Take a typical Kuwait payslip: KD 700 total made of KD 500 basic + KD 120 housing allowance + KD 80 transport allowance. For 6 years of service:
| Calculation basis | Daily wage | First 5 years | Year 6 | Total gratuity |
|---|---|---|---|---|
| Correct: KD 500 basic | KD 19.23 | KD 1,442.31 | KD 500 | KD 1,942.31 |
| Wrong: KD 700 gross | KD 26.92 | KD 2,019.23 | KD 700 | KD 2,719.23 |
The difference is KD 776.92 — money many workers expect but never receive, because the law is clear. This is the single most common gratuity disappointment in Kuwait: workers mentally calculate on their full take-home pay.
Which allowances are excluded?
- Housing allowance — excluded, even if paid monthly like salary.
- Transport / car allowance — excluded.
- Overtime pay — excluded (it is not part of the contractual wage).
- Bonuses and commissions — excluded.
- Annual flight tickets, school fees, cost-of-living extras — excluded.
If an allowance is genuinely fixed, paid every month, and written into the contract as part of the wage, some workers argue it should count — but the standard, safe interpretation applied in Kuwait is basic salary only. Do not count on allowances surviving a dispute.
What if my employer calculated on gross salary?
Good news: if your employer overpaid by using gross salary, that is their problem, not yours — paid gratuity is rarely clawed back. The risk runs the other way: employers who underpay by using an artificially low ‘basic’ figure. Some contracts show a tiny basic salary with huge ‘allowances’ precisely to shrink gratuity. If your basic looks unrealistically low compared to your total pay, that structure itself may be challengeable — and your final settlement deserves a second look before you sign. Run your numbers on the Kuwait gratuity calculator with your contractual basic salary to see the correct figure.
Does resignation change the basic-salary rule?
No — the basic-salary rule and the resignation brackets are two separate cuts. First your gratuity is calculated on basic salary (the Article 53 formula), then the resignation brackets (0% / 50% / two-thirds / 100%) apply to that figure. Example: KD 500 basic, 6 years, resigned → full gratuity KD 2,442.31 × two-thirds = KD 1,628.21. Both rules hit the same KD 500 base — allowances never enter the picture.
Related guides
- How to calculate gratuity in Kuwait (2026 formula)
- Kuwait gratuity after resignation: what you get
- What is the notice period in Kuwait?
- Kuwait gratuity calculator
Frequently asked questions
Is Kuwait gratuity calculated on basic salary or total salary?
Basic salary only. Under Article 53 of the Kuwait Labour Law, the gratuity formula — (basic ÷ 26) × 15 days for the first 5 years, then one month per year — runs entirely on your contractual basic salary. Allowances are excluded.
Is housing allowance included in Kuwait gratuity?
No. Housing allowance, transport allowance, overtime, bonuses and commissions are all excluded from the Kuwait gratuity calculation, even if paid monthly.
My contract shows no basic salary split. What counts?
What is written in your contract decides. If there is no basic/allowance split, ask HR for the breakdown in writing before any dispute — and be wary of contracts with an artificially tiny ‘basic’ figure designed to shrink gratuity.
Can my employer use gross salary to reduce my gratuity?
Using gross salary would increase — not reduce — your gratuity, so employers don't do that. The real risk is the opposite: an artificially low basic salary on paper. Check your contract's basic figure against your actual total pay.
Does the basic-salary rule apply if I resign?
Yes. The gratuity is first calculated on basic salary, then the resignation brackets (under 3 years: 0%, 3–5 years: 50%, 5–10 years: two-thirds, 10+ years: 100%) apply to that figure. Allowances never enter the calculation at any stage.
Work out your own amount
Enter your dates and salary to see your end-of-service pay instantly.
More questions
- How to calculate gratuity in Kuwait
- Kuwait gratuity after resignation
- What is the notice period in Kuwait?
- Kuwait gratuity calculator
Sources
This guide is based on Article 53 of the Kuwait Labour Law (Law No. 6 of 2010, Private Sector Labour Law). Labour laws are amended from time to time; for the latest version, always check the official gazette of Kuwait.
