Kuwait Labour Law Article 55: The 26 Working Days Statutory Divisor Rule

1. The Legislative Origin of Article 55

In the State of Kuwait, the rights of private-sector workers are anchored in Kuwait Private Sector Labour Law No. 6 of 2010, which repealed the outdated Law No. 38 of 1964. Among the critical modifications introduced by the 2010 statute was a precise legislative definition of how daily earnings are derived from a fixed monthly wage.

Prior to 2010, payroll departments frequently divided an employee's monthly pay by thirty calendar days. This method artificially suppressed the daily wage baseline by counting non-working statutory rest days as if they were billable work shifts. To eliminate this ambiguity, the Kuwait National Assembly enacted Article 55, establishing an explicit, mandatory arithmetic formula:

"The worker's daily remuneration shall be calculated by dividing his monthly remuneration by 26 working days."

2. Why Dividing by 30 Days Constitutes Unlawful Derogation

In commercial accounting and judicial practice, dividing by thirty calendar days is deemed an unlawful derogation of employee severance rights. Under Kuwait law, every employee is entitled to one fully paid statutory rest day per week (normally Friday), yielding approximately four non-working rest days in a standard thirty-day cycle.

When monthly remuneration is divided by twenty-six, the daily wage increases substantially. Consider an expatriate engineer earning a total monthly remuneration of 1,300 KWD:

When this 13.33 percent shortfall is compounded across years of accumulated service, the financial loss to the employee can reach thousands of dinars. The Public Authority for Manpower (PAM) and Kuwait Labour Courts consistently void indemnity settlements that rely on the thirty-day divisor.

3. Impact Across Accrual Tiers (Article 51)

Under Article 51 of the Labour Law, end of service indemnity accumulates in two distinct tiers:

• First Five Years of Continuous Employment: Fifteen (15) working days' remuneration for each completed year.
• Beyond Five Years: One full month's remuneration (thirty working days) for each subsequent year.
• Ceiling Limit: Total indemnity under all tiers combined cannot exceed one and a half years' remuneration (eighteen months' salary).

4. Resignation Reduction Mechanics (Article 53)

When an employee working under an indefinite term employment contract decides to tender their voluntary resignation, Article 53 applies a sliding percentage deduction to the gross accrued indemnity:

• Service Under 3 Years: Zero entitlement (100% forfeited).
• Service Between 3 and 5 Years: Fifty percent (50%) of the accrued indemnity.
• Service Between 5 and 10 Years: Two-thirds (66.67%) of the accrued indemnity.
• Service of 10 or More Years: One hundred percent (100%) full indemnity with zero statutory reduction.

Crucially, these percentage reductions are applied to the gross sum calculated via the statutory 26-day divisor, not after an unauthorized 30-day calculation.

5. Remuneration Components Included in Kuwait Indemnity

Article 55 stipulates that the calculation must be based on the employee's total remuneration (Al-Mukafaa). Under established Kuwait Court of Cassation precedents, total remuneration encompasses:

• Basic contractual salary;
• Fixed housing allowance (cash or cash valuation of provided housing);
• Fixed transportation allowance;
• Fixed, guaranteed monthly allowances paid on a regular basis without performance contingencies.

Discretionary annual bonuses, unpredictable overtime earnings, and reimbursements for business expenses are excluded from the statutory indemnity basis.