This is the companion to our comparison of the UAE, Saudi Arabia and Qatar. It covers the other three Gulf states, and it is a less tidy picture, because these three are not running the same kind of system as each other any more.
Kuwait: the formula, and the resignation cut
Kuwait’s indemnity sits in Law No. 6 of 2010 on labour in the private sector, and it has not changed.
Article 51 sets the formula. A worker paid monthly accrues 15 days’ wages for each of the first five years of service, and one month’s wages for each year thereafter, with the total capped at one and a half years’ pay. A worker paid daily, weekly, by the hour or by the piece accrues 10 days a year for the first five years and 15 days a year after that, capped at one year’s pay.
Article 53 is the one that costs money. Where a worker on an indefinite contract terminates the relationship themselves, the Article 51 entitlement is reduced on a sliding scale:
| Completed service | Proportion of the Article 51 figure |
|---|---|
| Under 3 years | Nothing |
| 3 to under 5 years | One half |
| 5 to under 10 years | Two thirds |
| 10 years or more | The full amount |
Article 44 sets notice at three months for monthly-paid workers.
The reason to sit with the Article 53 table for a moment is that the UAE had a rule of exactly this shape and repealed it. Article 137 of the old UAE law of 1980 cut gratuity on resignation on a similar scale; the 2021 decree-law repealed it in full, and Article 51 of the current UAE law contains no reduction for resigning. Plenty of material online still applies the old UAE rule, and plenty of people apply the UAE’s current position to Kuwait. Both errors point the same way, and both are expensive.
In Kuwait, on the statute as it stands, when you resign is a financial decision as well as a personal one. Crossing from four years and eleven months to five years moves you from one half to two thirds of the Article 51 figure.
Bahrain: the employer no longer holds the money
Bahrain made the structural change. Under Order No. 109 of 2023, amending Law No. 36 of 2012, and with effect from 1 March 2024, employers stopped paying leaving indemnity directly to departing foreign employees. They now remit monthly to the Social Insurance Organisation.
| Period of service | Monthly contribution |
|---|---|
| First three years | 4.2% of monthly basic salary |
| After three years | 8.4% of monthly basic salary |
Contributions are due within the first fifteen days of each month. Late payment attracts interest at 5% plus an additional penalty equal to 20% of the unpaid contributions. On leaving, the employee applies to the SIO rather than to the employer.
Those two percentages repay a second look. Take 4.2% a month across twelve months and you get roughly half a month of basic pay a year. Take 8.4% and you get roughly a full month a year. Which is, near enough, the shape of the old Bahraini indemnity formula. The percentages were not picked to change what you receive. They were picked to deliver the same thing through a different pipe — one where the money leaves the employer’s balance sheet every month instead of sitting on it as an unfunded promise until the day you resign.
That is the whole point of the reform, and it is the same argument the UAE and Oman are having in their own ways.
Oman: new formula in 2023, no gratuity at all from 2027
Oman has done both things at once.
The formula changed on 31 July 2023
Article 61 of the Labour Law, issued by Royal Decree 53/2023, provides that an employer pays a worker who is not covered by the Social Protection Law a gratuity of not less than the basic wage for each year of service, calculated on the worker’s final basic wage, with fractions of a year paid pro rata.
The statutory English is terse, so to be explicit about how it is read in practice: this is one month’s basic wage for each year of service. Both the sources we relied on read it that way, and it is the reading the Ministry of Labour has described publicly.
Service before 31 July 2023 keeps the old split: 15 days’ wages a year for the first three years, one month a year after that. So an expatriate with service either side of that date has a two-part calculation, and an employer running one formula across the whole period is getting it wrong in one direction or the other.
The 2023 change also removed the old one-year minimum, so part years now accrue from the start.
The Provident Scheme takes over on 19 July 2027
Under the Social Protection Law, gratuity for non-Omani workers is replaced by a savings arrangement from 19 July 2027, with employers contributing 9% of the insured worker’s monthly basic wage into an individual account.
Gratuity accrued before that date is protected: the employer disburses end-of-service gratuity for service before the scheme starts under the provisions of the Labour Law. So the same two-part logic applies again, one boundary further along.
A June 2026 client alert states that the Omani scheme guarantees a minimum 2% annual return. A reading of Article 141 of the Social Protection Law says a saver receives contributions plus investment returns, and that the regulations may specify a minimum — with none currently mandated. Those two positions cannot both be right, so we are not publishing a guaranteed return figure until the executive regulations settle it.
The three side by side
| Kuwait | Bahrain | Oman | |
|---|---|---|---|
| Who holds the money | The employer, until you leave | The Social Insurance Organisation, monthly | The employer now; a savings account from 19 July 2027 |
| Accrual | 15 days a year for 5 years, then 1 month a year | 4.2% a month for 3 years, then 8.4% | 1 month’s basic wage a year |
| Cap | 1.5 years’ pay | None stated | None stated |
| Reduced if you resign | Yes, on the Article 53 scale | No | No |
| Basis | Wages | Monthly basic salary | Final basic wage |
| Instrument | Law No. 6 of 2010 | Order No. 109 of 2023 | Royal Decree 53/2023 |
The word that decides the number
Across all three, the multiplier matters less than the base it is applied to. Bahrain contributes on monthly basic salary. Oman calculates on final basic wage. Kuwait’s Article 51 refers to wages.
In the Gulf, basic salary is routinely a fraction of a total package that also carries housing, transport and other allowances. A generous-looking total with a thin basic produces a thin end-of-service entitlement in every one of these systems, and the same is true in the UAE, Saudi and Qatar. It is the single most useful line to read carefully in an offer, and we have written about how to read one separately.
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These three are not converging on a common Gulf standard. They are diverging.
Bahrain has already moved the money out of the employer’s hands and into a state fund. Oman is doing the same thing on a slower timetable and with a higher contribution rate. Kuwait retains the traditional arrangement, where the money is an unfunded promise sitting on the employer’s books, and retains a resignation penalty that its neighbours have removed or never had.
For an employee, the practical difference is not the headline percentage. It is whether the money exists somewhere with your name on it before the day you resign. In Bahrain it does. In Oman it will. In Kuwait it does not, and the entitlement is also the one that shrinks if you are the one who leaves.
None of that makes any of these systems a criticism of the country that runs it — each reflects a different judgement about who should carry the risk. But it does mean that “my gratuity” describes three quite different things across three neighbouring states, and the calculation you learned in one will not travel.
Common questions
Under Article 51 of Law No. 6 of 2010, a monthly-paid worker accrues 15 days' wages for each of the first five years of service and one month's wages for each year after that, capped at one and a half years' pay. Workers paid daily, weekly, hourly or by the piece accrue 10 days a year for the first five years and 15 days a year thereafter, capped at one year's pay.
Yes. Article 53 reduces the Article 51 entitlement where a worker on an indefinite contract ends the relationship: nothing below three years, one half from three to under five, two thirds from five to under ten, and the full amount at ten years or more. This is a live rule in Kuwait, unlike the UAE, where the equivalent 1980 provision was repealed and no reduction for resignation applies.
Employers stopped paying leaving indemnity directly to departing foreign employees. Under Order No. 109 of 2023, amending Law No. 36 of 2012, they now remit monthly to the Social Insurance Organisation at 4.2% of monthly basic salary for the first three years of service and 8.4% thereafter, within the first fifteen days of each month. The employee claims from the SIO on leaving.
Because they reproduce the previous formula. Roughly 4.2% a month across a year is about half a month of basic pay, and 8.4% is about a full month, which matches the shape of the old indemnity accrual. The reform was designed to change who holds the money during your employment rather than how much you end up with.
Article 61 of the Labour Law issued by Royal Decree 53/2023 provides for not less than the basic wage for each year of service, calculated on the final basic wage, with pro rata payment for part years. In practice this is read as one month's basic wage per year. Service before 31 July 2023 keeps the older formula of 15 days a year for the first three years and one month a year after that.
On 19 July 2027, for non-Omani workers, with employers contributing 9% of the insured worker's monthly basic wage into an individual account under the Social Protection Law. Gratuity accrued before that date remains payable by the employer under the Labour Law, so service either side of the start date is calculated in two parts.
We cannot confirm it. One recent client alert states a guaranteed minimum of 2% a year. A reading of Article 141 of the Social Protection Law indicates that a saver receives contributions plus investment returns and that the regulations may specify a minimum, with none currently mandated. Because the sources conflict, we are not publishing a figure until the executive regulations settle the question.
On basic pay in all three countries: Bahrain contributes on monthly basic salary, Oman calculates on the final basic wage, and Kuwait's Article 51 refers to wages. Since Gulf packages often place a large share of the total in housing and transport allowances, a high total package with a low basic produces a smaller entitlement than the headline number suggests.
Next steps
- Find the basic salary line in your contract, separate from allowances. That figure, not your total package, drives the calculation in all three countries.
- In Kuwait, check your completed service against the Article 53 bands before you set a resignation date, since the thresholds at three, five and ten years change the proportion payable.
- In Bahrain, confirm with your employer that SIO contributions are being remitted monthly, since the entitlement is now claimed from the SIO rather than from the employer.
- In Oman, work out how much of your service falls either side of 31 July 2023, because the two periods use different formulas.
- Read the primary instrument for your own country in the sources below before relying on any figure quoted elsewhere, including ours.
Further reading on ExpatWealthPlus
- End of service compared: UAE, Saudi Arabia and Qatar
- UAE gratuity calculator
- UAE gratuity: resignation versus termination
- Reading a Gulf job offer financially
- What to do with an end-of-service payout
Official sources
Every figure in this article is checked against the primary source. These are the places to verify the current position for yourself, since rates, rules and product terms change.
- Kuwait Public Authority for Manpower — Labour Law No. 6 of 2010 →The authority publishes the statute; Articles 44, 51 and 53 govern notice, indemnity and resignation
- Bahrain — the SIO leaving indemnity system →Effective 1 March 2024; contribution rates, the fifteen-day deadline and the late payment penalties
- Oman — Royal Decree 53/2023, the Labour Law →Article 61 on end-of-service gratuity for workers outside the Social Protection Law
- Oman — how the savings system works until July 2027 →The 19 July 2027 start, the 9% contribution and the treatment of gratuity accrued before it
- Oman Social Protection Fund — Provident Scheme →The fund's own page on the scheme replacing gratuity for non-Omani workers