In Kuwait, the labor law outlines specific notice periods that must be adhered to during the termination of indefinite term contracts. These periods are designed to protect the rights of both employers and employees.

Notice Period for Indefinite Term Contracts

According to Article 30 of the Labor Law, a minimum notice period is required for terminating indefinite term contracts. The length of this notice period depends on the employee's pay schedule:

• For monthly salaried employees, a three months' notice prior to the termination date must be given by either the employer or the employee.
• For employees paid on a different schedule, a one month's notice prior to termination is required.

During the notice period, the employer has the right to excuse the employee from work duties. However, the notice period is still considered part of the employee's service term, and the employee is entitled to their full salary and benefits throughout this period.

It's important to note that these notice periods are the minimum requirements. An employment contract can stipulate a longer notice period, but it cannot be shorter than what the law prescribes.

Probation Period

The labor law in Kuwait also specifies a probation period within employment contracts. This probation period can be a maximum of 100 working days. During this period, either party can terminate the contract without notice. If the employer terminates during probation, they must pay the employee their terminal service indemnity for the worked period as per the labor law. An employee cannot be placed under probation with the same employer for more than one term.

In Kuwait, employees who are terminated from their employment are generally entitled to severance pay, also sometimes referred to as "end-of-service indemnity".

Eligibility for Severance Pay

According to Article 51 of Kuwait's Labor Law, employees are entitled to severance pay in the following termination situations:

• When the employer terminates the contract for various reasons, ranging from company restructuring to employee performance.
• If a fixed-term contract expires and is not renewed by the employer.
• If a female worker resigns within a year of marriage.
• Termination due to reasons outlined in Article 50 of the labor law, which include instances beyond the employee's control, such as employer breaches of contract.

Calculation of Severance Pay

The calculation of severance pay depends on the employee's pay schedule and length of service:

For Monthly-Paid Employees

• For the first five years of service, the severance pay is 15 days' pay for each year of service.
• For subsequent years, it's 30 days' pay for each year of service.
• The maximum entitlement for severance pay is capped at 18 months' worth of salary (1.5 years).

For Employees Paid on a Different Schedule

• For the first five years of service, the severance pay is 10 days' pay for each year of service.
• For subsequent years, it's 15 days' pay for each year of service.
• The maximum entitlement for severance pay is capped at 12 months' worth of salary (1 year).

Important Factors in Severance Pay

• Severance pay is calculated based on the employee's last basic salary.
• Severance pay for partial years is calculated proportionally.
• Employees who resign may receive reduced severance entitlements based on their length of service.

The termination of an employee in Kuwait, whether initiated by the employer or employee, must follow a specific process as outlined in the country's labor laws.

Termination by the Employer:

1. Valid Reasons: An employer can only terminate an employee for legitimate reasons. Article 41 of the Kuwait Labour Law outlines the acceptable justifications, which include gross misconduct by the employee, repeated failure to fulfill contractual obligations, repeated violations of safety instructions, imprisonment of the employee, and economic or organizational reasons leading to downsizing.

2. Written Notice: Unless the termination is due to gross misconduct, the employer must provide a written notice of termination.

Termination by the Employee:

1. Written Notice: The employee must provide written notice of their resignation.

Special Cases

• Probation Period: Either party can terminate a contract during the probation period without notice provided by either party.
• Fixed-term Contracts: If a fixed-term contract ends and the employer doesn't renew it, the employee is entitled to severance pay.

Dispute Resolution

• Labor Courts: If disputes arise between the employer and the employee regarding termination, the matter can be referred to the Kuwaiti Labor Courts for resolution.