Kuwait

Kuwait PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Kuwait to companies willing to enter the Kuwaiti market or hire local/expat employees in this area.

The widespread approach requires establishing a subsidiary in Kuwait.  Instead of that our solution allows you to start the operations in Kuwait within days hence save time and money.  WeHG would hire candidates on your behalf while you sustain full operational control of their work. So justly they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Kuwait fast facts

Population, million: 4
Land area:  17,818 km²
Capital: Kuwait City
Local currency: Kuwaiti dinar (KWD)

GDP per capita:$ 32697.33
GDP in currency:$ 67,891

Kuwait, a country of the Arabian Peninsula located in the northwestern corner of the Persian Gulf.

A small emirate nestled between Iraq and Saudi Arabia, Kuwait is situated in a section of one of the driest, least-hospitable deserts on Earth. Its shore, however, includes Kuwait Bay, a deep harbour on the Persian Gulf. There, in the 18th century, Bedouin from the interior founded a trading post. The name Kuwait is derived from the Arabic diminutive of the Hindustani kūt (“fort”). Since the emirate’s ruling family, the Āl Ṣabāḥ, formally established a sheikhdom in 1756, the country’s fortunes have been linked to foreign commerce. In time and with accumulated wealth, the small fort grew to become Kuwait city, a modern metropolis mingling skyscrapers, apartment buildings, and mosques. Kuwait city has most of the country’s population, which makes Kuwait one of the world’s most-urbanized countries.

Hiring, Negotiating and Doing Business in Kuwait

Necessity of written employment contract

The written employment contract is to be signed before accepting any job in Kuwait. The contract will contain the employee’s terms of service. A fixed time or indefinite terms of service may be given by the employer to the employee. The term of service which does not exceed five years is considered a fixed time.

An employment contract gives a fair idea about the description of the job, date of appointment and service length (if fixed), and remuneration payable. Arabic is the medium of language used for written contracts. A contract translated into another language may be attached when resolving disputes, but, the court of law will take into consideration only the Arabic version.

Different forms of engagement: employment, contracting, work with private entrepreneur

The following types of organizations are available under Kuwait law: Limited Liability Company; Joint Stock Company; General Partnership; Limited Partnership; and Joint Venture.

With the exception of the joint venture, all these forms of incorporation are endowed with independent legal personality.

As a general rule, the Kuwaiti Commercial Companies Law requires all business forms to have at least 51 percent Kuwaiti participation. In addition, the Commercial Companies Law provides that foreigners may engage in a business or trade in Kuwait only through a business structure in which at least 51 percent of the capital is Kuwaiti.

Foreigners wishing to conduct business in Kuwait may find it easier to do so following recent changes to the Commercial Companies Law. This legislation, enacted in 1992 and amended, allows holding companies to be created to hold stock or shares in and to participate in establishing Kuwaiti or foreign limited liability companies. Holding companies are also entitled to grant loans or guarantees to such limited liability companies as well as to manage such companies, hold industrial and intellectual property rights, grant licenses thereto and own moveable and immovable property.

Kuwait Employment Contract

Types of employment agreements

In 2016, the regulatory body known as the Kuwaiti Ministry of Social Affairs and Labour (“MOSAL“) issued a new standard form employment contract (the “New Short Form Contract“) template in Kuwait for all private sector employees. As previously required, there must be three copies of each contract of employment; one copy for each party (employer and employee) and the third copy must be lodged with MOSAL.

In accordance with the Kuwaiti Labour Law, the previous short-form contract only required the following elements: (i) the signing of the effective dates of the contract; (ii) the amount of remuneration; (iii) the term of the contract, namely whether it is for a specified term or unspecified; and (iv) the nature of the work.

Kuwait working hours

Eight hours a day and 48 hours a week is the required working hours for an adult worker. An employee must be allowed an hour rest or break after five consecutive hours of work. This one hour rest or break is not included in computation of working hours. MSAL can modify these standard working hours on case to case basis.

Overtime

An employee may be required to work overtime, provided, it is necessary and the employer’s order is in writing. Overtime rates are 1.25 times the basic hourly rate for excess hours worked on ordinary days, 1.50 times the basic hourly rate for all hours worked on the weekly day off and twice the basic hourly rate for all hours worked on public holidays.

Overtime working is only permitted for maximum 90 days a year, and is limited to additional two hours a day, 6 hours a week and 180 hours a year. The employee has the right to refuse overtime work.

Vacation leave in Kuwait

Employees are allowed to take 14 whole days of leave annually for completion of one year of service, and 21 days of leave every year after five continuous years of service. These annual leave do not include sick leave and official holidays. The employer is given the power to schedule the date of employees leave. In case of employee’s termination of service, the employee is entitled to receive cash payment in lieu of accumulated leave. This is irrespective of the number of years of leave due. Payment for accumulated leave should be computed on the basis of last salary payable on termination date.

Kuwait Maternity Leave

An expecting mother is allowed to take a paid leave, lasting 70 days, provided, her due date for delivery falls within that period. New mothers can also apply for unpaid leave of upto four months. The law prohibits employers from terminating the contracts of female workers during this period, or if they are sick due to associated issues during delivery. Once the new mother gets back to work, she is granted 2 hours break from normal work hours to nurse her baby.

Employers who have 50 women or 200 men working in their establishments are required to set up a day care centre for children below four years of age.

Kuwait Severance Laws

A workers severance pay shall be calculated as follows:

  • Fifteen days pay for each year; he shall be paid for fraction of a year its equivalent. The severance pay cannot exceed in total one and a half years wages.
  • In calculating the severance pay the last wage paid to the worker shall betaken into account, including increments, bonuses or allowances.

Kuwait Tax

Personal income tax – no

Social security contributions due by an employer and an employer

The most important change is a substantial reduction in the income tax rate on net profits of foreign entities doing business in Kuwait. The new tax law stipulate a flat rate of 15% instead of the current rate, a range of 5% to 55%, depends on the earnings above KD.5,250/-. The 15% tax will be levied on the income of any entity carrying on a trade or business in Kuwait, regardless of where the company is incorporated. The new flat tax rate will result in a significant decrease in the tax liability of such foreign entities.

Health Insurance Benefits in Kuwait

Employers are obliged to take precautions to protect their employees against physical hazards and occupational diseases at work. They are required to ensure that their work places are clean, well ventilated, and in sanitary condition. Employers are required to supply first aid kits containing medicines, antiseptics and bandages and place within visible reach of employees.

An appropriate transport should be provided by the employer to his employees who are working in areas not covered by public transport. An accommodation with drinkable water, and a means to obtain supplies should also be provided by the employer if his employees are working in remote areas.

Sickness benefit  

An employee is entitled to sick leave, subject to a satisfactory medical report.  An employee is eligible for sick leave of 40 days. This is inclusive of full pay for first 10 days, 75 percent pay for next 10 days, 50 percent pay for the following 10 days, and 25 percent pay for last 10 days. If an employee has consumed his 40 days of sick leave, he or she is still eligible for about 30 days of unpaid sick leave.

Additional Benefits in Kuwait

Compensations. According to Article 51 of Labour Law, a worker will receive end-of-service compensation in full at the end of contract period. This is equivalent to 10 days of pay for first five years, and from the sixth year it increases to 15 days pay.

The employee is eligible for full indemnity if the contract is terminated by the employer, or the contract ends without being renewed. A female employee can get full indemnity if she terminates the contract from her end due to marriage within a year from her marriage date.

Article 53 of the Labour Law states that employee who resigns from his work should still be paid a part of his compensation. For year of service, he deserves half month’s salary as compensation, but, this is given only to those who worked for more than three years and less than five years.

Seventy-five percent of monthly salary every year is given to employees who worked for more than five years but less than 10 years of service.

All employees who served for more than 10 years are given full month’s salary as compensation for every year of service.

If an employee is injured at work, the employer should report the matter to local police station and MSAL. The injured employee has the right to treatment at employer’s expense in any government hospital or private clinic, whichever the employee considers suitable. A doctor’s report stating treatment period required, disability arising out of accident and fitness to continue to work need to be obtained.

An employee is entitled to compensation for injuries pertaining to work. An employee’s family is entitled to compensation if the employee is not guilty of malpractice or intentional injury. The employee’s family has the right to claim compensation if the employee’s injuries have caused him more than 25% disability or dies. Even if the employee is guilty of gross malpractice, the family will still be compensated.

The amount of compensation is based on severity of the injury. If the injury results in death, total amount of 1500 days salary or more is given. The current legal blood money is KD10,000. Employees with permanent disability will be compensated to the total amount of 2000 days salary or more. One and one-third times the legal blood money will also be provided.

General market practice benefits/additional allowances

Since the COVID-19 pandemic outbreak began on 24 February 2020, Kuwait’s business activity has severely slowed down. The Kuwaiti government took strict measures to contain the spread of the virus, resulting in a combination of travel restrictions, forced business closures and supply chain disruptions. As a result, SMEs have been struggling to pay salaries and rent expenses without reducing payroll or making layoffs. This is the case mainly for those who work in the retail, hospitality, travel and transportation sectors. However, compared to other economies, the combined share of these sectors is relatively small in Kuwait: below 10% of total GDP, according to a report from the National Bank of Kuwait (NBK).

Due to the Kuwaiti government’s strict measures, operational constraints are expected to lead to congestion, delivery delays and higher freight rates, according to an IFC report. However, not all segments will be impacted equally. Entrepreneurs who shifted their businesses online increased their activities, as consumers moved to shopping from home.

Kuwait Holidays

An employee has the liberty to enjoy one whole day off per week. The day off is without pay and is traditionally scheduled during Fridays. However, this is not a legal requirement in Kuwait. There are eight holidays in a year, where an employee is entitled to enjoy full payment. The holidays are as follows:

Hijri New Year’s Day (1 Day), Ascension Day (1 day), Eid Al Fitr (2 days), Eid Al Adha (2days), Prophet Mohammed Birthday (1 day), National Day (1 day). There is also a holiday for Liberation Day, but for private sector, it is not a statutory holiday.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Kuwait

  • Working hours in Kuwait

    Eight hours a day and 48 hours a week is the required working hours for an adult worker. An employee must be allowed an hour rest or break after five consecutive hours of work. This one hour rest or break is not included in computation of working hours. MSAL can modify these standard working hours on case to case basis.

  • What are the main holidays in Kuwait

    • Hijri New Year’s Day (1 Day)
    • Ascension Day (1 day)
    • Eid Al Fitr (2 days)
    • Eid Al Adha (2days)
    • Prophet Mohammed Birthday (1 day)
    • National Day (1 day)
  • What are payroll taxes in Kuwait?

    Personal income tax – no. Social security contributions due by an employer and an employer The most important change is a substantial reduction in the income tax rate on net profits of foreign entities doing business in Kuwait. The new tax law stipulate a flat rate of 15% instead of the current rate, a range of 5% to 55%, depends on the earnings above KD.5,250/-. The 15% tax will be levied on the income of any entity carrying on a trade or business in Kuwait, regardless of where the company is incorporated. The new flat tax rate will result in a significant decrease in the tax liability of such foreign entities.

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