How To Hire And Pay Employees In Kuwait

If you are thinking about expanding to the Middle East region, Kuwait should be on your radar. In recent times, the government’s interest in driving external business into the country is increasing. Newly approved laws make it possible for foreign individuals to do business within the country (in certain sectors) while still holding 100% of their business equity.

With almost 70% of the population being expatriates, the country population is young, educated and has good English proficiency levels.

Partnering with an already established entity can accelerate the business setup time and avoid non-compliant situations.

There are specific rules for foreign/Kuwaiti individuals but employee costs in Kuwait are expected to be 10-15% of their salary.

Employees are entitled to 14 days’ annual leave after completing one whole year of service, and 21 days’ annual leave every year after five years of continuous service. There are eight public holidays in Kuwait.

January 1st: New Year's Day 
February 15th: National Day 
February 26th: Liberation Day 
March 1st: Lailat al Miraj
May 1st: Eid al-Fitr
July 9th: Eid al-Adha
July 30th: Islamic New Year
October 9th: Milad un Nabi

A probation period can be no longer than 100 days.

Termination requires three months' notice from either side for employees paid a monthly salary, or one month for all others. A contract can be terminated without notice or compensation in the event that the employee caused a significant monetary loss, committed fraud, or disclosed secrets that led to losses. Employees who are paid on monthly basis shall be entitled to 15 days’ severance payment for each of the first five years of service and one month for each year thereafter. The total end of service benefit shall not exceed 18 months' remuneration.

It is acceptable to have restrictive covenants contained in the Kuwaiti contract of employment, provided that the employee has become acquainted with the employer's clients or the secrets of the business and the covenants are reasonably drafted in relation to their duration, geographic scope and the nature of the business to be protected. Parties are permitted to include a liquidated damages clause in the contract of employment as it is generally not possible to obtain an injunction in Kuwait; however, any such penalty should not be exorbitant. Non-compete clauses and customer non-solicit clauses typically last no longer than 12-24 months. Employee non-solicits are also permissible.

Under Kuwaiti Labour Law, the employee needs to sign a written employment contract in Arabic and in a second language upon the request of an employee. In the case of a dispute, the Arabic version prevails over an employment contract in any other language.

An employment contract can be for either a definite or indefinite term. A definite-term employment contract should not exceed five years and should not be for less than one year. After the initial fixed period, the contract can be renewed, or is deemed to be renewed if both the parties continue performance following the expiry date.

An employee of a foreign employer who physically works in Kuwait typically signs two contracts: an employment contract with the foreign (or primary) employer; and an employment contract with the agent (or secondary) employer. The second, or local, contract is an essential part of the work permit application and for the purposes of Kuwait law, the local employment contract is the official contract that is registered by the agent with the MSAL. Although the first employment contract outlined here is optional, it is widely used by foreign employers to provide the full foreign employment structure and benefits to employees, while at the same time complying with the Labour Law.

Expectant mothers in Kuwait are entitled to 70 days’ paid maternity leave, and up to four additional months’ unpaid leave. There are no provisions in Kuwaiti law regarding paternity leave.

Employees in Kuwait are entitled to sick leave, provided they can produce a satisfactory medical report. The allowance is as follows:

• First six days of illness: 100% salary
• Next six days of illness: 75% salary
• Next six days of illness: 50% salary
• Next six days of illness: 25% salary

This is the total annual entitlement and not per period of sickness.

The employer is required to contribute as follows:

• Pension and Disability: 11%
• Unemployment: 0.5%

Kuwait has a state-funded health system that is 'free at the point of entry' for Kuwaiti nationals. Non-citizens who are resident in Kuwait are entitled to a health insurance card for which they pay an annual fee.

It is mandatory for expat workers in Kuwait to have health insurance of some description. Foreign citizens will not be permitted an entry visa for the country without health insurance, usually private. Though it is not mandatory for this to be provided by the employer, it is advisable and will create a more attractive work prospect for your foreign employee.

Employment visas can only be obtained by a Kuwaiti employer. There is no system in Kuwait that allows an individual to obtain an employment visa from a foreign employer by him or herself. An employer (or the Kuwaiti sponsor in the case of the foreign employer) is not permitted to hire expatriate staff without registration at, and authorisation from, MSAL. In addition, an employer in Kuwait may not hire a foreigner who is not under that employer’s sponsorship. These requirements that tie an expatriate’s residency status to his or her employment status are fundamental to the control of the labour force in Kuwait.

 

There is no minimum wage in Kuwait.

There is no personal income tax in Kuwait.

Salary payments should be made monthly.

The employee contributes 10% of their salary to a Pension & Disability fund, in addition to the employer contribution of 11%.

The employee contributes 0.5% of their salary to an Unemployment fund, in addition to the employer contribution of 0.5%.