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Hiring in Kuwait
Kuwait, officially known as the State of Kuwait, is a country in Western Asia. Kuwait City is the capital and the largest city of Kuwait. Kuwait is one of the wealthiest countries in the world. It is a petroleum based economy. The most significant non-oil industry is steel manufacturing. Kuwait’s main trading partners are Saudi Arabia, United Arab Emirates, India, United States, Germany and China. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Kuwait’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 30 days of annual leave. There is no personal income tax (PIT) imposed on individuals in Kuwait. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Kuwait’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Any probationary period must be specified in the work contract and may not exceed 100 working days
Annual Leave
- Employees in Kuwait are entitled to a 30-day annual leave with pay.
- However, this can only be availed until he/she has rendered at least 9 months of continuous service under one employer.
Public Holidays
- New Year's Day (1st to 2nd January)
- Kuwait National Day (25th to 27th February)
- Kuwait Liberation Day (26th February)
- Prophet's Ascension
- Eid al-Fitr
- Day of Arafat
- Eid al-Adha
- Islamic New Year
- Prophet's Birthday
Maternity Leave
- Female employees are entitled to 30 days of maternity leave before the expected due date and 40 days after the birth of the child.
- Pregnant women are also entitled to take 100 days of leave, consecutive or not, after the maternity leave, but they are not eligible for pay and must present a medical certificate as proof that they are unable to work.
Paternity Leave
- There is no statutory paternity leave.
Sick Leave
- Employees are entitled to the following sick leave provided that a doctor’s medical report is presented:
-
- 15 days with full salary
- 10 days with 3/4 salary
- 10 days with 1/2 salary
- 10 days with 1/4 salary
- 30 days without salary
Work Hours
- In Kuwait, the working week is generally 40 to 48 hours, although in Ramadan the work day is reduced to six hours.
- Some companies only reduce the hours for Muslims, but legally it applies to all employees.
- Fridays are the rest day. International companies generally have Saturdays off as well, but local companies are more likely to have Thursdays off.
Overtime
- An employer may require his employees to render work overtime provided that it is needed and it has a written agreement or order.
- Below is the list of the overtime rates of pay:
-
- 1.25 times the basic hourly rate for excess hours worked on regular working days
- 1.50 times the basic hourly rate for all hours worked on the weekly day off
- Twice the basic hourly rate for all hours worked on public holidays
- Overtime is only limited to 2 hours a day, 6 hours per week and 180 hours a year and should not exceed 90 days in a year.
Notice Period
- Under indefinite period employment contracts under which the employee is paid on a monthly basis, both the employer and employee have the right to terminate the contract with three months of advance notice.
Severance
- For employees who have been with their organization for under five years, they are entitled to 15 days’ compensation for each year completed.
- For employees who have over five years with their employer, they are entitled to 30 days’ compensation for each year worked.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- There is some evidence that some companies may give bonuses and when those are in contracts they will be obliged to pay them out.
income tax
- There is no personal income tax (PIT) imposed on individuals in Kuwait.
deductible expenses
- There is no personal income tax (PIT) imposed on individuals in Kuwait.
- Hence, there are no deductible expenses.
immigration
- Under Kuwait labor law, work permits are issued by the Public Authority of Manpower.
- As a result of a shortage of qualified Kuwaitis, a large part of the workforce in Kuwait is made up of non-Kuwaiti Arabs, Europeans, Americans and Asians.
- It is expected that the employment of expatriate workers will continue to be essential for the foreseeable future.
- Employers must obtain work permits from the Public Authority of Manpower for foreign, nationals, GCC nationals and Kuwaitis.
- Foreign nationals, other than the GCC nationals, get residency in Kuwait based on the period of the work permit, to take up employment.
- All expatriates must have Kuwaiti sponsors to obtain work permits.
- Work permits are issued by the Public Authority of Manpower after the authority considers various factors, including an employer’s requirement for the labor, the availability of labor in the country and the composition of the population of the country.
- Issuance of work permits is sometimes banned temporarily based on the aforementioned factors.
- It usually takes one month to obtain a work permit if no ban is in effect.
- Work permits must be activated by employees when they arrive to take up residence in Kuwait, with a fee of KWD60, KWD70 or KWD80 for one, two or three years, respectively.
- The permits are valid for a maximum of three years from the date of issuance.
- To obtain a work permit, an employer must submit a copy of the employee’s passport (not less than two years from the expiration date) and signed application form.
- In certain cases, authenticated copies of the educational certificates of the employees must also be submitted.
- After the work permit is issued, it is sent by the employer to the country of origin of the foreign national for presentation at the point of entry into Kuwait.
- The employee must have a work visa to enter Kuwait.
- The employer arranges for the work visa.
- The employee is required to obtain attested copies of his or her university degree and police clearance certificate from his or her country of residence and provide these to the employer after he or she arrives in Kuwait.
- After the employee enters Kuwait on a work visa, the employer will have the work visa converted into a work permit.
- Medical examination is required twice, in the home country of the employee and before getting the residency on the passport.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Entrance Visa |
|
90 days |
|
|
Work Permit |
|
Maximum 3 years |
|
value added tax
The tax authorities in Kuwait recently announced that it will finally introduce Value Added Tax (VAT) at 5% from 1 April 2021
withholding tax
- There is no withholding tax in Kuwait
termination
- Under indefinite period employment contracts under which the employee is paid on a monthly basis, both the employer and employee have the right to terminate the contract with three months of advance notice.
- If the employer or employee wishes to terminate in advance of the required three-month notice period, then the party wishing to terminate must pay the other party a compensation for the notification period equal to the remuneration of the employee for the same period.
- When the employer gives notice, the employee has the right to take 8 hours paid leave per week during the notice period to search for other work.
- The employer may exempt the employee from working during the notice period, but the employee is still entitled to count the notice period within the period of service for purposes of calculating any amounts due.
- The worker who terminates his work contract shall be entitled to an end of service certificate from the employer stating the duration of his services, his position and the last remuneration he received.
- The employer shall not have the right to include, explicitly or implicitly, any expressions that may harm the employee or limit his employment prospects.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- There is currently no PIT regime in Kuwait.
- Accordingly, individuals are not required to file PIT returns in Kuwait.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Kuwait ranked 83rd in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay that equals two weeks of pay after one year of service (2.74% of annual salary)
|
|
Vacations %
|
Employees are entitled to an annual holiday of 30 days (8.24% of annual salary)
|
|
Notice %
|
Employees are entitled to 3 months of notice period for one year of service or more (25%)
|
|
Christmas Bonus Over Notifications%
|
0%
|
|
Vacations Plus%
|
Workers are allowed 21 days to perform Hajj if they have not done it before.
5.76% |
|
Total percentage of Salary (yearly)
|
The total employment accruals as a percentage of salary per anum are equal to 41.74%
|
employer accruals
Additional information (Country Accruals)
| Social security ceiling | 2750 Kuwait dinars |
| Social security contributions | 11.50% |
| Maternity | 70days |
| Vacations | 13.15% |
| Severance per year of service | 4.11% |
| Description | For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s contribution is 11.5% and the employee’s is 8% of monthly salary, up to a ceiling of 2,750 Kuwaiti dinars (KWD) per month. Benefits provided include pensions on retirement and allowances for disability, sickness, and death. In addition to the above contributions, effective 1 January 2015, the employee’s contribution under the Social Security Law will increase by 2.5% of the monthly salary, up to a ceiling of KWD 1,500 per month. Currently, there are no social security obligations for expatriate workers in Kuwait. However, for such expatriate workers, the Kuwait Labour Law provides for terminal indemnity payments (applicable only to those who have completed three years of their service) calculated at 15 days’ pay-per-year for the first three years of service and 2/3 month’s pay-per-year thereafter. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Employees in Kuwait are entitled to a 30-day annual leave with pay. | This equals 8.22% (30/365 days) of annual income |
| Maternity Leave | Female employees are entitled to 30 days of maternity leave before the expected due date and 40 days after the birth of the child. | This equals 19.2% (70/365 days) of annual income |
| Sick Leave | Employees are entitled to the following sick leave provided that a doctor’s medical report is presented: • 15 days with full salary • 10 days with 3/4 salary • 10 days with 1/2 salary • 10 days with 1/4 salary • 30 days without salary |
This equals 4.1% (15/365 days) of annual income |
| Overtime | Below is the list of the overtime rates of pay: • 1.25 times the basic hourly rate for excess hours worked on regular working days • 1.50 times the basic hourly rate for all hours worked on the weekly day off • Twice the basic hourly rate for all hours worked on public holidays Overtime is only limited to 2 hours a day, 6 hours per week and 180 hours a year and should not exceed 90 days in a year. |
Normal hourly rate is around 7.8 KWD. Overtime is paid at an additional 3.9 KWD. |
| Severance | For employees who have been with their organization for under five years, they are entitled to 15 days’ compensation for each year completed. For employees who have over five years with their employer, they are entitled to 30 days’ compensation for each year worked. |
This equals 4.1% (15/365 days) of annual income |
| Social Security | For Kuwaiti employees, contributions are payable monthly by both the employer and employee under the Social Security Law. The employer’s contribution is 11.5% |
This equals 11.5% of annual income |
