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Mercans CountryIntel ® Kuwait Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in Kuwait

Bolstered by vast oil resources, Kuwait has the fifth largest oil reserves in the world after Venezuela, Saudi Arabia, Iran and Iraq. Kuwait has launched a mid range economic development plan that focuses on transport, utilities, industrial special zones, a technology park and a logistics zone.

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Doing Business in Kuwait

Kuwait follows a civil legal system with islamic law significant in personal matters. The transparent legal system has a proper separation of legislative, executive and judicial branches. Many laws are conducive to the investment climate and there are other laws approved for fostering the role of the private sector (promotion of direct investments, privatization program and public private partnership).

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Kuwait is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banking Hours: 8:00 am to 3:00 pm from Sunday to Thursday

Working Week

The standard working week is from Sunday to Thursday from 9:00 am - 6:00 pm

Labor Law

Law No. 6 of 2010 concerning labor in the private sector regulates the private sector workforce in Kuwait. This applies to both foreign national employees and Kuwaiti nationals. This provides the minimum mandatory rules that must be met regardless of any choice of law in the employment contract.

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Main Industries

Petroleum, petrochemicals, steelmaking, cement, shipbuilding and repair, desalination, food processing, construction materials

GDP Growth

11.20%

Dates & Numbers

dd/mm/yyyy

Official State Name

State of Kuwait

Population

4.271 million

Capital

Kuwait City

Major Languages

Arabic

Currency

Kuwaiti Dinar (KD)

Internet Domain

.kw

International Dialing Code

+965

Kuwait
Kuwait City, KW
12:41 pm, December 2, 2022
23°C
clear sky

Payroll

Article 56 of the Kuwait labor law states that employees hired on monthly pay should be paid wages at least once a month while other workers shall be paid at least once every two weeks. Common pay elements include basic salary, housing allowance, transport allowance and living contribution. Variable elements include overtime, sales commission, relocation allowance, leave passage and more.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept for 5 years

Reports

Employees receive paid annual leave of 30 days

Annual Leave

Employees receive 15 days full pay if they’ve worked in that company for at least one month

Sick Leave

70 days of paid maternity leave. There are no provisions for paternity leave

Maternity & Paternity Leave

1 month

Employee Termination

There is a 13th and 14th month salary that is paid as 50% of the employee’s monthly salary

13th month salary

75 KWD per month

Minimum Wage

Overtime payment of 125% the normal rate of pay if an additional 2 hours have been added to the regular hours

Overtime

Employees paid monthly are entitled to 15 days’ pay for each year of employment for the first five years of service

Severance Pay

Tax and Social Security

Kuwait is an income tax free jurisdiction, that is, tax is not applicable to income earned from employment in Kuwait. However, the government imposes a mandatory social security contribution on all employees who are citizens which must be paid by both employers and employees.

Tax

Taxi residency is not relevant to income taxation in Kuwait. However, if a foreign company conducts business in Kuwait through an agent, a 15% income tax is applied to its net income.

15%

Corporate Income Tax

-

Personal Income Tax

-

Sales Tax

-

VAT

Social Security

Contributions are payable monthly by both the employer and employee. There are currently no social security obligations for expatriate workers in Kuwait.

22%

Social Security Rate

11.5%

Social Security Rate for Employers

10.5%

Social Security Rate for Employees

Employment Law

The Kuwaiti government has taken proactive steps in implementing exceptional measures due to the COVID-19 pandemic. An employer cannot force an employee to take their annual leave during this period. Further, the employee’s remuneration may not be reduced for any reason during their period of service. The employer shall pay the employee’s remuneration during periods when work is totally or partially suspended for any other reason not related to the employee, for as long as they wish to employ the individual.

Employment Agreement

Employment contracts must be in writing and include key terms such as the date of the agreement, details of the employee’s remuneration, duration of the contract and nature of work. Companies which operate a multi-country payroll should take note that such an agreement must be drafted in triplicate with a third copy deposited at the General Authority for Labour Force (Public Authority of Manpower)

Working condition

Employees must work a maximum of 48 hours per week and must be given a rest day following a 48 hour working week. Rest breaks (one hour) must be given following five continuous working hours. Employees cannot work more than two hours of overtime each time.

Leaves

Employees must be given at least 30 days’ paid holiday each year following one year of service with the employer. Employees are entitled to 75 days of sick leave with variable pay (first 15 days at full pay, following 10 days at three quarters of pay, following 10 days at half pay, following 10 days at quarter pay and following 30 days without pay).

Employment termination

Employees are not entitled to management representation in a redundancy or disposal. If the employee believes they deserve a bonus or that they were wrongly dismissed, they should approach the relevant labor authority and put in a claim. Generally, the laws that apply to termination depend on whether the employee is on a fixed term employment contract or an open-ended one.

1 month

Minimum notice period for terminating an employee

8

Total number of public holidays

40

Working hours per week

Up to 3 days

Total number of days for Compassionate & Bereavement Leave

Immigration

Work permits must be obtained to work in the private sector. Employers are considered the sponsors of employees and must apply for work permits on the employee’s behalf. Following months of debate, a Kuwaiti health insurance committee has set the annual fees for the service (mandatory for expatriates over 60 who are renewing their work permits in the country) at KD500 per person. Expatriates over 60 who hold no university degree are now able to apply for the renewal of their work permits under new rules that ended a months-long ban on their employment.

Residency permits

For foreign national employees who want to work in Kuwait for longer than three months, the employer must apply for a residence permit at the Immigration and Passport Department. A maximum period of five years is granted. Where employees wish to work for three months or less, a temporary commercial visit visa must be obtained (which is issued for one month).

Work Permit validity

Four years

Required Documents

Evidence of domicile or hotel reservation. If accommodation is provided by the employer, the latter must provide a certificate to confirm he is taking up the housing costs

Copies of your passport.

Copies of all your diplomas and degrees,

2 identification sized photos.

Four passport-size photos taken within the previous 6 months.

Passport (valid for at least 6 months from date of exit of Morocco, and with at least one blank page), with a photocopy of the relevant data pages.

Fee (payable by postal order only).

Evidence of employment or bank statements.

Photocopy of the flight ticket(s)

Completed application form

Copy of the invitation letter issued by the company you are planning to work with.

Copy of your employment contract.

Business letter from employer

Work experience evidence

Compliant, reliable, error-free and touchless payroll in Kuwait

Build the best team and hire top talent compliantly in Kuwait. Get in touch with Kuwait payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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