Employer of Record (EOR) Kuwait

EOR Solutions in Kuwait

Employment Contracts in Kuwait

The Labour Law stipulates the requirement for a written employment contract in both Arabic and a second language upon the employee’s request. In the event of a dispute, the Arabic version takes precedence over any contract in another language.

Employment contracts can be either for a definite or indefinite term. Definite-term contracts must not exceed five years, with a minimum duration of one year. Renewal of a definite-term contract is possible by mutual agreement after the initial fixed period. However, if both parties continue performance after the expiry date, the contract is automatically considered renewed on the same terms, except that the period becomes indefinite.

Private-sector employees are entitled to a minimum wage of KD60 per month. Foreign employees working in Kuwait under a foreign employer usually sign two contracts: one with the foreign (primary) employer and another with the local (secondary) employer or agent. The local contract is an integral part of the work permit application, registered by the agent with the MSAL, and outlines essential details such as name, position, salary, payment category, and the contract’s term. While the first employment contract is optional, it is commonly used by foreign employers to align with the Labour Law while providing a comprehensive employment structure and benefits to employees.

Working Hours 

Typically, the working week in Kuwait ranges from 40 to 48 hours, depending on the specific policies of the company. Office hours generally commence at 8:30 am or 9:00 am and conclude at 5:30 pm or 6:00 pm.

Probation Period 

The Kuwait Labor Law recognizes the significance of the probation period by offering guidelines regarding its duration. In general, the probation period should not extend beyond 100 working days.

13th Month Salary 

As per the legislation, there are no stipulations for the provision of a 13th salary.

Social Security in Kuwait

In Kuwait, Social Security Law mandates monthly contributions for Kuwaiti employees, with both employer and employee contributing. Employers contribute 11.5%, and employees contribute 8% of their monthly salary, capped at 2,750 Kuwaiti dinars (KWD). These contributions cover retirement pensions, as well as allowances for disability, sickness, and death.

Starting January 1, 2015, an additional 2.5% of the monthly salary, up to KWD 1,500 monthly, will be added to the employee’s contribution under the Social Security Law.

Presently, expatriate workers in Kuwait do not have social security obligations. However, the Kuwait Labour Law mandates terminal indemnity payments for eligible expatriate workers, calculated at 15 days’ pay per year for the first three years of service and 2/3 month’s pay per year thereafter.

Other Taxes and Social Security contribution

Payroll in Kuwait

Minimum Wages

Kuwait’s robust currency and a minimum wage of KWD 75 make it an attractive destination for expatriates seeking employment opportunities. The country’s labor law further enhances its appeal by providing favorable provisions for employees. According to the law, workers who exceed their regular working hours are entitled to additional compensation, ranging from 25% to 100% of normal remuneration based on the day of overtime—weekday, weekend, or public holiday.

The legislation also ensures timely payment, specifying that monthly salaried employees should be paid at least once a month, while those on different pay frequencies should receive payment every two weeks. The government emphasizes the prompt payment of salaries, urging employers not to delay payments beyond seven days after the due date. This commitment reflects the government’s dedication to safeguarding the welfare of all private-sector workers in Kuwait.

Additionally, Kuwait has established minimum wage standards for various job categories, particularly for Indian workers. To access the complete list of minimum wages, interested individuals can refer to the Embassy of India, Kuwait website.

Payroll Cycle

According to Kuwaiti labor law, compensation for employees is structured as follows:

• Monthly-paid employees must receive their wages at least once a month.
• Workers falling into other categories are required to be paid at least once every two weeks.

Overtime Pay

Employers can request employees to work overtime when necessary, with a formal agreement or order in place. The compensation for overtime is as follows:

• 125% of the basic hourly rate for excess hours worked on regular working days
• 150% of 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 restricted to a maximum of 2 hours per day, 6 hours per week, and 180 hours per year, with a yearly limit of 90 days. Employees retain the right to refuse overtime work.

WPS Kuwait

Explore the streamlined payroll management solution offered by NBK UAE, designed to enhance efficiency and reduce the time and effort involved in processing employee salaries.

With the Wages Protection System (WPS), NBK UAE introduces an advanced electronic salary transfer system. This system facilitates institutions in seamlessly and securely transferring workers’ wages through authorized and approved banks. Embrace the convenience of WPS for a more efficient and automated payroll process, ensuring timely and hassle-free salary payments for your employees.

Payroll Cycle

Experience the efficiency of Mercans’ comprehensive payroll cycle management. Our services ensure timely and accurate payments to both employees and contractors, all in the local currency. Trust Mercans to streamline your payroll processes, making the entire cycle a seamless and localized experience.

Payroll Setup, Payroll Processing, and Payroll Administration

Mercans goes beyond conventional payroll services, offering end-to-end solutions. From meticulous payroll setup to precise processing and efficient administration, we manage every step with a commitment to accuracy and compliance. With Mercans, your payroll is in expert hands, allowing you to focus on your core business functions.

Statutory Filings and Payments

Navigate Kuwait’s regulatory landscape effortlessly with Mercans. Our dedicated team takes charge of statutory filings and payments, ensuring your business stays compliant with all legal requirements. Rely on Mercans for accurate and timely submissions, providing you with peace of mind in meeting your statutory obligations.

Kuwait Employee Hiring Cost

In Kuwait, considering an employee with a Monthly Net Salary of $8,950.00 USD or 2,756.87 KWD, the Monthly Payroll Cost extends beyond the net salary. This comprehensive cost includes the base salary, additional costs such as allowances and benefits, social security contributions from both the employer and employee, and statutory obligations like taxes. Taking all these components into account, the total Monthly Payroll Cost for the employee sums up to $11,150.00 USD or 3,434.53 KWD, providing businesses with a clear understanding of the overall financial commitment associated with employing in Kuwait.

Employee Benefits in Kuwait

Every employee needs a break to relax and spend time with their loved ones, especially if they are spending excessive hours at their office. A stressed and hectic mind will have a negative impact on job performance and can even result in costly mistakes. Hence, leaves are more than mandatory not just for the well-being of the employee but for the employer as well.

End of the service benefits

Article 51 of Kuwait Labour Law outlines the end-of-service benefits, specifying entitlements based on the worker’s payment structure. For those paid on a daily, weekly, hourly, or piecework basis, the benefit is 10 days for each of the first five years, increasing to 15 days for each subsequent year, not exceeding one-year remuneration. Monthly-paid workers are entitled to 15 days for the initial five years and one month for each subsequent year, with a cap at one-and-a-half-year remuneration. Fractional-year entitlements are proportional to the service period. Deductions include loans and credits, with consideration for Social Security Law provisions. Employers are responsible for the net difference between social security subscriptions and end-of-service benefits. Gratuity, a lawful employer obligation, hinges on the last drawn salary and years of service, calculated upon resignation or termination. Our Kuwait-based payroll experts provide comprehensive insights in the following Q&A, addressing common queries related to end-of-service gratuity in Kuwait.

Work Permit in Kuwait 

For companies eyeing expansion to Qatar, navigating the immigration process is crucial to secure the requisite visas and permits. Qatar offers various visas, but for employment, the essential document is the work visa. Foreign employees must obtain a work permit and residence permit before commencing work. The work permit application requires an employment contract, a completed form from the Ministry of Labour, a health certificate, passport copies, photographs, educational certificates, employer’s immigration card, employment visa, and biometrics. The residence permit necessitates a valid passport, employee photographs, employment visa, company’s Commercial Registration, business’s immigration card, employee’s medical certificate, and a specific application process. Adhering to Qatar’s complex hiring process involves registering with the Immigration Department, applying for work permits, obtaining employment visas, and securing residence permits, allowing employees to work exclusively for the hiring company. Employees should carry their ID and visas, and an exit permit, approved by the employer and issued by the Ministry of Interior, is required to leave Qatar.