Employer of Record (EOR) Kuwait

An Employer of Record (EOR) in Kuwait serves as the legal employer for workers, playing a crucial role in ensuring comprehensive compliance with local labor laws and regulations. As a trusted Global Professional Employer Organization (Global PEO), our EOR services extend beyond mere legal representation. We actively oversee various employment aspects, including meticulous management of payroll processes, handling taxes, benefits administration, and the creation of essential employment agreements.

In Kuwait, our dedicated Employer of Record takes charge of pivotal responsibilities, including:

• Rigorously ensuring adherence to Kuwait’s employment laws to maintain legal compliance.
• Efficiently managing the intricacies of local payroll procedures with precision.
• Expertly handling the submission of employment-related taxes and essential documentation.
• Providing workers with detailed payslips for transparent and accurate financial reporting.
• Promptly distributing workers’ salary payments to ensure financial stability.

Opting for our Global PEO services with an Employer of Record in Kuwait empowers your business with a hassle-free expansion solution that eliminates the need for entity setup. Our EOR guarantees legal presence, compliance, and Intellectual Property protection, enabling your business to focus on core functions. Additionally, our services facilitate smooth global mobility and work visa processes, contributing to the establishment of a diverse and efficient global workforce.

EOR Solutions in Kuwait

• EOR for Prospective Employees: Mercans offers seamless Employer of Record (EOR) solutions for businesses that have already identified their ideal candidates in Kuwait. Our services encompass every aspect of the employee lifecycle, ensuring compliance with Kuwait labor laws and regulations.
• EOR + Recruitment: For those seeking assistance in talent acquisition, our EOR and recruitment services provide a holistic solution. We tap into our extensive network and expertise to help you find, onboard, and retain top talent, streamlining your expansion into the Kuwait market.
• Visa Sponsorship and Global Mobility: Navigating the intricacies of expatriate employment is simplified through our visa sponsorship and global mobility services. We facilitate the relocation of your international workforce, ensuring compliance with Kuwait immigration and employment laws.
• AOR for Contractor Payments: Businesses grappling with contractor payments can leverage our Assistance on Record (AOR) services. We handle the complexities of contractor payments, guaranteeing accuracy and compliance.
• Converting Freelancers to Employees: Mercans supports the transition from independent contractors to permanent employees in Kuwait. Our expertise ensures smooth conversions while adhering to legal requirements.
• HCM Integration: Integrate Mercans’ EOR services seamlessly with your HCM system in Kuwait for real-time data exchange, enhanced compliance, and cost-efficiency. Trust our expertise for a unified, compliant, and efficient approach, elevating your workforce management and payroll operations.

Things you need to know before hiring 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.

Termination and Severance Pay ( End-of-service payments)

Termination

Distinct rules apply to the termination of definite-term and indefinite-term employment contracts.

For definite-term contracts, termination occurs upon the expiration of the agreed term. Either party can terminate for cause, but unjustified termination obligates the terminating party to compensate the other for damages, capped at the remaining contract period’s salary.

Establishing a union is challenging due to MSAL approval difficulties.

Indefinite-term contracts require written notice for termination, with a minimum of three months for monthly-paid employees and one month for others. The employer can excuse the employee from work during the notice period, counting it as work service, with entitlement to salary and benefits.

End-of-Service Payments

Upon termination or contract expiration, employees receive end-of-service payments. Daily, weekly, or project-based employees get 10 days’ wages for the first five years and 15 days thereafter. Monthly-paid employees receive 15 days for the initial five years and one month thereafter, up to a maximum of 1.5 years’ wages.

For Kuwaiti employees, the end-of-service payment may be subject to deductions for pension contributions under the Social Insurance Law. An indefinite-term contract termination by the employee with proper notice entitles them to half the payment after three years, two-thirds after five years but less than ten, and the full payment after ten or more years of service.

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.

Annual Leave

As per Article 70, workers in Kuwait are entitled to a 30-day paid annual leave. The entitlement for the first year of work begins after at least 9 months of service for the employer. Official holidays and sick leaves during the year are not counted as annual leave. The worker is entitled to leave for the fraction’s year in proportion to the period spent in actual service, even in the first year.

Hajj Leave

A worker who spent two continuous years working for the same employer shall be entitled to 21 days leave with pay to perform Hajj provided that he had not performed Hajj before.

Compassionate Leave

According to Article 77, the employer may grant an employee a special leave of three days in the event of a first- and second-degree relative’s death.

Sick Leave

Article 69 states that an employee is entitled to sick leaves at the following rate per annum: First 15 days at full pay, following 10 days at three-quarters of the pay, following 10 days at half pay, following 10 days at quarter pay, and following 30 days without pay (sick leave unpaid).

Maternity Leave

As per Article 24, a pregnant working woman is entitled to a paid maternity leave of 70 days, not included in her other leaves, if she gives birth within this period. After the end of the maternity leave, the employer may give the working woman, at her request, an unpaid leave for a period not exceeding four months to take care of the baby.

Public Holidays

Hegeira New Year, Isra’ and Mi’raj day, Eid Al-Fitr, Arafa Day, Eid Al-Adha, Prophet’s Birthday, National Day, and Gregorian New Year are some of the public holidays in Kuwait.

Academic Leave

The employer may grant an employee a paid academic leave to obtain a higher degree in his work field, provided the worker shall return and work for the employer for a similar length of time that should not exceed five years.

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.