How To Hire And Pay Employees In Kuwait

Emerald Technology's guide to hiring employees in Kuwait

CURRENCY

Kuwait City is the official currency of Kuwait Its currency symbol is د.ك, KWD.

CAPITAL CITY

Kuwait City is the capital of the gulf nation of Kuwait. The city lies in the southern shore of Kuwait Bay.

LANGUAGE

Arabic is the official language of Kuwait, since it is the language of the Holy Quran and Islam is the official religion of the state. 

POPULATION The current population of Kuwait is 4.329 Million 2021 based on World bank numbers.
PAYROLL FREQUENCY

Employers should pay employees monthly, at least once a month.

PUBLIC HOLIDAYS Kuwait haspublic holidays.

GROW YOUR TEAM IN KUWAIT

NO ENTITY, NO PROBLEM

To start growing your team in Kuwait, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN KUWAIT

If you are thinking about expanding to the Middle East region, Kuwait should be on your radar. In recent times, the governments interest in driving external business into the country is increasing. New 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 present 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. 

WHY KUWAIT IS GOOD FOR REMOTE WORKERS

Population in Kuwait mainly work exclusively in an office or work on a hybrid model. Workers have the same rights regardless of their working location. 

There is no income tax in Kuwait. Kuwaiti individuals should contribute with 8% of their salary to Social Security (up to a ceiling of 2,750 Kuwaiti dinars (KWD) per month). 

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN KUWAIT

The maximum permitted work week under Kuwaiti law is 48 hours (8 hours per day over 6 days). Most companies work 5-day weeks, with Friday and Saturdays off. Those working 6 days get Friday off. During Ramadan, the working hours are reduced to 6 per day. Employees are entitled to a one-hour break after working five straight hours, which is not included in the day’s working hours. Overtime should not be more than 2 hours per day, 3 days per week, or 90 days per year, and must be paid at 1.25x regular salary. Fridays must be paid at 1.5x regular salary, plus a compensatory day off. National holidays must be paid at 2x regular salary.

ANNUAL LEAVE AND KUWAIT'S PUBLIC HOLIDAYS

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

PROBATION PERIOD IN KUWAIT

A probation period can be no longer than 100 days.

RESIGNATION AND DISMISSAL IN KUWAIT

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.

RESTRICTIVE COVENANTS

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.

READY TO HIRE YOUR EMPLOYEES IN KUWAIT?

CONTRACT OF EMPLOYMENT IN KUWAIT

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.

KUWAIT'S MATERNITY LEAVE

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.

SICKNESS LEAVE IN KUWAITT

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.

SOCIAL SECURITY

The employer is required to contribute as follows:

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

HEALTHCARE AND INSURANCE

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 of

FOREIGN NATIONALS IN KUWAIT

Generally speaking, foreign nationals are not permitted to reside or work in Kuwait without an employment visa (except for dependants whose residency is sponsored by a spouse or parent) and a labour card, which is generally referred to as a Civil ID or Iqama.

Employment visas

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.

 

Salary Taxes

MINIMUM WAGE IN KUWAIT

There is no minimum wage in Kuwait.

KUWAIT'S INCOME TAX

There is no personal income tax in Kuwait.

SALARY PAYMENTS IN KUWAIT

Salary payments should be made monthly.

SOCIAL SECURITY CONTRIBUTIONS IN KUWAIT

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

SOCIAL CONTRIBUTION RATES

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

WORKER MISCLASSIFICATION IN KUWAIT

Similar to other countries, Kuwait has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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