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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
39°C
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.
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.
Social Security Rate
Social Security Rate for Employers
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
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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