An Employer of Record (EOR) in Kuwait is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before hiring in Kuwait through an employer of record (EOR).
| Continent | Asia |
| Country | Kuwait |
| Capital | Kuwait City |
| Time zone | UTC+03:00 (Arabia Standard Time) |
| Total Time zones | 1 |
| Working hours per week | 40 (30 during Ramadan) |
| Working week | Sunday–Thursday |
| Typical hours worked | 8 (6 during Ramadan) |
| Personal Tax filing deadline | NA |
| Financial Year | 1 April – 31 March |
Hiring Options in Kuwait:
Employee:
Employees in Kuwait can be hired on indefinite or fixed-term contracts. Part-time employment is allowed but not common. If both parties continue working under a fixed-term contract after its expiration, the contract is considered renewed for the same duration.
Independent Contractor:
In Kuwait, there is no specific concept of a consultant. However, individuals can establish their own professional license and business to work as independent contractors. This is due to the requirement for employees to have sponsorship, typically obtained through an employer.
Agency Worker:
The general concept of an agency worker or "temp" is not widely recognized in Kuwait. Some Kuwaiti-owned employment agencies have licenses to provide temporary manpower, but these workers remain under the agency's sponsorship. Such arrangements are primarily for low-level jobs like cleaning or security services.
Employment Contracts in Kuwait:
Non-Kuwaiti national employees must enter into a government employment contract, available in both English and Arabic, to obtain their work permit and residence visa. Kuwaiti and GCC national employees are generally not required to sign a standardized contract, although their regular employment contract may need to be submitted to the Public Authority for Manpower (PAM) for review.
All employment contracts in Kuwait must be in writing and in Arabic along with the language of the employees choice. The most common employment contract types are fixed-term and indefinite contracts. Fixed-term contracts can be anywhere between 1 to 5 years, contracts can be extended after five years upon mutual agreement by the employer and the employee. Fixed-term contracts after five years of employment will be considered as indefinite contracts.
Employees living in Kuwait and working for a foreign employer are required to sign on two contracts, one with foreign employer and the other with a local employer of record or an agent. A local employer of record sponsors the work visa to the employee and assists in employee relocation. Employment contracts are to be registered with the Ministry of Social Affairs and Labor (MOSAL) in Kuwait. It is a standard practice to include the details of employment such as employee nationality, identity, address, job title, salary, roles and responsibilities along with employer name, address and the authorized person.
Working Hours
The standard working hours in Kuwait is 40 to 48 per week and 8 hours per day. During Ramadan, the working hours cannot exceed 22 hours per week for Muslims. Employees working only 4 and half hours per day during Ramadan as per Arab Times Online.
Probation Period, Notice Period and Termination
The maximum allowed probation period in Kuwait is 100 days. The standard notice period in an indefinite contract is three months. In case of unlawful termination in a fixed-term contract, employers are liable for paying the amounts equals to salary of the balance length of employment.
Payroll in Kuwait
Minimum Wages
The minimum wage in Kuwait is 75 KWD (Kuwaiti Dinars).
Payroll Cycle
In Qatar, payroll is usually processed monthly and the salaries are paid in local currency Kuwaiti Dinars.
Paying Employees in Kuwait
Employers must pay their employees through Wage Protection System into a Kuwait registered bank in Kuwait Dinars. This is to make sure employees are getting paid on time.
Overtime Pay
The maximum additional working hours are 2 per day and 180 per year. Overtime pay is 1.25 times the standard pay during regular hours, 1.5 times the standard pay for work performed during days off, and 2 times for work performed during public holidays.
13th Month Salary
It is not mandatory to pay a 13th month salary as per the Kuwait labor laws.
Social Security in Kuwait
In Kuwait, social security is managed by The Public Institution For Social Security. The employer contribution is 12% and the employee contribution is 8.5 to 11% of the monthly salary.
| Contribution Type | Employer's Share | Employee's Share | Maximum Monthly Limit |
|---|---|---|---|
| Basic Contribution | 11.5% | 8% | 2,750 Kuwaiti dinars (KWD) |
| Additional Contribution* | - | 2.5% | 1,500 KWD (as of Jan 1, 2015) |
Employer Payroll Contributions
Employer contributions include pension and unemployment insurance. The employer's contribution towards the pension is 11.5% of the monthly salary, capped at 2,750 KWD. The contribution towards unemployment insurance is 0.5%.
| Tax | Employer Contribution |
|---|---|
| Pension (up to a ceiling of 2,750 KWD) | 11.50% |
| Unemployment | 0.5% |
| Total Employment Cost | 12.00% |
Employee Payroll Contributions
Employee contributions include pension, unemployment insurance, and an additional social security component. The employee's contribution towards the pension is 8% of the monthly gross salary, capped at 2,750 KWD. The contribution towards unemployment insurance is 0.5% of the monthly salary. Additionally, there is an extra social contribution of 2.5%, effective since 2015, and the amount is capped at 1,500 KWD.
| Contribution | Rate |
|---|---|
| Social Security (up to ceiling of 1,500 KWD) | 2.50% |
| Pensions (up to a ceiling of 2,750 KWD) | 8.00% |
| Unemployment | 0.5% |
| Total Employee Cost | 8.50% – 11% |
Personal Income Tax in Kuwait
There is no personal income tax in Kuwait.
Employee Benefits in Kuwait
| Leave Type | Duration | Policy | Frequently Asked Questions (FAQs) |
|---|---|---|---|
| Annual Leave | 30 days | Article 70 |
|
| Sick Leave | Up to 45 days | Article 69 |
|
| Maternity Leave | 70 days | Article 24 |
|
| Hajj Leave | 21 days | Entitled after two continuous years of service | No specific FAQs provided |
| Paternity Leave | Not specified | No statutory paternity leave | No specific FAQs provided |
| Compassionate Leave | 3 days | Article 77 | Granted in the event of a first- and second-degree relative’s death |
| Academic Leave | Not specified | Employer may grant paid academic leave for higher degree | Must return and work for the employer for a similar length of time (not exceeding five years) |
| Iddah Leave | 130 days for Muslim, 21 days for non-Muslim | Article not specified | Leave granted for mourning the death of a husband |
| Marriage Leave | 3 days | Not specified | Employee can avail Annual leave for marriage |
Kuwait Public Holidays
- Hegeira New Year: 1 day
- Isra’ and Mi’raj day: 1 day
- Eid Al-Fitr: 3 days
- Arafa Day: 1 day
- Eid Al-Adha: 3 days
- Prophet’s Birthday: 1 day
- National Day: 1 day
- Gregorian New Year: 1 day
End-of-Service Payments
Employees in Kuwait are entitled to end-of-service payments based on their type of employment and the duration of their service. Here's an overview:
| Payment Type | Entitlement |
|---|---|
| Daily/Weekly/Per-Project Basis | 10 days’ wages for each of the first five years, prorated. 15 days’ wages for any following years, prorated (not exceeding one year’s wages). |
| Monthly Basis | 15 days’ wages for each of the first five years, prorated. One month’s wages for any following years, prorated (limited to 1.5 years’ wages). |
| Kuwaiti Employee on Indefinite-Term Contract | Termination by giving required notice:
|
Choosing an Employer of Record (EOR) in Kuwait stands as a strategic decision for companies navigating the complexities of global expansion. Entrusting the EOR with responsibilities such as local employment regulations, payroll intricacies, and compliance matters allows businesses to seamlessly establish a foothold in Kuwait, sidestepping the intricate process of setting up a legal entity. This collaborative partnership empowers companies to concentrate on their core objectives and growth strategies, ensuring that their workforce in Kuwait operates in full compliance with local laws. The EOR not only simplifies international employment procedures but also provides expert guidance in navigating the nuanced landscape of Kuwait's employment regulations. In a dynamic and diverse market like Kuwait, an EOR proves to be an invaluable ally, streamlining operations and fostering a conducive environment for sustained business growth.