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KUWAIT
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Kuwait Payroll and Employer of Record: Employment Contracts
Kuwaiti work visas are conditional on a job offer from a Kuwait-based company. Once this is finalized the employer will be responsible for handling the employees’ residence/work visa application.
The authorities will provide a document known as a No Objection Certificate once the application has been processed. This allows the employee to enter Kuwait, and a residence visa will be issued upon arrival.
PAID TIME OFF
Annual Vacation
Employees are entitled to a 30 days paid annual leave after they have been employed for at least 9 months. This leave should be taken within one year of accrual, unless otherwise agreed upon with the employee’s manager.
Annual leave must be paid in advance of the employee’s leave period beginning.
Official holidays and sick leave are not included in annual leave.
Employees have the right to cash out their unused annual leave at the end of their contract.
Employees who have not previously performed Al-Hajj are entitled to 21 days of leave after two years of continuous service with the same employer.
Sick
Employees are entitled to the following sick leave if accompanied by a doctor’s medical report:
- 15 days paid in full
- 10 days with a salary of 3/4
- 10 days at half pay
- 10 days at a quarter salary
- 30 days without pay
Maternity
Female employees are entitled to 30 days of maternity leave prior to the expected due date and 40 days following the child’s birth.
Pregnant women are also entitled to 100 days of unpaid leave, consecutive or not, following their maternity leave. A medical certificate as proof of inability to work must be presented.
Paternity
N/A
Family
Leave of compassion
An employer may grant a three-day special leave to an employee in the event of the death of a first- or second-degree relative.
National Holidays
There are in total 9 paid public holidays.
Other Paid Time Off
- Academic leave : The employer may grant an employee paid academic leave to pursue a higher degree in his or her field of work, provided the employee returns to work for the employer for a similar period of time that does not exceed five years.
- Leave Iddah : A Muslim working woman whose husband has died is entitled to four months and ten days of paid iddah leave from the date of death. The working woman is not permitted to work for another employer during her leave. Non-Muslim working women whose husband has died are entitled to 21 days of paid leave.
- Marriage Allowance : Marriage leave is not provided in Kuwait; however, employees can use their annual leave to marry.
STATUTORY EMPLOYEE BENEFITS
Unemployment
For up to six months, 60% of the insured’s last monthly earnings plus the supplemental old-age pension the insured is entitled to is paid.
Employees pay 0.5% of their monthly covered earnings. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Employer: 0.5% of covered monthly payroll. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Workers Compensation
A work injury or occupational disease must be evaluated.
For the first six months, 100% of the employee’s earnings are paid; after that, 50% of the employee’s earnings are paid until full recovery or certification of a permanent disability.
Social Security
The Social Security Law requires both the employer and the employee to pay monthly contributions for Kuwaiti employees. The employer contributes 11.5% and the employee contributes 8% of monthly salary, up to a monthly cap of 2,750 Kuwaiti dinars (KWD). Pensions and allowances for disability, sickness, and death are among the benefits provided.
Retirement
The pension is divided into three parts: the basic pension, the supplemental pension, and the remuneration pension.
The basic pension is 65% (75% for military personnel) of the insured’s last monthly earnings (for employed persons) or average monthly earnings in the previous three years (for self-employed persons), plus 2% for each year of contributions exceeding 15 years, up to 95% of earnings (100% for military personnel).
The minimum monthly earnings used to calculate benefits are 230 dinars for employees and 200 dinars for self-employed individuals.
The maximum monthly earnings for benefit purposes are 1,500 dinars.
In addition to the full basic pension, a lump sum of 10% of the insured’s last annual earnings is paid for each of the first five years exceeding 30 years, 12% for the next five years, 15% for the next five years, and 20% for each year after that.
Health
Kuwait has a state-funded healthcare system that provides free treatment to Kuwaiti passport holders. There is a public insurance scheme in place to provide low-cost healthcare to non-citizens.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
N/A
Retirement
Private retirement/pension funds are not available as options in Kuwait.
Health
Private healthcare is available in Kuwait.
Insurance
Private life insurance is available in Kuwait.
PERSONAL INCOME TAX
Tax Year
1st April to 31st March.
Tax Tables
Individuals in Kuwait are not subject to personal income tax (PIT).
Taxation Method
N/A
Double Taxation
Kuwait has multiple double tax agreements (DTA) with other countries.
Residence Requirements
The concept of a tax residence is not defined in Kuwaiti law.
Payroll Calendars
Employees hired on monthly pay should be paid at least once a month. Other types of employees must be paid at least once every two weeks or as stated in their employment contract.
Rebates & Tax Credits
N/A
Health Insurance
Kuwait has a state-funded healthcare system that provides free treatment to Kuwaiti passport holders. There is a public insurance scheme in place to provide low-cost healthcare to non-citizens.
Unemployment
For up to six months, 60% of the insured’s last monthly earnings plus the supplemental old-age pension the insured is entitled to is paid.
Employees pay 0.5% of their monthly covered earnings. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Employer: 0.5% of covered monthly payroll. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Social Security
The Social Security Law requires both the employer and the employee to pay monthly contributions for Kuwaiti employees. The employer contributes 11.5% and the employee contributes 8% of monthly salary, up to a monthly cap of 2,750 Kuwaiti dinars (KWD). Pensions and allowances for disability, sickness, and death are among the benefits provided.
PAYROLL ELEMENTS
Income
Basic salary, housing allowance, transport allowance, living contribution, overtime, sales commission, bonuses or incentives.
Bonuses
13-month payments are not required by law however, if the company has put in the signed agreement then they must uphold it. Employers have the option to give out incentives at their discretion.
Allowances
Family allowance (based on income): Amount depends on family circumstances.
The monthly family allowance is set at 255 dinars.
The monthly family allowance is limited to 1,200 dinars.
A monthly housing allowance of up to 150 dinars is paid.
Kuwaiti law also requires an employer working for government contracts or those employing workers in a remote area to provide adequate accommodation/transportation facilities free of charge. Should there be now adequate provision, employees must be paid adequate allowances
Benefits in Kind
Kuwaiti labor law regulates benefits in kind. Employers are required to provide their employees with benefits in kind such as :
- Housing/accommodation
- Transportation
- Paid leave
- Food
Investment Income
Capital gains on the sale of any asset or share by a foreign shareholder will be treated as a normal business profit and therefore subject to tax at 15%.
Retirement Funding
The pension is divided into three parts: the basic pension, the supplemental pension, and the remuneration pension.
The basic pension is 65% (75% for military personnel) of the insured’s last monthly earnings (for employed persons) or average monthly earnings in the previous three years (for self-employed persons), plus 2% for each year of contributions exceeding 15 years, up to 95% of earnings (100% for military personnel).
The minimum monthly earnings used to calculate benefits are 230 dinars for employees and 200 dinars for self-employed individuals.
The maximum monthly earnings for benefit purposes are 1,500 dinars.
Health Insurance
Kuwait has a state-funded healthcare system that provides free treatment to Kuwaiti passport holders. There is a public insurance scheme in place to provide low-cost healthcare to non-citizens.
Risk Insurance
Employers must provide employee risk insurance to protect them from workplace accidents and illnesses. Specifics are established by the Ministry of Social Affairs and Labor.
Taxable Income
Only capital gains made by investment are taxable at 15%.
Allowable Deductions
Social security contributions, retirement fund contributions as well as healthcare contributions in the case of foreigners. Loan repayments, salary advances and other deductions agreed upon in employment contracts are allowed.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Employers pay 11% while employees pay 7.5%. Employees in Kuwait are not subject to a personal income tax. In most cases, corporate tax in Kuwait is 15%. Zakat, a 1% religious tax, is also levied.
Unemployment
For up to six months, 60% of the insured’s last monthly earnings plus the supplemental old-age pension the insured is entitled to is paid.
Employees pay 0.5% of their monthly covered earnings. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Employer: 0.5% of covered monthly payroll. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Social Security
The Social Security Law requires both the employer and the employee to pay monthly contributions for Kuwaiti employees. The employer contributes 11.5% and the employee contributes 8% of monthly salary, up to a monthly cap of 2,750 Kuwaiti dinars (KWD). Pensions and allowances for disability, sickness, and death are among the benefits provided.
Workers Compensation
A work injury or occupational disease must be evaluated.
For the first six months, 100% of the employee’s earnings are paid; after that, 50% of the employee’s earnings are paid until full recovery or certification of a permanent disability.
ADMINISTRATION
Income
Personal income tax is not applicable in Kuwait.
Payroll Taxes
Employers pay 11% while employees pay 7.5%. Employees in Kuwait are not subject to a personal income tax. In most cases, corporate tax in Kuwait is 15%. Zakat, a 1% religious tax, is also levied.
Unemployment
For up to six months, 60% of the insured’s last monthly earnings plus the supplemental old-age pension the insured is entitled to is paid.
Employees pay 0.5% of their monthly covered earnings. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Employer: 0.5% of covered monthly payroll. The maximum monthly earnings for contribution purposes are 2,750 dinars.
Social Security
The Social Security Law requires both the employer and the employee to pay monthly contributions for Kuwaiti employees. The employer contributes 11.5% and the employee contributes 8% of monthly salary, up to a monthly cap of 2,750 Kuwaiti dinars (KWD). Pensions and allowances for disability, sickness, and death are among the benefits provided.
Workers Compensation
A work injury or occupational disease must be evaluated.
For the first six months, 100% of the employee’s earnings are paid; after that, 50% of the employee’s earnings are paid until full recovery or certification of a permanent disability.
Statutory Benefits
Statutory benefits for those in Iraq are: 9 paid public holidays, maternity leave and paid annual leave.
Employee Benefits
Certain benefits are mandated by law . Iraq has 9 public holidays on which employees are excused from work, and 30 days of leave per year. Employers are obligated to pay for sick leave and maternity leave.
LEGISLATION
- Kuwaiti Constitution of 1962, restored in 1992
- Private Sector Labor Law (Law No. 6 of 2010)
- Children’s Rights Act (No. 21 of 2015)
- Ministerial Decree on Observance of Safety Precautions Against Occupational Injury and Disease (No. 22 of 1974)
- Decree on the Control and Use of Ionizing Radiation and Hazard Protection (No. 131 of 1977)
- Law on Compulsory Education (No. 11 of 1965)
- Ministerial Order No. 201/A of 2011 Prohibiting Forced Labor
- Law Against Human Trafficking and Migrant Smuggling (No. 91 of 2013)
STATUTORY BODIES
- Ministry of Social Affairs and Labor.
- The Public Authority for Manpower.
- The Labor Court.
- The Public Authority for Social Security.
