Employer of Record in Kuwait
Skuad’s Kuwait EOR (Employer of Record) solution helps your business expand into Kuwait without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team, manage their payroll and benefits and ensure compliance with local regulations. We help you streamline the global expansion process with the able assistance of our international network.
Kuwait at a Glance
Official Name: State of Kuwait
Location: Southwest Asia
Population: 4.2 Million (2019)
Currency: KWD Kuwaiti Dinar
Capital city: Kuwait City
Languages: Arabic (Official), English
GDP: 107.94 Billion USD (2020)
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What You Must Know Before Employing in Kuwait
Kuwait employment laws apply both to foreign nationals as well as their citizens. However, there are some differences in their entitlements.
To set up a local entity in Kuwait, a company must be aware of all aspects of Kuwait’s employment regulations. They may look somewhat complex and confusing but are not much different from the employment regulations of many other countries. Nevertheless, to minimize or mitigate challenges that may arise for companies looking to set up a local office, it is advisable to partner with a local payroll provider who is well aware of Kuwait’s labor laws for both local and international employees.
|Statutory Working Hours
- Eight hours per day and a maximum of Forty Hours Per Week (Exception - 26 Hours Per Week during the fasting month of Ramadan)
- Employees are entitled to one hour break per day and weekly off (typically Friday)
- For Female Employees, the standard workweek should not exceed 45 hours, 8 hours per day.
- The maximum overtime limit is 180 hours or 90 days per year.
- The Overtime pay is 125% of the basic rate during workdays.
- Employees working on a day off get 150% of their regular salary, and in addition, they are entitled to another day off from work.
- Employees who work on a Public Holiday receive 200% of their regular salary.
|Paid Public Holidays
||The following Public Holidays are observed in Kuwait -
- New Year’s Day
- National Day
- Liberation Day
- Ascension Day/Isra wa Miraj
- Eid Al Fitr
- Eid Al Adha
- Islamic New Year/Hijri New Year
- Prophet Mohammed’s Birthday
- Waqfat Arafat
|| Employees are entitled to 30 Paid Annual Leaves after nine months of service.
- Employees receive one day of annual leave for every month of service.
- Once accrued, Annual leave must be taken within one year.
- Annual leaves can be accumulated to a maximum of two years. Any exceptions should be clearly defined and agreed upon by both parties in the employment contract.
- The Annual leave must be paid in advance before the leave begins.
- The employer must determine the annual leave with the employee within the first 14 days of every year.
||Employees are entitled to a maximum of 45 paid sick leaves and 30 unpaid sick leaves in a year. A medical certificate is required to avail of sick leave.
|Sick Leave Days
|First 15 Days
|16 to 25 Days
|26 to 35 Days
|35 to 45 Days
Women Employees get 70 Days of paid maternity leave and up to 4 months of unpaid maternity leave. There is no regulation for paternity leave for male employees.
Employers must adhere to the following rules :
- Employers with 50 or more employees should provide daycare center facilities.
- They must provide at least 2 hours break to women employees to breastfeed their children during working hours.
- They can not terminate a Female employee during maternity or sick leave.
Employers are not required to pay the bonus to their employees.
- Kuwait requires its employees to have healthcare insurance to secure a residence permit, and the employer pays the healthcare premium.
- Kuwaiti citizens get free public medicare facilities.
- Expatriates need to pay a yearly fee to use public healthcare.
- Employees must register themselves to the nearest clinic to obtain a medical card.
Contractors vs. Full-Time Employees
The decision to keep contractors versus hiring full-time employees is of great importance while expanding globally. Contractors should be hired for short-term projects and work where high supervision is not needed. However, if you have a role that is part of the company’s core business and requires a long-term association, you should hire a full-time employee. For example, industries dealing in knowledge workers such as IT Solutions, Services, Business Intelligence, Software Development may be best suited to hire contractual employees to utilize the best talent available at a much lesser cost.
Hiring in Kuwait
Companies looking to hire talent in Kuwait must be familiar with Kuwait’s Labor Law. The significant working population in Kuwait comprises expatriates. Hence, there are various aspects of employment laws. Every Citizen has a right to duty, and they should not be discriminated against on any ground. The two most critical elements are getting work residency for employees and employment contracts.
Companies looking to hire knowledge workers tend to hire contractors and often use the Job Search portals like Bayt and Naukrigulf. However, these portals help in finding a pool of talent available in Kuwait. However, they don’t help much in the overall hiring and onboarding process. In addition, if companies are not compliant, they may run into the risk of penalties and delays that can affect their business.
Engaging and paying foreign talent via a global EOR solution like Skuad is significantly cheaper than in-house HR. Skuad as an Employer of Record in Kuwait can help you hire in Kuwait without setting up a legal entity; this eliminates most of the legal and financial risks. Additionally, you will have the flexibility of adding more projects to expand your business.
As per Kuwait’s Labor law, The probation period of a worker is 100 working days. If the employer terminates the employee within the probation period, the employee becomes eligible for the end of service benefit proportionate to his work period. Once the probation period ends, the employee becomes eligible for benefits and entitlements as defined in the employment contract.
Termination Of Service
As per Kuwait Employment Law, Both the Employer and employee may terminate an employment contract after giving a termination notice.
The notice period is three months for monthly salaried employees and one month for all other types of employees. If an employer terminates the employee without any notice period, they must pay the total amount of salaries covering the notice period. The same rules apply to an employee who is not able to complete the notice period.
|Employee Salary Type
||Severance Pay Entitlement
||Fifteen days per year of service up to five years, and a month for each after that (up to a limit of eighteen months of wages). |
Ten days’ salary for each year of service up to five years, and fifteen days for each year after that (up to a limit of one year of wages)
EOR Solutions In Kuwait
Skuad’s Kuwait Employer of Record (Kuwait EOR) solution makes it easier and faster for businesses to expand into Kuwait. Taking the EOR route ensures smooth and compliant payroll processing and other employment responsibilities without any entity establishment. Skuad can help you manage monthly payroll, contracts, work permits, taxation, etc., in Kuwait for your employees.
General Employer of Record Service Terms
|Taxes that apply to invoices
||Kuwait entity - 7% GST
Foreign company: No GST
|Minimum duration of service
||USD / EUR / GBP
|Required Details & Documents
||For Kuwait Citizens: Personal information, Copy of passport, Bank details, Copy of Civil ID (for permanent residents), Job description.
For Expatriates: Personal information, Job description, Educational qualifications, Technical qualifications, Copy of Passport, An HIV/AIDS test report, A Medical Certificate and Police Clearance of no criminal record.
Outsourcing Employment Through An Employer of Record
When you decide to expand into Kuwait as an organization, you also need to determine the path you want to take - whether you wish to build an in-house team or accept an EOR to manage payroll and employee lifecycle.
Types of Visas in Kuwait
|Kuwait Tourist Visa
- Tourists can enter and travel around Kuwait with this visa.
- The Tourist Visa is valid for up to 90 days. The processing time is between 1 to 3 business days.
|Kuwait Visit Visa
- A visit visa has to be sponsored by a relative resident or company.
- There are various requirements based on the reason for travel. The processing time is two business days.
- The Visit visas are valid for entry within 90 days of issue. Visitors can stay in Kuwait up to 30 days after entry
|Kuwait Multiple Entry Visit Visa
- A business-sponsored foreigner who needs to travel multiple times in a year can apply for this visa.
- Ministry of Defense does the approval
|Kuwait’s Residence Visa
- Any expatriate other than Gulf Cooperation Council (GCC) citizens must apply for a Kuwait residence visa to live in the country.
- There are three main types of this visa, including work, domestic servant, and dependent visa.
|Kuwait Work Visa
Below are the required documents for a work visa:
- A work visa requires an employment offer from a private company or government organization.
- The employer needs to apply for a work permit or visa on behalf of your employees.
Employee Receives No Object Certificate to enter Kuwait. Residency Visa is provided once they reach Kuwait.
- Valid Passport
- Approved Visa
- Passport Size Photo
- An HIV/AIDS test report.
- A Medical Certificate from a local doctor.
- Police Clearance of no criminal record.
To live and work in Kuwait, foreigners shall obtain a residency visa, which is issued based on valid employment. The employer needs to apply for the work permit on behalf of the expatriate employee. The Private Sector Kuwait Labor Law has specific requirements for employers. The Employers must keep a file for each foreign employee that includes copies of their:
- Work Permit
- Kuwaiti Civil ID
- Documents related to annual and sick leave
- Overtime hours
- Work injuries or diseases, if applicable
- End of service date and reasons for leaving the job
- Employment contract
- Copies of receipts that an employee returns all documents, tools, and certificates after employment.
|Work Permits Assistance
|Can Skuad Sponsor Work Permit in Kuwait
|Processing and Approval Time
- Work permit approval takes 1-3 business days.
- The foreign nationals must enter Kuwait with their work entry visa asap after approval of visa, which will be endorsed at the point of entry.
- Entry and post-arrival formalities should be completed within 60 days of work permit issuance.
|Work Permit Process
Step 1: Skuad’s local partner obtains the General Administration of Criminal Investigation at the Ministry of Interior for work permit application.|
Step 2: Skuad’s local partner in Kuwait applies for the Work Visa through the Ministry of Social Affairs & Labour.
Step 3 - The Ministry of Foreign Affairs in Kuwait sends a copy of the work permit to the Kuwaiti Embassy, where the employee lives, for endorsement.
Step 4: The worker enters Kuwait with authorization and an entry visa.
Step 5: The worker receives a letter that permits them to start work and travel to Kuwait.
Step 6: The worker applies for a Civil Card and receives it within 30 days
||The employee’s original passport is presented during their appointment with the Ministry of Social Affairs & Labour.
|Work Permit Process for Different Countries
||For most, the process to obtain a work permit is the same. However, there are some exceptions for citizens of some countries like China.
|Change of Sponsor Within Kuwait
||The employee needs to submit a new application for a change of sponsor.
|Where is the application processed?
||The application is processed in Kuwait or the workers’ home country.
|Work Permit Restrictions
||A specific fee is applicable depending on the country of origin.
|What is the cost of a Business Visa?
|What is the duration of a Business Visa?
||One Year/Multiple Entries
|Switch Business Visa to Work Permit?
|Can spouses work on dependent visas?
||Spouses cannot work on a Dependent Visa unless they transfer it into a work visa under Kuwaiti sponsorship. Transfer can be done after 6 to 12 months of holding a dependent visa
|Termination of Work Permit
||No notice period is required for cancellation
|Special Requirements for Work Permit Cancellation
||The employer or appointed employment agent must cancel the work permit.|
Things You Must Know to Set Up Payroll in Kuwait
To set up payroll and manage taxation in Kuwait, you need to be aware of the rules, which vary from one category to another. The first and the foremost thing you must consider is whether you want to employ foreign professionals or locals. As a foreign company, you must be aware and adhere to the local tax laws like income tax, business tax, withholding tax, employee compensation insurance, and social security costs.
There are two ways of doing it
- Set up an in-house team to manage the payroll in Kuwait.
- Hire the services of a local payroll specialist, who will make the management simpler and ensure complete compliance with Kuwait laws.
Companies can’t set up their payroll in Kuwait unless they have a registered subsidiary, which means it could take a long time before hiring your first employee. However, as Employer of Record, Skuad can handle all employment-related compliances and make the hiring much quicker.
Taxes in Kuwait
|Personal Income Tax
There is no income tax in Kuwait
||In Kuwait, 15% Corporate Income tax is levied on companies. The tax amount is arrived at based on companies’ net income while exercising their business activity during one business year.
|Social Security Rate
||In Kuwait, the Social Security Rate tax is related to labor income charged to both companies and employees.
- The current Social Security Tax rate is 19.5%
- Social Security Rate For Companies is 11.5%
- Social Security Rate For Employees is 10.5%
|Financial Tax Year
||Flexible 12 month period. The first tax period can be up to a period of 18 months.
||Foreign Companies carrying out business in Kuwait are taxable at a standard rate of 15%.
|Capital Gains Tax - Other Assets
||Capital gains are treated as regular business profits and are subject to income tax at the standard rate of 15%.
|Capital Gains Tax - Residential Property
||Individuals are not subject to tax in Kuwait
Incorporation: How to Set Up a Subsidiary in Kuwait
Many factors impact setting up a Subsidiary in Kuwait. For example, different regions and cities in Kuwait can have their subsidiary laws, which will affect how you incorporate them.
Another important aspect is the type of subsidiary you intend to set up. You can incorporate several different entities, including a shareholding company, limited liability company (LLC), branch or partnership. Each option will have other Kuwait subsidiary laws and place restrictions on your activity level in the country. Most companies choose to incorporate LLCs because it gives them the most freedom to operate, while a branch is the most restrictive entity type.
Steps Involved in Setting up Subsidiary in Kuwait:
- Register at the Department of Companies of the Ministry of Commerce and Industry (MOCI)
- Reserve a unique company name
- Obtain a letter addressed to the bank from the Department of Companies
- Deposit your capital at the bank
- Inspection of your company offices by the municipality
- Approval of a memorandum of association from the Department of Companies
- Commercial Registry or the Company
- Issuance of commercial license from the Department of Companies
- Registration with the Kuwait Chamber of Commerce and Industry
- Registration with the Public Authority for Civil Information (PACI)
- Complete Registration at the Ministry of Labor and Social Affairs
Setting up a Subsidiary in Kuwait can be a complex process for a foreign company. Skuad as an Employer of Record, has a team of lawyers, accountants and consultants who can help handle the process with ease.
A PEO (professional employer organization) is an organization that enters into a joint-employment relationship with an employer - by providing employees on lease to the employer. This arrangement allows the PEO to share and manage liabilities and employee-related responsibilities. The organization must be registered in every Kuwaiti state as a legal entity to hire the services of PEO. The best alternative for a PEO is having an Employer of Record. EOR can be used as a partial workforce. It also allows companies to work in Kuwait without setting up a legal entity.
Skuad enables companies looking to expand in Kuwait without the hassle of setting up a Legal Entity. Skuad helps manage workers’ compensation, payroll, unemployment claims, handle local laws and taxations.
We understand that expanding business across geographies is not an easy task. For example, while Kuwait has well-defined labor laws and fewer taxation; Understanding the local provisions and getting approvals from state agencies is a complex task. Skuad can help by providing a well-established global HR platform to hire, pay and manage employees without setting up a legal entity in Kuwait. Talk To Skuad Experts Now.