Kuwait

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 assistance of our international network.

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Kuwait at a Glance

Official Name: State of Kuwait

Location: Southwest Asia

Population: 4.3 million

Currency: KWD Kuwaiti Dinar

Capital city: Kuwait City

Languages: Arabic (Official), English

GDP: USD 162.65 billion

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.

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, and 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 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.

Probation Period

As per Kuwait’s Labor law, The probation period for 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.

Notice Period

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.

Severance Pay

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

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

Work Permit

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 a 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
• Penalties
• 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.

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 foremost thing you must consider is whether you want to employ foreign professionals or locals. As a foreign company, you must be aware of and adhere to 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 the Employer of Record, Skuad can handle all employment-related compliances and make the hiring much quicker.

Taxes 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.

PEO

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, and unemployment claims and handles local laws and taxation.

Conclusion

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.

FAQs

1) What is an employer of record in Kuwait?

An Employer of Record in Kuwait is a service that legally hires and manages staff on behalf of another company, handling payroll, benefits, tax compliance, and local labor law compliance. This allows companies to employ staff in Kuwait without establishing a local entity, simplifying business operations and market entry.

2) What are the key advantages of using an EOR?

Key advantages of using an EOR include compliance with local employment laws, streamlined HR management, operational flexibility, and reduced legal and financial risks. This service is particularly valuable for companies looking to expand quickly without the complexities of setting up a subsidiary.

3) How much does an EOR cost in Kuwait?

The cost of using an EOR in Kuwait typically ranges from 10% to 20% of the employee's salary, depending on the level of services provided. This fee covers comprehensive management of employment-related tasks, making it a cost-effective solution for managing overseas employees. For more insights, try Skuad’s cost calculator now.

4) What is the maximum work hours in Kuwait?

The maximum work hours in Kuwait are set at 8 hours per day or 48 hours per week. During Ramadan, working hours for Muslim employees are reduced to 6 hours per day. Any hours worked beyond these limits are considered overtime and must be compensated accordingly.