By Globalization PartnersOctober 2015
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Globalization Partners enables companies to quickly and easily expand into 187 countries without the hassle of setting up local branch offices or subsidiaries. You identify the talent, and we employ your team member via our in-country payroll. This enables you to quickly and easily hire around the globe, and lifts the burden of figuring out HR, tax and legal matters from your shoulders to ours.
With Dubai’s airport surpassing London’s Heathrow passenger traffic record, there is clear evidence of the economic power of the Cooperation Council for Arab States of the Gulf (GCC). Many companies considering international expansion in the region look to Dubai in the United Arab Emirates for talent. However, the nation state of Kuwait – a member of GCC – is another viable option to base foreign professionals.
Employing non-Kuwait nationals requires a local sponsor who becomes the official employer of record and organizes all aspects of employment in-country. For companies that find talent based in Kuwait, we offer some key points to keep in mind when employing in Kuwait.
A copy of all employment contracts must be lodged with the competent Ministry. As such there is a set format that the contracts must follow. Generally, only the fixed portion of a compensation package is included in the contract lodged with the Ministry. A separate contract may be needed to document variable compensation.
End of service benefit:
For employees paid on a monthly basis, the employer must pay an end of service benefit equal to 15 days of remuneration for each of the first five years of service and one month of remuneration for every year thereafter. The amount of the end of service benefit is reduced in cases where the employee terminates the contract and varies depending on the length of service.
Termination notice period:
Both the employer and employee are required to give three months of advance notice to terminate the employment relationship. If the employer or employee wishes to terminate in advance of the required three month notice period, then the party wishing to terminate must pay the other party a compensation for the notification period equal to the remuneration of the employee for the same period.
Probationary periods up to 100 working days are allowed if specified in the work contract. Either party may terminate the contract during the probation period without notice. In the event where the termination is made by the employer, then the employer must pay the employee’s end-of-service benefit for the period of work in accordance with the provisions of the labour law. It is very common to use a probationary period in Kuwait to avoid the otherwise long advance notice period.
Work visa and residence permits:
The process for non-Kuwaiti nationals to obtain a first-time residence permit takes approximately 2 months. Residence permits can be issued for durations of 1, 2 or 3 years. Work visas and residency permits are employer-specific. As such, for individuals who wish to transfer employment to a new sponsor, the sponsor of the existing visa must first cancel the visa immediately after which the new visa can be issued. The individual is required to leave Kuwait and re-enter on the new visa.
Prior to exiting Kuwait for good, the residence permit must be officially cancelled. Failure to do so could delay the departure or cause problems in the future.
Residence permits are not granted or renewed without proof of the individual’s health insurance policy. All employers must pay for their employees’ health insurance premiums, which must provide for a certain set of basic health and medical services.
Other common employee benefits:
• Housing allowance
• Education allowance
Annual, sick and holiday leave:
Employees are entitled to a 30-day paid annual leave after having served an initial 9 months for the employer. Annual leave does not include the 12 fully-paid official holidays. Employees are entitled to sick leave at full pay for up to 15 days and partial pay for additional sick days provided that a doctor’s medical report is presented.
Cost of living:
• The personal income tax rate in Kuwait is 0%.
• Apartment rentals range from $1,100 to $3,000 per month depending on the location and number of bedrooms.
• Overall, Kuwait ranks 134 out of an index of 282 countries in terms of the most expensive country for expats to live in the world.
Planning to hire an employee in Kuwait, and need help getting started?