Payroll process in Kuwait

Payroll in Kuwait is a crucial aspect of managing the finances of businesses and organizations. With a rich culture and a rapidly growing economy, Kuwait offers ample opportunities for employees and employers alike. The process of payroll involves calculating the salaries and benefits of employees, ensuring compliance with labour laws and tax regulations, and providing timely and accurate payments to employees. Understanding the nuances of payroll in Kuwait is essential for any company or individual operating in the country.

Payroll Process in Kuwait: Our unique Features

The following details, which are below mentioned, include some of the most important Kuwait payroll regulations, procedures, and practices.

Social Contribution

For Kuwaiti Nationals employees, social contributions are payable monthly by both the employer and employee. The employer’s contribution is 11% and the employee’s contribution is 10.5% of the monthly salary up to a ceiling of 2750 Kuwait Dinars per month

Types of statutory leaves in Kuwait

1. Annual Leave

   • 30 calendar days per year

2. Sick Leave

   • 75 Days Sick leave in a year
     • First Fifteen Days – Full Pay
     • Next 10 Days- three-quarters of the pay
     • Next 10 Days- Half pay
     • Next 10 Days- quarters of the pay
     • Next 30 Days- Without Pay

3. Maternity leave – 70 Days

4. Hajj Leave -21 Days

5. Compassionate Leave – 3 Days

6. Iddah Leave – 130 days

Please read our article on Kuwait leave policy here for a comprehensive understanding

End of Service Gratuity

The end-of-service Gratuity is a monetary payment eligible to an employee as a lump sum at the time of resignation/termination/end of contract.

Gratuity calculation is accrued against the last drawn salary on the following basis.

• 15 days salary per year for the first five years
• One-month salary per year from sixth year onwards.

For a comprehensive understanding of Kuwait gratuity accrual and settlement, please refer to our article.

Tax and other statutory deductions:

Payroll is not subject to income tax, and hence there are no mandated tax deductions. Kuwait nationals are subject to mandatory social insurance contributions

Working Hours and Overtime

The maximum number of working hours is eight hours a day and 48 hours in a week. During the month of Ramadan, it is six hours per day employees.

A worker on overtime hours is entitled to a 25% pay over his original remuneration. A worker working on his weekend rest day is entitled to a 50% pay over his original remuneration. Workers working over a national holiday are entitled to 100% pay over their original remuneration 

Frequency of Salary Payment

As per Kuwait labour law, employees shall be paid as follows;

• Employees hired on monthly pay should be paid wages at least once in a month.
• Other types of workers shall be paid at least once every two weeks.

End of Service Benefits

The employee is eligible for the following post-employment perks.

• Un processed Salary
• End of service Gratuity
• Air ticket for repatriation
• If applicable, pay for the notice period.
• Any unused leave (Vacation).
• Any other unpaid payments or deductions
• Any other benefits or compensation mentioned in Employment Contract

In order to get a detailed understanding about the payroll process in Kuwait, please refer to our article