How to Hire Remote Employees In 

Kuwait

The Basics

Currency
Kuwaiti Dinar (KWD)
Employer Taxes
11.5%
Payroll Frequency
Monthly
Official Language
Arabic

Employment in 

Kuwait

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Kuwait

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Kuwait can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Kuwait, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Kuwait.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Kuwait is not the same as paying workers in your own country. Employees have to be paid using Kuwait’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Kuwait

 Specific Information

Working Hours

Kuwaiti law defines the maximum workweek at 48 hours/6 days a week at 8 hours per day. Most companies work 5-day weeks, with Friday and Saturdays off. Those working 6 days get Friday off.  

During the month of Ramadan, the working hours are reduced to 6 per day.  

Employees are entitled to a one-hour break after working five straight hours. The hour is not part of the day’s work.  

Overtime

Overtime should not be more than 2 hours per day, 3 days per week, or 90 days a year. It pays 1.25x regular salary.  

Working on a Friday earns 1.5x regular salary and a compensatory day off.  

Working on a national holiday earns 2x regular salary.  


Payroll Tax

Employer

Employer

  • Pension
  • Unemployment

Minimum Wage

Kuwait minimum wage policy is 75 KWD per month in the private and oil sectors.

Payroll

Pay Cycle

Salaries are paid monthly.

13th Salary

No 13th Salary.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • The minimum paid leave is 30 days, beginning after 9 months of service.
  • An employee working for the same employer for two consecutive weeks is entitled to 21 days leave with pay to perform Al-Hajj, as long as the employee has never performed it before.  

Public Holidays

There are 8 public holidays consisting of 13 days off.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

         After the employee provides a written medical report from a doctor:  

  • 15 days at full pay
  • 10 days at ¾ pay
  • 10 days at 1/2 pay
  • 10 days at 1/4 pay
  • 30 days without pay.

Maternity Leave

Maternity leave is 70 days paid, and up to 4 additional months unpaid.

Paternity Leave

There is no paternity leave. 

Parental Leave

There is no parental leave.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

Three days paid leave in the event of the death of first or second-degree relatives.  

A Muslim woman whose husband dies is entitled to a fully paid leave for four months and ten days. A non-Muslim woman is entitled to 21 days of paid leave.

Termination

Termination Process

Termination requires 3–months’ notice from either side for employees with a monthly salary or one month for all others.  

A contract can be terminated without notice or compensation in the event that the employee caused significant monetary loss, committed fraud, or disclosed secrets that led to losses. 

Notice Period

The notice period in Kuwait is:

3-months’ notice from either side for employees with a monthly salary or one month for all others.

Severance Pay

Employees paid on a monthly basis receive 15 days remuneration for each year of employment at the company up to 5 years and a month for each after that, up to a limit of 1.5 years of salary.  

Employees paid by the hour, day, or week receive 10 days’ salary for each year of employment at the company up to 5 years, and 15 days for each year after that, up to 1 year of salary.  

Probation Period

A probation period can be no longer than 100 days.