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New Labour Law in Kuwait

Guiding Principles

Kuwait’s new Law No. 6 of 2010 promulgating the Law of Labour in the Private Sector (the “Labour Law”), enacted February 21st, 2010 following its publication in the Official Gazette, replaces the previous labour law in its entirety. In the following this Article will focus on the main interesting legal points and changes to the new Kuwaiti Labout Law, in particular the end of service indemnity and its calculation, the calculation of annual leave and the permissible working hours and overtime calculation.

1. The End of Service Indemnity and its Calculation
Kuwait’s Law No. 6 of 2010 promulgating the Law of Labour in the Private Sector (the “Labour Law”) regulates all employer-employee relationships in Kuwait and applies to workers in the private sector.  End-of-service indemnities for employees paid on a monthly basis are determined in Article 51 of the Labour Law by calculating 15 days’ remuneration for each of the first five years of service and one (1) month’s remuneration for each of the following years, provided that the total amount of the indemnity does not exceed the remuneration of one year and a half. Employees who are paid on daily, weekly, hourly or piecework basis shall be entitled to a 10 days remuneration for each of the first five (5) years of service and fifteen (15) days remuneration for each subsequent year.

Under the new Labour Law, an employee will receive complete end-of-service indemnities

  • at the end of his or her contract period (if the contract is not renewed),
  • if the contract is terminated by the employer; or
  • in accordance with the provisions of the Labour Law, or
  • if a female employee resigns as a result of her marriage within one year from the date of her marriage.

Furthermore and in cases where the employee resigns an indefinite contract term and the period of service is not less than three (3) years and not more than five (5) years, the employee shall only be entitled to half of their end-of-service indemnities. two-thirds of their end-of-service indemnities for completing five years but not more than ten (10) years of service, and full end-of-service indemnities if their years of service exceeds more than ten (10) years.

Based on the aforementioned, the end-of-service indemnities would not likely include the period of service performed prior to the employees’ arrival in Kuwait if he/she worked in another country also for the same company.

In addition, parties to an employment contract cannot contract out of the employer’s obligation to pay end-of-service indemnities. The benefits granted under the Labour Law represent the minimum rights granted to the employees. Employers can grant employees greater rights and benefits, but not less. As such, any agreement to the contrary will be null and void without effect.

2. Annual Leave
Moreover, one of the major sources of confusion for employers is the calculation of annual leave under the Labour Law. Article 70 of the official Arabic version of the Labour Law states that employees are entitled to a 30-day paid annual leave period, excluding “public vacation days” and sick leaves. The provision does not state whether the 30-day period refers to calendar days or business days. An employer-friendly interpretation of the provision is that the annual leave period refers to calendar days. Under this approach, the leave period would be calculated from the last working day of the employee and the employee loses the economic value of the weekend. A second and more employee-friendly interpretation of the provision is that the leave period applies to business days and thus the weekend shall not be counted as leave. As the Labour Law is interpreted in favour of the employee, we support the interpretation of annual leave  to be counted as 30 business days.

Another source of confusion is the term “public vacation days” as stated in Article 70. Article 67 states that employees are entitled to a paid weekend which is equal to 24 continuous hours after every six working days, thereby granting employees one weekend day per week. As such, one interpretation of the Labour Law is that the annual leave period is calculated as 26 business days by excluding 4 rest days. However, another interpretation is that Friday is a public holiday in Kuwait, and that therefore the weekend day should be in addition to Friday and calculates the annual leave period as 22 business days by excluding 8 days. However, the paid “public holidays” are listed in Article 68, and there is an argument that if the legislators intended for Fridays (as a public holiday) to be excluded from the calculation of the annual leave, they would have used the term “public holiday” instead of “public vacation day.”

As there has been much controversy over the calculation of the annual leave period in Kuwait, the hope is that the Labour Law’s implementing regulations, when released, will put more light on this issue.

3. The Permissible Working Hours and Calculation of Overtime
The Labour Law regulates in its Article 64 that employees may not work for more than 48 hours per week or 8 hours per day, except as otherwise specified in the Labour Law. The working hours for employees working in the financial, commercial, and investment sectors are equal to eight consecutive hours. Employees not working in these sectors may not be required to work more than five consecutive hours a day without a break of minimum one hour which is not considered to be included in the working hours.

Notwithstanding the above, an employer may require their employees to work overtime in the following circumstances: (i) if the necessity arises for the purpose of preventing a dangerous accident; (ii) for repairing damages arising from a dangerous accident; or (iii) to avoid a loss or if the employer faces an unusual work load. However, such overtime may not exceed two hours per day, 180 hours per year, three days a week, or 90 days a year. Employees are entitled to overtime payments of a 25% increase over the original remuneration for the period of overtime.

Based on the above, an employer will be in violation of the Labour Law if he requires employees to work in twelve-hour shifts and will be required to make overtime payments to employees who work beyond the permissible working hours, provided that such services are described in one of the circumstances described above.
With respect to the employees on assignment in Kuwait, such employees must obtain a work permit in order to work legally in Kuwait. Kuwait’s Ministry of Social Affairs and Labour (“MOSAL”) requires that all applicants for work permits sign off on a short-form employment contract with their Kuwaiti sponsor (employer), which is subject to Kuwaiti law. As such, the Labour Law will apply to the employees with respect to their services performed in Kuwait.

January, 2011  Roberta Di Siena
  Meyer-Reumann & Partners – Dubai Office
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