The document provides an overview of the payroll process in Kuwait. It discusses key aspects like salary payment frequency, common pay components, standard working hours, overtime calculation, gratuity accrual, statutory deductions, and leave policies. The payroll process requires monitoring tax updates and ensuring accurate and timely salary payments. Outsourcing payroll to an experienced provider can help free up time and ensure compliance.

1. Payroll Process in
Kuwait: A brief
overview
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2.  Payroll process is not a cakewalk; it is quite complicated that requires
abundant time and resources. One needs to monitor tax updates and other
statutory changes constantly and must also ensure that employees are
paid the correct salary amount on time.
 The payroll process will not be the same for all countries; each country has
its own tax laws, minimum salary requirements, pension plans, gratuity
schemes, leave policies, and many more. Here we have covered in detail
about the payroll process in Kuwait, via a set of FAQs.

3.  What is the frequency of Salary Payment in Kuwait?
Article 56 of the Kuwait labour law states that employees shall be paid as
follows;
Employees hired on monthly pay should be paid the wages at least once in a
month.
Other types of workers shall be paid at least once every two weeks.
 What are the statutory pay components included in employee salary?
The Kuwait labor law does not define the components that should make up
an employee’s salary; there are no defined statutory components.

4.  What are the common pay components that are normally payable to
employees?
Fixed component may include Basic salary, Housing Allowance, Transport
Allowance and Living Contribution. The variable components may include
Overtime, Sales commission, Bonus, Incentives, Relocation allowances, Leave
passage, Housing Allowance, Transport Allowance and Living Contribution.
 What are the standard working hours in Kuwait?
The standard working hours are set at a maximum 8 hours a day or 48
week. The standard working hours during Ramadhan is 6 hours a day.

5.  What is the official salary payment currency in Kuwait?
Article 56 states that remuneration is to be made in the country’s currency,
this case, the Kuwait Dinar.
 How is overtime calculation determined in Kuwait?
Overtime is any extra hours worked by an employee beyond the normal
working hours. A worker on overtime hours is entitled to a 25% pay over
original remuneration. A worker working on his weekend rest day is entitled
to a 50% pay over his original remuneration. Workers working over a
holiday are entitled to a 100% pay over their original remuneration.

6.  How is gratuity accrued?
Employees are entitled to 15 days wages for each year of the first five years
service and one-month wage for each year of service thereafter. Calculation
shall be made based on the last remuneration received by the worker. The
total end of service benefit should not exceed one-and-a-half-year
remuneration for employees.
To know more about Kuwait Gratuity Click here
 When is gratuity paid to an employee?
Employees are eligible for gratuity pay at the end of their service period, at
termination, death, or while resigning.

7.  What are the statutory deductions that are made to employees in
Kuwait?
There is no statutory deduction in the form of income tax in Kuwait.
Kuwaiti nationals are enrolled in Social security and hence they deduct a
certain amount of their salary towards social insurance.
 How is Kuwait Social contribution calculated?
For Kuwaiti Nationals employees, 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 monthly salary up to a ceiling of 2750
Kuwait Dinars per month.

8.  What is WPS in Kuwait?
Wage Protection System (WPS) was implemented to protect the employee’s
salary payment. It is an electronic salary transfer system that allows
institutions to pay workers’ wages via banks, approved and authorized to
provide the service.
 Are Employees eligible for Air Ticket Benefits in Kuwait?
There is no statutory requirement for employers to provide employees with
air tickets. However, as a general practice, many employers provide their
employees with annual or bi-annual air tickets to travel back to their home
countries for vacation.

9.  What is the leave policy defined under the labor law?
 Annual Leave
As per Article 70, workers in Kuwait are entitled to a 30-day paid annual leave.
the entitlement to a leave for the first year of work begins after at least 9 months of
service for the employer. Official holidays and sick leaves during the year are not
counted as annual leave.
 Sick leave
As per Article 69,Employees are entitled to seventy-five-day sick leaves during the
broken down as follows:
 first 15 days – at full pay
 following 10 days – at three-quarters of the pay
 following 10 days – at half pay
 following 10 days – at quarter pay
 following 30 days- without pay.

10.  Maternity leave
According to Article 24, a pregnant working woman shall be entitled to a
paid maternity leave of 70 days, not included in her other leaves, if she
gives birth within this period. After the end of the maternity leave, the
employer may give the working woman, at her request, an unpaid leave
a period not exceeding four months to nurse her baby.
 Hajj Leave
As per Article 76, An employee who has spent two continuous years
working for the same employer shall be entitled to 21 days leave with pay
to perform Al-Hajj if employee had not performed hajj before.
 Paternity Leave
In the Labour law of Kuwait, there is no Statutory Paternity Leave.

11.  Marriage Leave
Marriage leave is not provided in Kuwait; employees can avail their
leave for marriage.
 Compassionate Leave
According to Article 77, the employer may grant an employee a special
leave of three days in the event of a first- and second-degree relative’s
death.
 Iddah Leave
The Muslim working woman, whose husband has died, shall be entitled
a fully paid iddah leave for four months and ten days from the date of
death. During this leave, the working woman cannot work for another
employer.The non-Muslim working woman, whose husband has died,
be entitled to a paid leave of 21 days.

12.  Academic Leave
The employer may grant an employee a paid academic leave provided the
worker shall return and work for the employer for a similar length of time.
Academic leave should not exceed five years.
Please read our article on Kuwait leave policy here for a comprehensive
understanding.
 Is bonus or incentive payment mandatory in Kuwait?
No, Incentive and Bonus is totally based on Companies decision.

13.  What are the items included in the End of Service Benefits calculation in
Kuwait?
The employee is entitled to the following end of service benefits.
 End of service Gratuity
 Repatriation ticket if applicable
 Notice periods pay if applicable
 Any unutilized leave (Vacation) pay
 Any other outstanding payment or deduction

14. Holidays in Kuwait
 The following National holidays are given in Kuwait.
 Arabic New Year: 1 day
 Isra’ and Mi’raj day: 1 day
 Eid Al-Fitr: 3 days
 Arafat day: 1 day
 Eid Al-Adha: 3 days
 Prophet’s Birthday (Al-Mawlid Al-Nabawi): 1 day
 National Day: 1 day
 Gregorian New Year: 1 day

15. Employee Benefits in summary:
 Salary
 Gratuity
 Annual Leave
 Sick leave
 Maternity Leave
 Iddah Leave
 Compassionate Leave
 Medical Insurance
 Overtime pay if applicable.
 Hajj Leave

16. Payroll Process
 The process of payroll is a little complicated and time-consuming; hence
it is always recommended to outsource your company’s payroll function.
Outsourcing payroll will ensure the assistance of a team of trained payroll
professionals and it frees up the time of the organization, helping them
focus on other projects that add value to their business.
 One should be extra vigilant while selecting their payroll provider, as
payroll data is highly sensitive, and one should opt for a provider that can
ensure high levels of data security.

17. Payroll Process
 As a leading payroll outsourcing company, HLB HAMT can help solve
your payroll complexities through customized strategies. We take care of
our clients’ entire payroll cycle that includes preparation of payroll
reports, processing salary payment with WPS compliance, accrual
management including Gratuity, pension funds, an online portal for
accessing payslips, and many more. Our leadership team spends the
necessary hours on every project, ensuring our clients get refined
consulting services to take your business forward.
 Business owners may not have the time for payroll calculation as they
have numerous other things to take care of. Outsourcing payroll functions
will not only free up the time of the owner but will also promise
professional service.

18. CONTACT US
HLB HAMT
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates. Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com
www.hlbhamt.com