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KEY DEVELOPMENTS FOR 2024

New Cabinet Resolution on Framework for Kuwaiti Employees on Government Contracts

Cabinet Resolution No. 1179 of 2023 on National Manpower Employment Regulations on Government Contracts (“Resolution No. 1179 of 2023”) applies to government contracts tendered by public bodies and excludes oil business sector contracts. It introduced a comprehensive framework for the recruitment, employment, and benefits of Kuwaiti workers in government contracts, as well as penalties for contractors' non-compliance. Each public body that offers government contracts must have a Kuwaitisation Unit, responsible for determining the proportions and numbers of Kuwaiti workers for each contract, announcing job vacancies, conducting recruitment procedures, overseeing the implementation of Resolution No. 1179 of 2023, and imposing penalties for non-compliance by contractors. The Kuwaitisation Unit has wide powers and discretion to interpret and apply Resolution No. 1179 of 2023, and to coordinate with the Public Authority for Manpower and other relevant authorities. This development reflects the Government's intention to monitor and enforce Kuwaitisation more closely and effectively, and to ensure that Kuwaiti workers are given priority and fair treatment in government contracts.

Work permit amendments

In August 2023, Decision No. 234 of 2023 was issued pursuant to Administrative Decision No. 156 of 2022 was issued. It amends certain portions of applications for work permits. In addition, work permits are permitted to be transferred or renewed on an annual basis for expatriate employees who are over the age of 60, and for those who hold a high school diploma or less are subject to the employee being insured by a comprehensive health insurance policy and an annual additional fee of KD 250.

Pensions

The Kuwait National Assembly has recently approved an increase to the minimum pensionable wage for Kuwaiti nationals to KD 1,000. Employers should ensure that their pension schemes are duly updated to incorporate this increase in the minimum pensionable wage for Kuwaiti nationals.

KEY DEVELOPMENTS FOR 2023

Restriction on expats changing jobs for a 5-year period

Abdullah Al-Turaiji, Kuwaiti Member of Parliament (“MP”) has submitted a proposal (the “Proposal”) in June 2022 calling for restrictions on expatriate job mobility. The Proposal sets out to restrict expatriates from changing their occupation before completing 5 years with the same employer. This Proposal is aimed specifically at “well-trained” expatriate employees, and “greedy employees.”

The Proposal, if adopted, would make it difficult for employers to attract the top talent for their given industry, and might also present problems at the managerial/executive level—especially where managers/executives/partners are expatriates themselves. As the Proposal stands, in order for an expatriate worker to change jobs, they would need to complete 5 years of service with their current employer. The alternative would be for the expatriate worker to leave Kuwait for a period of 5 years, and then return to Kuwait should they wish to change jobs.

It is unclear whether or not termination of an expatriate employee would change the situation; however, and seeing as though the Proposal’s aim is to protect the rights of employers, the 5-year requirement seems to be a hard-line requirement necessary to change jobs.

Employers should remain wary and keep themselves apprised of this potential development in Kuwait, as it is a very strict policy that would truly change the labour and employment landscape in Kuwait. Employers should keep this policy in mind when preparing their compensation packages for new joiners and should keep in mind that should this proposal be implemented, their future employees will be necessarily tied to their initial sponsor for a period of 5 years. This Proposal necessarily implies that employers are—and must continue to—invest heavily in the onboarding process.

Public Authority for Manpower (“PAM”) announces new online services

The Public Authority for Manpower launched a new electronic service through the “Asahel” application for employers. This new online service allows the employer to change work permit data, and to modify and/or correct the data of their employees. Specifically, employers, through the Asahel application, can modify the name, degree/certificate, passport number, and other biographical information of their employees through the application.

The newly expanded online services allow for employers to modify regular menial details concerning their employees more expeditiously. This means that employers can better organize these affairs internally rather than relying on other employees to physically visit the relevant ministry to achieve the same outcome. We would advise employers to establish internal protocols for those individuals who might have access to such data (e.g., only high-level managers might be able to make amendments, and only upon express written approval of the owner of the business).

Internal protocols on this matter would be necessary as it is important for sensitive information pertaining to employees to be protected, i.e., it is important that sensitive information about employees not be divulged to their colleagues.

Kuwait suspends work visas for Egyptian workers

In late 2022, it was announced that the State of Kuwait would be suspending work visas specifically for Egyptian nationals. On December 6, 2022, it was clear that the suspension was to continue. Egyptian nationals are the second largest group of expatriate workers in Kuwait after Indian nationals. Depending on an employer’s type and/or scale of business operations, this will have a varying effect.

Egyptian nationals in Kuwait occupy a special space in Kuwaiti labour/employment as they are often educated and occupying high-level positions (e.g., judges, lawyers, doctors, etc.) but there is also a significant contingent of Egyptian nationals working more physically demanding, non-skilled positions, too (e.g., drivers, cooks, general labourers, messengers, etc.). Further to the special place that Egyptian nationals occupy in Kuwait is the fact that they are Arabic speakers, all of whom are able to properly act upon instructions given in Arabic, and, when in a managerial role, are able to properly delegate work to other Arabic speakers.

Kuwait is largely dependent on its expatriate workforce and the suspension of visas being offered to Egyptian nationals may have a significant impact insofar that the amount of Arabic-speaking workers may be diminished and the cost to employ individuals who are already in Kuwait could increase as a result. We would advise employers to review their business operations and their corresponding business needs in the context of the State of Kuwait’s recent referenced decision. Specifically, we would advise employers to focus on whether their business operations would require Egyptian expatriates as having Arabic-speaking employees is often necessary in Kuwait when dealing with government offices, and general day-to-day operations.

KEY DEVELOPMENTS FOR 2022

New laws regarding preventing discrimination

Resolution No. 177 of 2021, Prohibiting Discrimination in Employment in the Private Sector and Prohibiting Sexual Harassment in Workplaces came into force in 2021. This resolution prohibits employers from discriminating employees based on gender, age, pregnancy, or social status in all aspects of employment. Further, sexual harassment in the workplace is prohibited in all its forms and means, including by means of new technological methods, without violating provisions of the Penal Code.  It is anticipated that the prohibition of discrimination in the workplace will be a key focus of 2022.  

Employers’ files may be permanently or temporarily suspended in the event of a violation to the resolution.  As such, it is important that employers take appropriate action to avoid any deliberate or indirect act that could fall foul of this new law.  

Ability to transfer work permits after one year (rather than three)

Administrative Decision No. 375 of 2021 has implemented a change to the existing work permit regime.  Work permits can be transferred after one year of service from the date of issuance of the work permit instead of three years, provided that the approval of the employer is obtained and the conditions and regulations set by Public Authority for Manpower are followed. Employers should be mindful of this change which may assist with the transition of employees.

New cloud computing regulatory framework

The Kuwait Communication & Information Technology Authority (“CITRA”) published a Cloud Computing Regulatory Framework in September 2021 in relation to the telecommunications and IT sector in Kuwait. In addition, there is an obligation on all natural or legal persons contracting with service providers to classify their data for information security procedures in line with the new Data Classification Policy or international best practices. Employers should review their current procedures and policies to ensure current operations are in line with the new regulations and ensure that all data is classified appropriately.

Introduction of work permit fees for expats over 60 years of age

On 24 January 2022, the Public Authority of Manpower issued a decision that work permits for expats who are 60 years and older with a high school degree or less should be accompanies by a fee of KD 250 and health insurance (the latter via one of the insurance companies listed on the stock market). Certain exemptions apply in respect of excluded groups, including husbands and children of Kuwaiti women, wives of Kuwaiti men, as well as Palestinians with proper documentation. Employers should be aware of this change, particularly as this appears to be part of the long-term strategy of replacing expat workers with Kuwaitis.

KEY DEVELOPMENTS FOR 2021

Restrictions on the transfer of employees

Administrative Resolution no. 529/2020 for amending Resolution no. 842/2015 regarding the terms and conditions of transferring an employee from one employer to another one has prohibited the transfer of work permits from the government sector to the private sector. All spouses and children of Kuwaiti women and the wives of Kuwaiti and Palestinian women, who have documents in line with technical professions specialised in the health field and have licenses to practice are excluded from this prohibition. This also includes medical professionals in the Ministry of Health, provided that the nature of their work is related to the health field, such as doctors, nursing staff, and others who practice medical specialties according to the procedures in force at the Ministry of Health.

Implications of work visas on businesses

In light of the pandemic, there has been a halt on the issuance of new work visas resulting in a halt on foreign recruitment. Although the Government has slowly begun to assess visa applications for a certain list of professions (not known to the public as of yet), there is no indication as to when the Government and the immigration authorities will revert to their visa issuance status pre‑COVID. The effects of this can be seen across business in Kuwait, who are experiencing a shortage of manpower due to their inability to recruit from abroad. Having said this, there are talks within business councils in Kuwait regarding the necessity for amending the Kuwait Labour Law to accommodate to future economic hardship in order to avoid hardships such as lack of manpower. However, it cannot be said with certainty whether or not the Kuwaiti Government will consider amending the law.

KEY DEVELOPMENTS FOR 2018

No Deductions for Pension Contributions

On termination, an employee is entitled to the full end of service indemnity without deducting the contributions made by the employer towards the Public Institution for Social Security (“PIFSS”). Previously, some employers used to deduct the amount that they had contributed towards social security from their employee’s end of service pay out, but this practice is no longer permitted.

Annual Leave Entitlements

Previously, the Labour Law did not specifically state that weekends, public holidays and sick leave days were not counted as part of annual leave and employers were therefore more inclined to give 30 calendar days’ leave.

However, weekends, public holidays and sick leave days shall no longer be counted as part of annual holidays, and employees have the right to 30-days’ paid annual leave in the first year of service provided they have been employed for at least six months.

Domestic Workers

The Kuwaiti government now anticipates reforming the method in which work permits are granted to domestic workers, taking into account the most balanced solution for both employers and employees alike. In addition, the government wishes to ensure safe channels for domestic workers to seek help from the Kuwaiti government when required. It is unclear as to when such changes will take place.

KEY DEVELOPMENTS FOR 2016

All employees required to sign a new standard form employment contract

A new standard form employment contract called the Unified Employment Contract has been introduced which includes 16 standard clauses.

Ability for employees to transfer jobs without the permission of employers

Where an employee has worked with an employer for three years (beginning with the date of issue of the work permit), the employee is free to move jobs provided he serves his notice period (which, for those employed on a permanent employment contract, will be such notice as the employment contract provides). Employees on fixed term contracts will have to complete the remainder of the contract before being able to move jobs.

Various legislative changes

Where an employee has worked with an employer for three years (beginning with the date of issue of the work permit), the employee is free to move jobs provided he serves his notice period (which, for those employed on a permanent employment contract, will be such notice as the employment contract provides). Employees on fixed term contracts will have to complete the remainder of the contract before being able to move jobs.

• All employers (save in respect of certain exempt industries) with five or more employees must pay salaries to employees’ accounts with local financial institutions and the Public Authority for Manpower may request a copy of the statements of payments
• Companies which bring in expatriate employees to Kuwait and then fail to provide them with employment or find that there is no actual need for the employee may now be fined and the employer shall bear the expenses of the repatriation ticket. If the employee stops working for the employer without proper notice and joins another company the new company will be liable to pay for the repatriation of the employee once the original employer reports that the employee has been absent from work. The fines have increased to KD 2,000 – KD 10,000 and could result in imprisonment of up to three years.
• Various fines and penalties may be imposed where an employer does not:
  • Take proper safety measures to protect its employees;
  • Instruct the employee of the risks and warnings associated with his work; or
  • Protect the employee from work hazards (such as health damage and occupational diseases that may arise from the performance of the work).
• The Ministry can partially or completely close the premises or suspend the use of a specific machine or machines until the violation is remedied. The fines and penalties for violation of closures have increased to KD 500 to KD 2,000 and/or imprisonment for one to six months.