A Dutch construction company, XYZ, has operations in over 40 cities worldwide and employs more than 50,000 staff. Employees working on-site work in twelve-hour day and night shifts. XYZ has recently set up operations in Kuwait ("XYZ Kuwait"), hiring local staff as well as bringing a number of existing employees to Kuwait on assignment for a one-year period to train the local employees. The managing partner of XYZ Kuwait would like to know how Kuwaiti law addresses the following issues with respect to the local employees and particularly to the foreign employees on assignment, given that their employment contracts are subject to the laws of the Netherlands.
What are the permissible working hours and how is overtime calculated?
Kuwait's Law No. 6 of 2010 (the "Labor Law")
regulates the labor law in Kuwait and applies to workers in the
private sector. The Labor Law states that employees may not work
for more than 48 hours per week or 8 hours per day, except as
otherwise specified in the Labor 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 that is
not 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, XYZ Kuwait will be in violation of the Labor
Law if it 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
provided under one of the circumstances described above.
With respect to the XYZ 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 Labor
("MOSAL") requires that all applicants for work permits
sign off on a short-form employment contract with their Kuwaiti
sponsor, which is subject to Kuwaiti law. As such, the Labor Law
will apply to the XYZ employees with respect to their services
performed in Kuwait.
How are end-of-service indemnities calculated, and do the same apply services performed outside of Kuwait?
End-of-service indemnities for employees paid on a monthly basis
are determined by calculating 15 days' remuneration for each of
the first five years of service and one 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.
Under the Labor 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 Labor Law,
or if a female employee resigns as a result of her marriage within
one year from the date of her marriage. Furthermore, the Labor Law
states that employees with indefinite term contracts who resign are
entitled to half of their end-of-service indemnities if they resign
having completed between three and five years of service,
two-thirds of their indemnities for completing between five and ten
years of service, and full indemnities if their years of service
reach and/or exceed ten years.
With respect to the XYZ employees on assignment in Kuwait, their
end-of-service indemnities would be calculated based upon the terms
contained in the assignment contract (i.e., the short-form
employment contract required by the MOSAL) that is subject to
Kuwaiti law. Therefore, the end-of-service indemnities would not
likely include the period of service performed prior to the
employees' arrival in Kuwait.
Finally, parties to an employment contract cannot contract out of
the employer's obligation to pay end-of-service indemnities.
The benefits granted under the Labor Law represent the minimum
rights granted to 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.
How is annual leave calculated?
One of the major sources of confusion for employers is the
calculation of annual leave under the Labor Law. Article 70 of the
official Arabic version of the Labor 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 reading of the provision is
that the annual leave period refers to calendar days. Under this
approach, the leave period would be calculated from the date the
employee last worked and the employee loses the economic value of
the weekend. A second and more employee-friendly reading of the
provision is that the leave period applies to business days and not
the weekend, meaning that if an employee takes 20 days leave, he or
she is entitled to 20 working days plus the weekend. As the Labor
Law is interpreted in favor of the employee, we support the
interpretation that the annual leave period refers to 30 business
days.
Another source of confusion is the term "public vacation
days" 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 Labor 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 calculate 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 Labor Law's
implementing regulations, when released, will shed more light on
this issue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.