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.