KUWAIT Law and Practice Contributed by: Sam Habbas, Luis Cunha, Hisham Al-Quraan and Mustafa Sayed, ASAR – Al Ruwayeh & Partners
• the employee was assaulted by either the employer or their deputy; • continuing work will endanger their safety and health pursuant to the decision of the medical arbi - tration committee at the Ministry of Health; • the employer or their deputy committed an act of cheating or fraud with regard to work conditions upon signing the contract; • the employer accused the worker of committing a punishable act and the final verdict acquitted the worker; or • the employer or their deputy commits an act against the employee that violates public morals (Article 48). If the term of the work contract is not specified (ie, an indefinite-term contract), both parties have the right to terminate by providing three months’ prior notice of termination (assuming the employee is paid on a monthly basis – this notice period is one month for contractors paid on another basis (Article 44)). In rela - tion to fixed-term contracts, Article 47 of the Labour Law provides that, where the contract is unlawfully terminated prior to the expiry date, the terminating party shall compensate the other party for damages suffered, provided that the amount of compensation does not exceed the remuneration of the worker for the remaining period of the contract. The damage suf - fered is typically determined in light of trade custom, the nature of the work and the unexpired portion of the contract. All amounts due to the other party may be deducted from the value of the compensation. Except in limited instances (eg, termination under Arti - cle 41 (a) of the Labour Law), employees are generally entitled to certain end-of-service benefits following the conclusion of the relevant employment relationship. In this regard, according to Article 51 of the Labour Law, employees paid on a monthly basis are entitled to 15 days’ salary for each of their first five years of service and 30 days’ salary for each subsequent year. Other employees (eg, employees paid on a commis - sion basis or an hourly, daily or weekly basis, etc) are entitled to ten days’ salary for their first five years of service with the employer and 15 days’ salary for each subsequent year. The total end-of-service indemnity is based on the latest monthly salary (including all regu - lar, customary and ordinary payments made to the
employee, such as regular benefits, allowances and grants) and should not exceed one and a half years’ salary. Other factors that affect the calculation of the end-of-service benefits include whether the employee was on a fixed-term contract, the term of employment
and whether the employee resigned. 4.5 Employee Representations
Articles 98 to 132 of the Labour Law address employ - ees’ rights to organise/form unions, collective employ - ment contracts and collective labour conflicts. Such issues are rarely encountered in practice unless an employment field is populated primarily by Kuwaiti employees, and such arrangements are by no means mandatory. Article 109 of the Labour Law requires employers to provide their employees with copies of all laws and regulations relating to their rights and duties. Addition - ally, Article 35 of the Labour Law requires employers to inform employees in advance of the penalties to which they may be subject. Natural persons are not generally subject to tax in Kuwait. As such, no taxes are typically payable in the context of an employment relationship. However, with respect to the employment of Kuwaiti nationals, such persons and their employers are subject to the Social Security Law of Kuwait and are obliged to make certain social security contributions (ie, 10.5% of the employee’s salary from the employee and 11.5% from the employer). 5.2 Taxes Applicable to Businesses There have been certain developments regarding the application of income tax in Kuwait. The following are particularly noteworthy. • Decree Number 3 of 1955 (the “Corporate Income Tax Law”): this law applies generally and provides that tax will be levied at a flat rate of 15% on the net profits generated in Kuwait by any corporate body “carrying on business” in Kuwait. As a matter 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
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