New Rules on Annual Leave and Pension Contributions

The Kuwaiti government has amended legislation to clarify (and extend) employee entitlements to annual leave and pension contributions.

Law No. 85 of 2017 effectively amended two articles concerning labor in the private sector in Law No. 6 of 2010. The Public Authority for Manpower in Kuwait (PAM) has now commenced implementation of the change.

Annual leave entitlements

Previously, the law did not specifically state that weekends, public holidays, and sick leave days could not be counted as part of an employee’s 30 days of annual leave. The amendment stipulates that weekends, public holidays, and sick leave days shall no longer be counted as part of annual holidays.

An employee’s entitlement to this annual leave is dependent on the employee having completed six months’ service with the employer.  

Clarification on deductions for pension contributions

Article 51 of the Labor Law deals with end of service gratuity and pension contributions. The amending law now states that upon termination, an employee is entitled to a full end-of-service indemnity without deductions for the contributions the employer made 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 employees’ end-of-service payout. The amending law clarifies that this practice is no longer allowed.

Comment

This change has been enacted to ensure a level playing field amongst employers. Going forward, employers that were previously taking advantage of grey areas of the law to deny their employees their legal entitlements will be at risk.

Written by Sadie Hussain of Al Tamimi & Co. and Roger James of Ogletree Deakins