Lower oil prices gravely affected many sectors in Kuwait society even the private companies with many expat employees working for them. Many questions have risen and expat employees are seeking for answers.
Situation No. 1: Our boss told us that because of bankruptcy / restructuring many of us will be terminated without any notice. Does this mean that because the company has filed for bankruptcy, we will not be able to get our termination indemnity and other benefits?
Answer: While it is true that private companies can terminate their employees because of bankruptcy only until a final verdict must be given by Kuwait Court as stated in Article 50 (a) of Kuwaiti labor law 6/2010:
“Article (50) The employment contract shall be deemed terminated in the following events:
a- If a final verdict was issued declaring bankruptcy of the employer;
b- If the establishment was permanently closed.
In the event where the establishment is sold, merged with another establishment or transferred by inheritance, donation or other legal action, the work contract shall remain valid under the same conditions and the obligations and rights of the original employer towards the workers shall be transferred to the employer who has taken his place.”
It must be noted too that for employees who have a contract on a specific time or length that is not renewable or renewable only with written approval, then the contract could end easily, with no consequences for either party. If the contract has a specified term, then the employer may terminate the employer but must pay him/her three months’ salary or have him/her work for another three months.
Situation No.2: Our employer said that he is going to lay us off but a contractor will re-hire us. We should expect no benefits from our new employer. What will happen to us?
Answer: As stated in Article 28 of Kuwait Labor Law 5/2010, “Regardless of whether the work contract is for a specific of indefinite term, the remuneration of the worker may not be reduced during the contract validity period. Any agreement to the contrary, whether made before or after the effective date of the contract, shall be deemed null and void because this matter is related to the general order.”
It is imperative for employers not to take away an employee’s benefits that are either agreed upon in the employment contract or are constantly given to the employee. For example if a free travel ticket is given to an employee every year, then, the travel ticket is obligatory. Whereas if a monetary bonus is given only if the company is gaining much profit, then a bonus is voluntary only.
However, even before the employees get rehired by a contractor, the legal employer must pay all the benefits, rights and termination indemnity when the contract between is finished. Rehiring from a contractor is another story.
Source: Atty. Fajer Ahmed, Kuwait Times