1. Administering Payroll for Kuwait
  2. Social Insurance Calculation for Kuwait

Social Insurance Calculation for Kuwait

Social insurance is applicable to all Kuwaiti citizens who work in Kuwait and are paid there. This contribution is normally paid both by the employer and the employee.

Contributions are calculated as percentages of a contributory salary. The contributory salary components are elements such as salary, social allowances, child allowance and so on. The legislation determines which elements are liable to social insurance contributions, whereas the amounts and definitions depend on the employer's regulations.

For private sector employees:

  • The amount of the contributory salary can be overridden at the person level.

  • If this amount isn't entered at the individual level, you can define a formula used to calculate the contributory salary at the legal employer level.

  • Finally, if neither individual override, nor legal employer formula, are defined, the contributory salary uses the value of earnings elements that are subjected to social insurance. These elements are identified through secondary classification and feed the balance Subject to Social Insurance. Further detail on how Kuwait has defined element classifications and balances can be found in the related sections.

    The contributory salary has a monthly minimum value and a monthly ceiling. This means that if the monthly social insurance income is lower than the minimum value, contributions are calculated on the minimum value. If the monthly social insurance income exceeds the monthly ceiling, contributions are due just on the part up to the ceiling. For the Kuwait Basic social insurance is calculated on earnings between KWD 230-1,500. Supplementary social insurance is calculated on earnings over KWD 1,500 up to a maximum of KWD 2,750.

  • For the Private Sector, the current contribution rate for the employee is 10.5% and the employer is 11.5%.

  • Employee contribution is inclusive of 2.5% gratuity contribution which is effective from 1st January 2015. To calculate gratuity contribution, the Employee Social Insurance Calculation Card is enhanced to capture Gratuity Contribution Start Date, Gratuity Previously Received from PIFSS, and Gratuity Received from Previous Employer.

  • If the payroll relationship of an employee is terminated in the middle of the month, social insurance contributions aren't deducted. If at the end of the month, the full social insurance contributions will be deducted.

For the government sector:

  • The contributory salary uses the value of earnings elements that are subjected to social insurance. These elements are identified through secondary classification and feed the balance Subject to Social Insurance. Basic social insurance is calculated on earnings between KWD 230-1,500 .Supplementary social insurance is calculated on earnings over KWD 1,500 up to a maximum of KWD 2,750.

  • The current contribution rate for the employee is 10% and the employer is 11%.

  • Employee contribution is inclusive of 2.5% gratuity contribution which is effective from 1st January 2015.

    To calculate the gratuity contribution the Kuwait Employer Gratuity Details is enhanced to capture Gratuity to be Paid; and the Employee Social Insurance Calculation Card is enhanced to capture Gratuity Contribution Start Date, Gratuity Previously Received from PIFSS, and Gratuity Received from Previous Employer.

  • On termination, the social insurance contributions are calculated up to the last working date and are always based on the balance Subject to Social Insurance. If the earnings elements that feed the balance are enabled for proration then social insurance contributions will automatically be prorated.