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New Unemployment Insurance Law to aid unemployed Kuwaitis

Kuwait introduced several new laws to update its legal system in recent times, and the Social Insurance or the unemployment insurance law is one of these.

Social Insurance, in general, is a system wherein people receive benefits or services in turn for their contributions made to an insurance program. In order to further expand on the Kuwait social insurance system, a permanent government-funded social security fund for protection of employees against unemployment has been established. The details of the law are briefed here, as explained by ‘Al Tamimi and Company’, leading law firm in Kuwait.

The Unemployment Insurance Law was introduced in April 2013 to offer insurance against unemployment and offer social security for Kuwaiti employees in the private and oil and gas sectors in case of their dismissal. The eligibility of the law is limited to Kuwaiti nationals in the age group of 18 to 60 years, who are capable of working and not entitled to receive a pension. They should have been employed for at least six months, prior to application date of the Unemployment Insurance Law.

The Unemployment Insurance Law says that employees are eligible for 60 percent of their last month’s salary for a period of six consecutive months following unemployment, irrespective of the cause whether resignation or termination.

Both employer and Kuwaiti employee should contribute to this social insurance fund. Further, the Unemployment Insurance Law states that each Kuwaiti employee and his employer shall contribute a monthly 0.5 percent, and the public Treasury will also contribute 0.5 percent.

These contributions will be deducted retroactively from the date of application of the Unemployment Insurance Law on 1st May 2013 (for those registered with PIFSS – Public Institute for Social Security) from that date. This contribution amount will be calculated based on total salary in basic insurance and salary in supplementary insurance at maximum of KD2750 a month.

All provisions of Unemployment Insurance Law are to be applied in line with Social Insurance Law, which is discussed above.

To obtain the unemployment insurance benefits, the unemployed Kuwaiti employee should apply to Manpower and Government Restructuring Program within 30 days from ending of date of employment. The insured will be paid unemployment compensation from the eighth day of ending date of employment and if no registration occur, the compensation will be payable from the date the application was submitted.

The insurance benefits may not be granted under the some specific circumstances, such as, if the insured rejects a suitable job, or if the insured refuses to join a training course under the Manpower and Government Restructuring program, or if the insured has a private business.

From May 2013, the total contributions owed to social insurance funds through various arrangements by Kuwaiti employees will be 8 percent of employee’s monthly salary and for the employers, and the total contribution shall be 11.5 percent of the employee’s monthly salary.

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