Protecting Your Workforce and Business: Key Legal Insights for Kuwait

OVERVIEW

Recent regional developments have created operational challenges for businesses across the GCC, including in Kuwait. In practice, employers may be considering measures such as mandating annual leaves, implementing reduced working hours or part time arrangements, imposing unpaid leave, temporary or permanent salary reductions, temporary suspension of employment and termination, particularly where the business has been affected. While employees may feel pressured under these circumstances to accept less favorable terms, such bargaining dynamics do not necessarily, in the circumstances, remove statutory obligations.

Although these measures may appear operationally necessary, applicable labor laws and recent regulatory guidance (in some GCC jurisdictions) confirm employees’ protections, thus careful legal consideration and assessment must be made on a case-by-case basis prior to the implementation of any measures limiting or affecting employees’ rights arising from the employment contract, the internal policies of the employer and the applicable laws and regulations.

REGULATORY CONTEXT AND KEY LEGAL CONSIDERATIONS IN KUWAIT

1. Force Majeure and Exceptional Circumstances under the Civil Code

Pursuant to Decree-Law No. 67/1980 (the “Civil Code”), Kuwaiti law distinguishes between force majeure and exceptional circumstances, each carrying distinct legal consequences with respect to contractual obligations.

Force majeure, as provided under Articles 215 and 437, arises where performance of an obligation is rendered objectively impossible by an external event beyond the control of the obligor. In such circumstances, the contractual obligation may be extinguished, and the contractual relationship terminated.

Exceptional circumstances, codified in Article 198, contemplate situations in which unforeseen events, arising after the conclusion of the contract, render performance excessively onerous. The Civil Code permits the competent court, at its discretion, to adjust contractual obligations in a manner that restores equitable balance between the parties. The application of this doctrine presupposes that the circumstances are extraordinary, general, and unforeseeable, and does not automatically relieve the obligor from performance absent judicial determination.

It is also important to note that any reliance on the COVID-19 period as a direct precedent should be approached with caution, as widespread mitigating measures (including remote working and operational adjustments) were generally implemented and broadly adopted by employer since, reflecting a general preparedness that often allowed contractual performance to continue and reduced findings of force majeure in practice. As such, what may have previously been considered force majeure would not necessarily be characterized as such today, and the assessment remains highly dependent on the relevant industry and the actual impact on performance, including whether the work can be carried out remotely or requires on-site presence.

2. Employment Contracts under Kuwaiti Labor Law

Employment contracts constitute continuing obligations over a defined term. Article 61 of the Kuwaiti labor law (the “Labor Law”) provides that employees are entitled to receive their wages during temporary closures not attributable to them. Kuwaiti courts have consistently affirmed that this statutory protection prevails over general provisions of the Civil Code, including the doctrine of exceptional circumstances.

As such, any unilateral modification of wages or employment terms could carry legal risks, notwithstanding any consent provided by employees, and may be subject to challenge.

3. Factual and Legal Considerations

The distinction between force majeure and exceptional circumstances may depend upon the specific operational and economic impacts of the prevailing circumstances on each company. While contractual performance may remain possible, the degree of burden may be substantial, invoking considerations under Article 198 rather than Articles 215 and 437.

The assessment of workforce measures under Kuwaiti law is therefore fact-sensitive, and judicial outcomes remain discretionary, with particular regard to:

– The nature and scope of the employer’s operations;

– The specific terms of employment contracts;

– The extent of operational or economic disruption; and

– Relevant judicial precedent and statutory protections, including those enshrined in the Labor Law.

In summary, the legal framework governing workforce measures in Kuwait limits the circumstances in which contractual obligations can be adjusted under the Civil Code. The doctrines of force majeure and exceptional circumstances are highly fact-specific, and their application depends on the particular circumstances of each case as interpreted by the courts. Evaluating potential workforce measures therefore requires careful consideration of the statutory framework, relevant precedents, and the operational context. Any decision in this environment involves balancing legal obligations with practical realities, and the risks associated with different approaches must be carefully assessed before action is taken. The employer may further also seek to discuss any measures, prior to implementing them, with the Ministry of Social Affairs.

OTHER GCC JURISDICTIONS

In the UAE, force majeure and hardship are recognized concepts under contract law; however, there is currently no explicit decision or regulatory framework that specifically governs or permits temporary measures affecting employment obligations due to the regional context. It is therefore expected that the same rationale applies in practice, with a strong emphasis on compliance with existing contractual and statutory obligations.

For instance, in Abu Dhabi, on 6 April 2026, the Abu Dhabi Registration Authority (ADRA), in coordination with the Department of Economic Development – Abu Dhabi, issued Circular No. 08/2026 reaffirming employers’ obligations regarding the timely payment of wages. Against the backdrop of ongoing economic and geopolitical pressures, the circular emphasizes that salaries must be paid in full and in accordance with contractual timelines, without delay or reduction. It further clarifies that employers may not defer, withhold, or reduce wages except in circumstances expressly permitted by law, and that financial or economic constraints do not constitute legal justification to deviate from contractual commitments.

It also stresses that any amendments to employee compensation or benefits must comply with applicable legal and regulatory requirements. The circular signals a firm regulatory approach in Abu Dhabi. Thus, careful legal consideration and assessment must be taken by employers prior to implementing any measures affecting the rights and entitlements of employees.

PRACTICAL GUIDANCE FOR BUSINESSES

Navigating workforce management under exceptional circumstances requires a structured and legally grounded approach. Companies should:

Assess legal and operational risks: Review proposed measures against statutory protections, judicial precedent, and regulatory obligations to understand potential exposure.

Identify applicable remedies: Evaluate whether force majeure, hardship clauses, or other contractual relief mechanisms may apply, and understand their limitations under the relevant laws.

Document decisions and communications: Keep detailed records of employee communications, agreements, and operational justifications to support compliance and mitigate potential disputes.

Engage employees appropriately: Seek formal agreement where adjustments to contractual terms are proposed.

Monitor regulatory and judicial developments: Anticipate potential challenges, including scrutiny from authorities or courts, particularly regarding wage payments or reductions in employee entitlements.

HOW CAN WE HELP

At Meysan, our teams have extensive experience advising companies operating in Kuwait and across the region on employment law matters, particularly in situations involving operational disruption or exceptional circumstances. Drawing on our historical experience and established precedent, we help clients assess the legal and operational risks associated with contemplated workforce measures, including how different approaches may be viewed under statutory provisions, judicial interpretation, and regional regulatory requirements.

Our support extends to documentation drafting, employee communications, negotitaions and mediation, and implementation strategies, with the aim of minimizing disputes while preserving operational flexibility. By combining regulatory expertise with practical, on-the-ground experience, we enable clients to make informed, risk-aware decisions while carefully managing compliance and operational exposure under Kuwaiti and regional employment law.