Kuwait caps salary deductions at 10% for loans, 25% for debts

Picture a worker opening their payslip and finding less money than expected, with no real explanation. It happens more often than it should in Kuwait, and it’s exactly the kind of situation the Public Authority for Manpower (PAM) just addressed.

PAM has put out a clarification telling employers in plain terms: you cannot quietly lower a worker’s agreed wage, and if you deduct money for a loan or a debt, there are strict limits on how much you can take. This comes at a time when the authority has already been flagging thousands of firms over late salary payments, so pay issues are clearly on its radar.

How this started: a publication about rights and stability

PAM released an awareness publication called “Clarity of Rights… Stability for the Employment Relationship.” The title says a lot about the goal here. The authority wants both workers and employers to know exactly where they stand when it comes to pay.

The first point PAM made is simple but important: the wage written in your employment contract has to stay the same for the whole contract period. An employer cannot reduce it partway through, whatever the reason. This sits under Article 28 of Kuwait’s Labour Law, and it applies to every worker whose pay is set out in a contract.

So what can an employer actually deduct?

This is where the new clarity matters most. PAM separated the rules into two situations.

Loans or debts owed to the employer: if a worker owes their employer money, perhaps from a salary advance or a company loan, the employer can only deduct up to 10% of the wage to recover it. On top of that, Article 59/A of the Labour Law bans employers from charging any interest on these loans or debts. So the amount owed should never grow on its own.

Other debts: this covers situations where a worker’s salary is seized, assigned, or deducted to settle debts that are not owed to the employer, for example a court order or a bank obligation. Here, the limit is higher but still capped. PAM said this kind of deduction cannot go beyond 25% of the wage, even if the worker has several debts at once.

PAM also said the two limits interact. The 10% cap for employer debts still has to be respected within the overall 25% deduction ceiling, so an employer and other creditors can’t simply stack claims past that point.

What happens when debts pile up?

If a worker owes money in more than one direction at the same time, PAM made it clear there’s an order of priority. Alimony obligations come first, ahead of other debts. This follows Article 59/B of the Labour Law, and it protects family maintenance payments from being pushed aside by other claims on a worker’s salary.

What this means for people working in Kuwait

For expats on a monthly wage, this gives you a number to check your payslip against. If your employer is deducting more than 10% for a company loan, or more than 25% in total for outstanding debts, that goes beyond what the law allows.

It also matters if you’ve taken a personal loan from a bank in Kuwait rather than your employer, since court-ordered deductions for that kind of debt fall under the 25% rule, not the 10% one.

For citizens and long-term residents alike, the wage-protection part of this matters just as much. Your contracted salary is your contracted salary, whatever your employer’s situation looks like. This comes alongside other recent moves from PAM, including its warning to firms over late salaries to expats and plans to shut the files of companies that don’t pay on time.

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