Kuwaiti oil prices have dropped significantly in the past year, and it is no secret that Kuwait’s economy depends on oil. An issue that I have been receiving multiple emails about in the past few weeks is the termination of a work relationship and other employee rights and obligations that come along with it. I have previously spoken about termination, but the cases I recently have been getting are different because there seems to be group terminations caused by companies going through financial difficulties and losing on projects they have won.
So before I get into the legalities of termination indemnity, I just want to be clear that I am not using legally correct language, but instead using the words that are understood by the general public as I am simplifying the legal issues, because the aim of my column is for my readers to understand.
Question (Part 1): Our company hired me in 2012 when they won a project’s contract with an oil company. Two years later in 2014, another company won the project’s contract and we were transferred or I guess re-hired by the new company. We got paid all of our termination indemnity rights, and we had to sign new contracts, even though we were literally working in the same place. Is this legally correct? I would like to know for the future.
Fajer: Well, this is not an easy question to answer because it depends on a few things, let us take it step-by-step. From experience with contractors, it seems like some foreign companies are being subcontracted to do the actual work. Now these companies usually use Kuwaiti companies to bring in or to hire their employees.
In order to save money, foreign companies now ask employees to resign and then rehire the employees through the new sponsor that has won the government contract. They are saving money because usually the more years you work with a certain employer, the more your termination indemnity is. Also, if you are resigning yourself before the end of your contract, you will not be entitled to any end of service benefits.
Asked to resign
Question (Part 2): In 2016, another company came in and won the governmental contract but did not rehire us. Our current company asked us to resign. I do not understand why I have to resign if my contract ends anyways?
Fajer: Although I generally do not give legal advice concerning an employment relationship without reviewing the contract because the answer to this question may depend on clauses in the contract, but it is safe to say that they are asking employees to resign in order to save money by not being obliged to pay end of service benefits. I can also say from experience that a lot of companies will try to get their employees to sign a document stating that they no longer owe them any amounts even if that is not true.
Question (Part 3): Is there any advice you can provide to my colleagues that may be laid off in the near future?
Fajer: I think all employees should consider being precautious regardless of how stable their job might be. To make our jobs easier in the future should a dispute arise, my team suggests the following:
1. For contractors specifically that are working with private foreign companies to ask for their full salary to be deposited in their Kuwaiti bank accounts.
2. Always save important emails by forwarding them to your personal email, you never know when you will be denied access to your work email.
3. Keep important dates like the day you started your employment relationship, date you received a promotion, date you went on holidays and so on.
4. Always ask for things in writing, if you leave a meeting and something important was discussed or decided, then email ‘Minutes of meeting’ to the attendees of the said meeting, mentioning the important topics discussed.
5. Never sign a document unless you can fully understand the information in it and, this goes without saying, it is in a language that you can personally read and understand. Also no matter how much pressure you receive, do not sign a document unless you agree to what is written in it.
6. Check your work permit and make sure it states your exact salary amount, not less or more.
By Attorney Fajer Ahmed
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