Saudi Labour Law Updates In 2023
Staying current with Saudi labour laws and regulations is crucial for any business operating or aspiring to operate in the Kingdom. These laws have evolved significantly to support the country's ambitious goals and objectives to achieve Vision 2030 by creating a vibrant community and unique work environment for a competitive labour market. During the last three months, the Ministry of Human Resources and Social Development (MHRSD) has implemented various policies and regulations that have significantly impacted the labour market's advancement.
This blog post will take you through the latest legal updates and legislative policies that were announced by the MHRSD in 2023.
Saudi Labour Law Updates In Q4
Saudi Arabia Enforces Strict Measures Against Salary Delays
The Saudi Ministry of Human Resources and Social Development has implemented stringent rules through the Mudad platform, mandating that employers who delay salaries for three consecutive months will face a halt to all their services. Employees impacted by such delays can transfer to another employer without needing consent from the current one. The platform also reduces the period for employers to justify salary delays to 10 days and for employees to respond to three days. This move is aimed at enhancing employee rights and ensuring timely salary payments.
MHRSD Announces Localization of Insurance Sales Jobs by April 2024
Saudi Arabia has mandated the localization of all insurance sales jobs, effective from April 15, 2024. This decision, issued by the Insurance Authority, is part of an effort to Saudize jobs in the insurance sector. It also includes a regulation that workers in non-sales roles within the sector are not allowed to receive sales commissions. This initiative aims to develop specialized national competencies and improve service quality in the insurance industry.
MHRSD Launches E-Documentation for Operation and Maintenance Contracts
The Saudi Ministry of Human Resources and Social Development has begun the first phase of electronically documenting operation and maintenance contracts in public entities. This initiative, which started on December 1, 2023, is being rolled out on the QIWA platform. It aims to monitor the localization of these contracts, ensure compliance with localization rates, and increase Saudi workforce participation. The decision covers contracts with government agencies and state-majority-owned companies, including various sectors like city cleaning and IT maintenance.
Saudi Private Sector Urged to Digitize Employee Contracts via QIWA Platform
The Ministry of Human Resources and Social Development (MHRSD) in Saudi Arabia is calling on private sector firms to document their Saudi and non-Saudi employee contracts through the QIWA platform. This documentation is vital for firms to fully benefit from the Ministry's services. The compliance percentages for contract documentation in 2023 have been set at 20% for the first quarter, 50% for the second, and 80% for the third quarter. The Ministry aims to protect workers' rights, ensure labour law compliance, and enhance the Kingdom's labour market attractiveness.
QIWA Platform Introduces Salary Disbursement on a Percentage Basis
The QIWA platform in Saudi Arabia now allows employers to distribute workers' salaries based on a percentage basis. This feature aims to provide flexibility in salary management, particularly useful for businesses that rely on variable income streams. It enables employers to adapt their payroll to fluctuating revenue conditions, ensuring both business sustainability and fair employee compensation.
QIWA Platform Sets Probation Period Limit to 90 Days
QIWA platform has revised the probation period for workers, setting a maximum duration of 90 days. This update represents a significant change in employment regulations, aiming to provide clarity and fairness in the probationary terms for employees. It aligns with the efforts to streamline labour practices and enhance worker rights in the Kingdom.
Saudi Labour Law Updates In Q3:
QIWA Reduces The Probation Period Of Workers To 90 Days
The QIWA platform, managed by the Ministry of Human Resources and Social Development (MHRSD), has made the probation period for workers shorter, reducing it to 90 days. This change can be seen in the electronic records of employment contracts, where the probation period is now limited to a maximum of 90 days instead of the previous 180 days. This change follows the rules of the Labour Law, specifically Article 53, which states that the probation period for employees should not be longer than 90 days.
New Skill Verification Service For Expatriate Workers
The Ministry of Human Resources and Social Development (MHRSD), working with the Ministry of Foreign Affairs, has introduced a single platform for the Skill Verification Service. This platform is designed to confirm the qualifications of foreign workers.
Under this initiative, the MHRSD, through the Professional Accreditation Program, will gradually roll out the initial phase of the service in 62 countries using the platform. This aligns with the ministry's strategy to create an appealing job market and enhance and improve the working conditions.
Saudi Arabia Aims To Nationalize 35% Of Dental Workforce
The plan to introduce a 35% localization requirement for the private dental sector will take effect on March 10, 2024.
This decision is a joint effort between the Ministry of Human Resources and Social Development (MHRSD) and the Ministry of Health. The aim is to generate more appealing and beneficial employment opportunities for both male and female citizens across Saudi Arabia.
A penalty of SR5,000 for Employing Expats Without Proper Work Permits or Ajeer Notification
The Ministry of Human Resources and Social Development has announced a fine of SR5,000 for hiring a foreign worker without the necessary work permit or failing to notify on Ajeer Program.
This penalty has been included in a ministerial decision that stems from the updated list of violations and penalties outlined in the Labour Law.
QIWA Platform Enables Work Permit Fee Payments with Credit and Debit Cards
The QIWA platform has introduced a new service that allows you to pay your work permit fee using credit cards and Mada debit cards. The amount can be debited from the Qiwa digital wallet of the employers.
Saudi Labour Law Updates In Q2:
2nd Phase of Documenting 50% Of Employees' Contracts Via QIWA Begins
The Ministry of Human Resources and Social Development (MHRSD) has commenced the second phase of its initiative to mandate that businesses document 50% of their employee contracts via the QIWA platform. The MHRSD has outlined a staggered approach for the documentation of contracts throughout 2023, with 20% required in Q1, 50% in Q2, and 80% by Q3.
This contract documentation service aims to safeguard the rights of all involved parties - employers and employees. It also seeks to foster a healthy working environment conducive to employee retention and productivity.
This service aids in tracking businesses' adherence to labour laws, confirming the accuracy of contract information, and minimising contract-related disputes. The platform facilitates the uploading and updating of contractual details for employees in the private sector, applicable to both Saudi and non-Saudi employees. It also empowers employees to verify their contact details electronically.
The MHRSD further explained that once a business has set up an employment contract, the employee can approve, reject, or request modifications through their QIWA account. The employment contract will be deemed approved and officially documented by the MHRSD once a consensus is reached between the employer and the employee.
Saudi Arabia Begins Localising Consultancy Jobs
The Ministry of Human Resources and Social Development (MHRSD) has initiated the first phase of domesticating consultancy sector jobs throughout Saudi Arabia.
The move to localise the consultancy sector took effect on April 6, 2023, following the end of the provided grace period for roles within the sector.
The initial phase of the localisation process targets consultants and specialists engaged in consultancy work in the sector by 30%, which is predicted to open up employment opportunities for Saudi citizens of both genders. The initiative to localise the consultancy sector and its professions is part of the collaboration between MHRSD and supervisory authorities. These include the Ministry of Finance, the Local Content and Government Procurement Authority, the Expenditure and Project Efficiency Authority, and the Human Resources Development Fund (HADAF).
The collaborative effort is designed to strengthen the representation of Saudi nationals in the sector, augment the proportion of Saudis in the sector, develop the local content within this strategic sector, and also regulate the labour market. MHRSD will assist private sector enterprises in numerous ways and aid them in employing Saudis. This includes supporting the training and development of employees, as well as aiding in employment procedures and more.
The Local Content and Government Procurement Authority will oversee the adherence to localisation requirements in consulting contracts. They have also released a guide that clarifies the details of the localisation initiative within the consultancy sector and the process of its implementation. To avoid legal penalties, businesses are required to adhere to the rules concerning localisation.
Over 2.23 million Saudis Have Been Employed in The Private Sector Thanks to The Updated Nitaqat Program
The Ministry of Human Resources and Social Development (MHRSD) disclosed on Thursday that the initial two phases of the 'Updated Nitaqat' Saudization initiative have significantly contributed to increasing the count of Saudi nationals employed in the private sector to over 2.23 million.
The ministry emphasised that the program, designed to encourage private sector firms to nationalise jobs and ensure employment stability for citizens, has achieved positive outcomes since its inception.
The population of Saudis employed in the private sector exceeded 2.1 million by the end of 2022. This number included over 277,000 Saudis who entered the labour market the same year, meeting 80% of the program's target.
After the program's second phase launched in January 2023, the ministry aimed to incorporate around 35,000 Saudis into the labour market in the year's first quarter. This push resulted in the total number of Saudis working in the private sector exceeding 2.23 million. The program has helped lower the unemployment rate to a record 8% in conjunction with other ministry initiatives.
The first phase of the program, which commenced on December 1, 2021, was applied to all private sector entities in accordance with localisation mandates. This aligns with the ministry's goal of increasing Saudi participation and enhancing stability within private-sector organisations.
MHRSD Wing Settles Class Action Lawsuit Of 254 Workers Against Their Company
The Ministry of Human Resources and Social Development has played a crucial role in resolving a labour dispute that involved 254 employees of various nationalities and their employers.
The Amicable Settlement Department's field team at the ministry's branch in the Riyadh region initiated action to reach a settlement following a collective lawsuit filed by the workers against their company.
Using the Wudi system, the settlement concluded the employment relationship between the workers and the company and ensured the payment of their overdue salaries and allowances. The labour disagreement was successfully resolved through a series of congenial settlement sessions involving the disputing parties.
MHRSD Opens Up Opportunities to Work in The Hajj Season Through Ajeer
The Ministry of Human Resources and Social Development (MHRSD) has announced employment opportunities for Saudi nationals and residents during the 1444 AH Hajj season via the Ajeer portal.
MHRSD encourages all nationals and residents eager to work at the holy sites during this year's Hajj to submit their resumes on the Ajeer portal.
The ministry allows businesses operating during the Hajj season to issue "Ajeer Al-Hajj" permits for their workers at the holy sites. These permits enable temporary employment of Saudi nationals and residents to meet the increased labour demand during Hajj.
The Ajeer portal permits authorised businesses operating during the Hajj season to advertise job openings on its platform.
Additionally, Ajeer provides a platform for job seekers to explore and apply for suitable opportunities.
According to MHRSD, establishments authorised to issue these permits include domestic pilgrim service companies, civil institutions approved by the relevant authorities, and labour suppliers based in Makkah, Madinah, and Jeddah.
This initiative aligns with MHRSD's efforts to manage labour during the Hajj season and ease operations for businesses and workers involved in Hajj activities. MHRSD also aims to enhance the quality of services provided to Hajj pilgrims and improve their overall pilgrimage experience.
Ajeer serves as a new platform for job opportunities within Saudi Arabia. It enables individuals to upload their CVs and apply for various roles across diverse companies and sectors.
Saudi Labour Law Updates In Q1:
Launch the second phase of the updated Nitaqat program
The MHRSD has launched the second phase of the updated Nitaqat program, which is a key initiative to improve job opportunities and the overall performance of the Saudi labour market. Read this blog to learn about Nitaqat: Everything You Need To Know About Nitaqat in Saudi Arabia.
MHRSD has also launched an instant calculation service to help support private sector establishments in preparing for the second phase of Nitaqat. Check the link The instant calculation
Several professions are to be localized in Madinah and Jazan
The Ministry of Human Resources and Social Development (MHRSD) announced that several professions in the Madinah region would undergo localization, with a percentage range of 40% to 100% in the food & beverage industry. This decision will take effect in June 2023. For more details, check Procedural Guide on the Decision to Localise Medina Province.
A ministerial decision has also been issued to increase job opportunities for Saudis. The decision involves localizing several professions with a 70% localization target in the marketing and media production industry, fixing & maintain computer devices and others. This move is set to provide new and exciting job prospects while boosting Saudi participation in the labour market. For more details, check Procedural Guide on the Decision to Localise Jazan Province.
Fees for changing professions are the employers’ responsibility
By the Ministry of Human Resources and Social Development (MHRSD), employers must shoulder the burden of changing profession fees for non-Saudi workers. This regulation extends to other fees, including residency fees (IQAMA), work licenses and their renewals, as well as any penalties that may arise due to delays. MHRSD's recent confirmation of this policy aims to ensure that employers take accountability and contribute to providing a fair and supportive work environment for all their employees.
Workers transfer is done automatically if the establishment ownership changed
The Ministry of Human Resources and Social Development (MHRSD) has confirmed that the process of transferring workers if a business changes ownership will be done automatically as long as the establishment maintains the same commercial registry.
50% localizations in the optical sector
The implementation of the decision to localize the optical sector is officially underway in Saudi Arabia. The Ministry of Human Resources and Social Development (MHRSD) has announced that March 18, 2023, was the deadline for compliance, and all private sector establishments with four or more workers are required to adhere to the regulation.
Expatriates’ companions become eligible for employment
The Kingdom of Saudi Arabia has recently taken a big step towards supporting the employment of expatriate workers by allowing their companions and close blood relatives to be hired. The government has authorized the Minister of Human Resources and Social Development to oversee the process and set certain conditions to ensure it is done fairly and appropriately. This decision will positively impact many families and individuals, providing them with opportunities to work and contribute to the country's economic growth.
Expats who have a digital copy don’t need to carry printed IQAMA
The General Directorate of Passports (Jawazat) has made things easier for expatriates by allowing them to renew their residency permit (IQAMA) and use its digital copy on their smartphones instead of carrying the physical copy.
In addition, the Muqeem ID (Resident Identity), valid for five years, must be renewed every year through the employer's Absher platform.
GOSI allows employers proactively register non-Saudi workers’ data
To protect the rights of both non-Saudi workers and their employers, the General Organization for Social Insurance (GOSI) is implementing a proactive registration service for these employees. Through data exchanges with relevant government agencies, employers will be provided with this service as soon as their non-Saudi workers enter the Kingdom. To complete the registration process, employers must take the initiative to enter their workers' actual wages or salaries through electronic services. This method of registration will ensure that both parties are protected by the correct wage agreed upon between them.
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