Saudi Arabia: Nationalisation Of Your Workforce In KSA : An Employer’s Obligation

In the past two months the Ministry of Labour in the Kingdom of Saudi Arabia (KSA) has announced the introduction of a new regulatory regime called the 'Nitaqat' programme. Nitaqat is designed to enhance the employment of Saudi nationals in the private sector and employers have been given three months within which to comply with the new system. Nitaqat is part of a wider programme which will see further regulations regarding recruitment, enforcement of salary payment, health insurance and the establishment of a call centre to provide advice to individuals with employment advice.

At present only 10% of the Saudi workforce is employed in the private sector and two million visas for non nationals were issued in the past year alone. Legislation introduced since 2005 and Nitaqat are designed to change this and address an increasing need to create jobs for young graduates in a population more than 50% of which consists of individuals less than 25 years of age. A stated aim of the KSA government is the creation of 1.12 million jobs by 2014.

Under the Nitaqat system, employers registered with the Ministry of Labour are categorized into one of four categories, Red, Yellow, Green and Premium (an employer can check its allocated category by logging onto the Ministry of Labour website):

  • Red: employers in this category are not complying with their obligations to employ Saudi nationals and will therefore not be able to apply for new sponsorships for work permit and residency visas for new recruits or renew sponsorships for existing ones;
  • Yellow: employers in this category are complying with certain obligations regarding the employment of KSA nationals but are not complying with the quota duty. These employers will not be able to renew sponsorships for work permit and residency visas for existing employees who accrue six years of service with them; and
  • Green: employers in this category are complying with their obligations and will not be subject to restrictions in obtaining sponsorship for work permits and residency for new recruits or in renewing existing sponsorships for current employees.
  • Premium: (this category is reserved for employers with the highest percentage of Saudi national employees) employers in this category are entitled to the same privileges given to the Green category. Moreover, they are able to recruit foreign employees of whatever profession and transfer these employees' visas to their organization from other companies without the employees needing to have completed two years with the first employer.

Employers are also classified according to sizes: Small (10-49 employees), Medium (50-499 employees), Large (500 employees and above) and Giant entities which consist of (3000 employees and above).

The size of the entity is based on the total number of Saudis and foreigners working in the entity. Saudis are calculated according to the number of Saudis registered in the database of the General Organization for Social Insurance (GOSI), while the number of foreign employees is calculated according to the Ministry of Interior database.

An employer's obligation to employ KSA nationals includes the following:

  • Under the KSA labour law the strict obligation is to have 75% of the workforce consist of Saudi nationals. However, in practice, the Ministry of Labour has permitted employers to have lower percentages, applying an obligation on employers with 20 employees or more to employ 30% of their workforce from the national KSA labour force. This practice is now set to change under the Nitaqat system which does not apply to employees with 9 employees or less but which imposes an obligation on all other employers to have 49% of their workforce made up of KSA nationals and to have a KSA national employed to perform visa services; and
  • Regardless of the number of employees, certain roles are reserved for KSA nationals and these include: security guards, human resource managers, bank tellers, customer service accountants, postmen, data handlers, librarians, debt collection officers, public relations officers, training and purchasing managers, janitors, and booksellers. There are approximately 40 reserved roles for KSA nationals.

All KSA nationals must be registered with GOSI for pension benefits and monthly employer and employee contributions administered by the employer.

Unlike in the UAE, there are no specific provisions regulating the termination of a KSA national's employment and no specific procedure or notification to the Ministry of Labour required prior to effecting termination. However, where a KSA national is terminated by reason of redundancy and a non KSA national is retained, a Labour Committee is more likely to find such a termination unfair. A Labour Committee can also order reinstatement as well as damages for loss of employment.

Another increasing focus in KSA is the desire to encourage female participation in the workforce. By law employers remain obliged to segregate female and male employees and provide entirely separate workforces. One measure suggested by the Ministry of Labour is the introduction of home working for female employees and the encouragement of women to run their own businesses from home.

Employers permitting part-time, flexible working or working from home would be advised to have specific company policies covering issues such as an employee's ability to request such a work pattern, the type of work pattern an employee may work depending on his role and the its requirements, as well as performance measurement; for example setting specific performance goals and measurable objectives, or introducing a working time recording system.

The UAE Ministry of Labour also recently revised its employer classification system extensively with two main goals of enabling greater employee mobility between employers and encouraging the employment of UAE nationals. Clyde and Co has previously written on the new system and this bulletin can be found on our website.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Sara Khoja
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions