The Ministry of Labor has recently issued ministerial resolution number 156309 dated 18/08/1440 H (April 24 2019), which launches the electronic contract registration program. All employers in the Kingdom or those looking to set up in the Kingdom should immediately consider what action needs to be taken with their employment contracts in respect of the this resolution.
The registration service will be provided via the General Organization for Social Insurance (GOSI) online portal. Registration is required for all new employees and on renewal of existing visas. For most expatriate visa renewals occur annually.
As for existing employees, the schedule for uploading contracts is as follows:
The resolution also provides that in case employers do not comply with the above timeframes, employees are permitted to transfer their employment to a new employer, without their current employer's approval. Ordinarily this freedom does not exist except where an employer is failing with the requirements of the Nitiqat nationalization program.
Employers should therefore also consider whether their current employment contracts are compliant with the Saudi labour law and include the relevant mandatory clauses.
When looking at the form of contracts it may also be a good time for employers to consider whether their fixed term employment contracts for expatriates would benefit from other changes such as limiting damages payable on termination by including an agreed damages/indemnity clause. We are aware that in some instances the courts have upheld 'indemnity clauses" which provide for lower payments than those set out in in the Labour Law (typically the balance of the fixed term contract or a minimum of 2 months).
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.
