New GCC rules for employers, Part 4 (KSA)

This next post in our GCC series looks at changes in Saudi law on discrimination, immigration and Saudization.

New Policy To Foster Equal Opportunities and Prevent Discrimination

• In January, the Saudi Ministry of Human Resources and Social Development (MHRSD) announced a new national policy to promote equality of opportunities and treatment in employment in the Kingdom of Saudi Arabia. The announcement forms part of the Kingdom’s increased efforts to eliminate discrimination in the labour market.
• The newly approved policy contains a number of designated targets, including upgrading systems and policies that explicitly define and prevent discrimination, initiatives to promote equal treatment in employment and occupation, and the implementation of procedures, programs, and initiatives to enable groups with fewer opportunities to enter and remain in the labour market.
• Based on this recent announcement, it is possible we could see potential changes to the Labour Law in the Kingdom that will encompass broader protections in relation to equality and prevention of discrimination in the workplace.

Temporary Work Visa/Increased Flexibility for the Engagement of Foreign Nationals

• A new short-term work visa for certain foreign nationals is now available to apply for on an online platform called Qiwa. This new visa enables qualified employees to work in the Kingdom of Saudi Arabia for a visa-sponsoring entity for up to 90 days per visa in one year. During the course of the one-year period (i.e., from the date of first entry into the Kingdom), it will be possible to re-apply for new temporary work visas at the end of each 90-day period. To apply, employers will need to be classified as at least “Medium Green” in the Saudization scheme, comply with obligations in the Wage Protection System, and ensure foreign workers have valid work authorization. The visa quota will be limited to 50 per employer and visas will not be transferrable to other entities.
• It is expected that many employers will take advantage of the new temporary work visa as businesses in the Kingdom have been seeking a legally-compliant solution for short-term work assignments. More foreign national-friendly programs are expected in Saudi Arabia in the future, as additional foreign labour will be needed to fill positions in the NEOM – a cross-border city in northwest Saudi Arabia that is planned to be built by 2025.

Saudization

• As part of ongoing reforms, however, a three-year Saudization plan has also been introduced to increase the Saudization rates. As part of this, the MHRSD has consolidated the categories in which all economic activities (based on the business sector in which the employer operates) will be combined to create one larger economic activity. The new changes form part of the existing Saudization program in the Kingdom (Nitiqat), which imposes a quota system for the hiring of Saudi nationals for all companies in the private sector. Nitiqat classifies companies into three categories according to their Saudization levels:
  • Premium
  • Green (with subcategories of High, Medium and Low)
  • Red

• Companies in the Premium and High Green categories are able to apply for new block visas. However, companies in the remaining categories can only obtain visas for expatriate employees through a transfer of sponsorship (i.e., they are limited to hiring expatriate employees who are already in the Kingdom and who have the requisite work authorisations from their existing employer). Companies have the option of paying monthly fees in lieu of hiring Saudi employees to maintain or change their Nitiqat classification under the Parallel Nationalisation program, which was introduced in 2017. The amount of the fee varies according to the number of employees employed by the company and the number of Saudi employees required to reach the next Nitiqat classification. Small companies with fewer than five employees are not subject to Nitiqat provided they have at least one Saudi employee.
• The MHRSD has announced that further professions will be localised from March 2023 in an aim to provide 33,000 job opportunities to Saudi nationals. Affected professions include aviation and customer service roles. The MHRSD has also confirmed that seven business activities’ sales outlets will be 70% Saudized, including security and safety equipment sales outlets, elevators, escalators, and conveyors. Branch manager, supervisor, treasurer, customer accountant and customer services agent jobs will all be subject to the decision.
• Employers will need to plan their workforces going forward and consider the number of roles that must be occupied by Saudi nationals (and in turn, which of their foreign workers will be required to remain within the workforce to ensure business continuity).