Co-authored by Zahir Qayum of Al Tamimi & Co.
The Saudi government has introduced a number of measures to favor Saudi nationals over expatriate employees. These so called "Saudisation measures" include the following:
- A new resolution that prohibits the "mass termination" of Saudi nationals for any reason that is attributable to the employer (e.g., redundancy) except in cases of bankruptcy or dissolution (Minister of Labor and Social Development (MLSD) Resolution No. 50945). The resolution applies to employers with 50 or more employees that propose to dismiss 10 or more Saudi nationals within 1 year. Employers failing to comply with the resolution will be subject to penalties that include the withdrawal of the MLSD's services in relation to the issuance and renewal of visas for expatriate employees.
- An extension of the "Nitaqat" policy to those employers with 6 or more employees in Saudi Arabia (from 10 or more). This policy classifies employers according to the size of their workforces and the economic sectors in which they operate and ranks them on a color-coded scale according to their success in achieving their quota of Saudi national employees. Employers that meet or exceed their quotas are ranked as "green" and "platinum" employers. Where employers have an insufficient number of Saudi national employees, then they are ranked as "yellow" or "red" employers. Penalties are applied to yellow and red category employers so that, for example, they are unable to apply for and renew visas for expatriate staff, whereas employers in the green and platinum categories are granted privileges with regard to access to visas.
- Another significant change is that only employers that are graded platinum and high green will be able to apply for block visas for the recruitment of foreign nationals.
The Ministry of Labor and Social Development has also announced a list of penalties that will be imposed on employers that violate employee rights. Employers will be subject to fines of:
- SAR 25,000 (approximately USD 6,664: GBP 4,845: EUR 5,460) for registering Saudi national employees with the General Organization for Social Insurance (GOSI) without their approval;
- SAR 20,000 (approximately USD 5,331: GBP 3,876: EUR 4,368) for recruiting expatriates to jobs reserved for Saudi nationals;
- SAR 10,000 (approximately USD 2,666: GBP 1,938: EUR 2,184) and closure of the establishment for one day where a male expatriate is employed in a role reserved for Saudi nationals;
- SAR 2,000 (approximately USD 533: GBP 388: EUR 437) for holding an employee's passport without his or her consent;
- SAR 5,000 (approximately USD 1,333: GBP 969: EUR 1,092) for employing a worker without a contract or for failing to provide a copy of the contract written in Arabic; and
- SAR 5,000 (approximately USD 1,333: GBP 969: EUR 1,092) for not complying with the conditions of a training contract or for not maintaining employee records, including names, salaries, fines, attendance and medical records, or for withholding in full or part the employee's salary.
In addition to the above fines, the ministry may also close the employer's establishment for up to five days. Again, a number of these sanctions have a clear Saudisation mandate.
Employers will want to reassess their compliance with Saudisation due to the new penalties, the revision of the Nitaqat tables and the creation of new employer sizes, redefining of sector activities, and changes in percentage quotas. The changes are a reflection of the prioritization of the engagement of Saudi nationals in the private sector.