Saudi Arabia: New Fines Applicable In KSA

Last Updated: 19 January 2016
Article by Sara Khoja

Since August 2011 the Ministry of Labour in the Kingdom of Saudi Arabia (KSA) has focused on promoting employment for KSA nationals and updating labour legislation to produce a more dynamic labour market. Recently these measures culminated in the amendment of the KSA Labour Law (Labour Law) with the amendments coming into effect on 18 October 2015 and the introduction of new fines to support the enforcement of those amendments.

The new fines were introduced by way of Ministerial Resolution Number 4786 dated 28/12/1436H (equivalent to 12 October 2015) (Resolution) and supplement existing fines under the Labour Law and immigration regulations. In this article we examine the main fines introduced in the Resolution.

Failure to issue employment documentation in Arabic

Under the Labour Law, it has long been an obligation to issue employment contracts and policies in Arabic. Under the Resolution a fine of SR 5,000 may be levied for failure to use Arabic for employment contracts and personnel records. A fine of SR 5,000 is also imposed if personnel records detailing employee names, wages, fines imposed, attendance records, medical examinations of employees, and work files for each employee, are not maintained.

Failure to comply with workforce nationalization obligations

The various legal obligations to employ KSA nationals is often referred to as 'Saudisation' and the fines introduced for failing to comply with specific obligations include:

SR 25,000 (for each worker) and closure of the office for 5 days if the employer registers a KSA national as an employee without the individual's knowledge or approval. This fine seeks to prevent the registration of individuals simply to meet a quota;

SR 20,000 (for each worker) if the employer employs a non KSA national without a work permit or under an expired and non renewed permit;

SR 25,000 (for each worker) if the employer employs individuals sponsored as dependents by a foreign national in KSA without a valid permit;

SR 20,000 (for each worker) if the employer employs a non KSA national in a role reserved for KSA nationals; and

SR 5,000 if the employer (with 50 employees or more) fails to comply with its obligation to train at least 12% of its KSA workforce

Breaching regulations regarding employment of women

Within its measures to promote the employment of nationals, the Ministry of Labour has also sought to encourage the employment of KSA women by introducing a number of resolutions regulating the employment of women in factories, retail, amusements parks and also permitting them to work remotely from home. Accordingly, the Resolution includes the following fines:

SR 10,000 (for each worker) and close of the business for 1 day, if the employer employs a male worker in a role reserved for a KSA female worker;

SR 5,000 if an employer fails to post written instructions in the workplace to female employees (of whatever nationality) notifying them of their obligation to wear the veil;

SR 1,000 on a female employee (of whatever nationality) for failing to wear the veil;

SR 1,000 for failing to provide separate sections for female employees; and

SR 5,000 (per worker) for employing women during night time hours.

Failure to comply with health and safety obligations

The spotlight has been placed on health and safety issues in the Kingdom, in light of the recent tragic events during the Haj in Islamic year 1436 and the previous crane accident in the Holy Mosque in Mecca (leading to a Royal Decree ordering an official investigation and banning the Bin Laden company from government contracts as well as a travel ban on its Chairman). The Resolution seeks to further highlight and penalize healthy and safety violations with the following fines:

SR 25,000 and closure of the business for 1 day if the employer fails to comply with rules measures and standards applicable regarding occupational protection, health and safety within the establishment or fails to take precautions with regard to hazards, occupational diseases and machinery;

SR 3,000 (per worker) for failing to comply with summer time working hours prohibition or other regulations regarding work in direct sun light;

SR 5,000 if an employer fails to prominently post in the workplace work place rules regarding health and safety;

SR 1,000 on the worker directly if he or she fails to use, maintain or preserve personal protective equipment or to follow health and safety instructions or if the worker misuses or impairs devices provided to protect workers and the workplace;

SR 1,000 failure to provide medical aid cabinets for first aid; and

SR 5,000 (per worker) for failure to provide a comprehensive medical examination for workers exposed to occupational diseases as specificed in the social insurance law and GOSI regulations.

Failure to comply with certain employee entitlements

Interestingly the Resolution creates new fines if an employer retains an employee's passport without consent (SR 2,000 per worker), if the employer passes on the costs of recruitment or visa fees to the employee (SR 10,000 per worker), or if the employer fails to give an employee a work experience certificate or provides a certificate containing detrimental statements likely to prejudice the employee's ability to secure another job (SR 5,000 per employee).

Doubling of Fines

If an employer is discovered to be repeating a breach for which he has previously been fined, then the fine is doubled on the second violation. A breach should be rectified within one month of being discovered and the fine imposed, otherwise the fine is regarding as a second violation and is doubled. If 24 months pass between one violation and a second one the second is regarded as a new violation and not a repeat one. An employer may appeal a fine within 60 days of it being imposed but the fine itself will not be suspended pending the appeal unless by way of a specific Ministry committee decision.

The amended Labour Law introduced a reward for whistleblowers notifying the Ministry of potential violations. If a fine is levied on an employer, the individual whistleblower may receive up to 25% of the fine.

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.

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