Historic labor reforms comes into force in Saudi Arabia

The landmark initiative ends the 70 year old Kafala (Sponsorship) System in the Kingdom.

Saudi Arabia’s Ministry of Human Resources and Social Development formally declared that the new labor reform initiative will come into force on March 14, 2021. Ministry said that this labour initiative is in continuation with Saudi’s ongoing efforts to improve labour market.

The initiative is intended to bring in a complete change in the Saudi employment market and bring about an improved contractual employment relationship in private sector.

The labour reform allows improved job mobility and regulates issuance of final exit and exit and re-entry without employer’s consent. These services will be available online through Absher and Qiwa.

The regulations apply to all expat workers in the private sector except to private driver, home guard, domestic worker, shepherd, and gardener or farmer.

Under the new system and expatriate employee can transfer to new job upon expiry of his present work contract without the need for the employer’s consent.

The reforms will elevate the competitiveness and flexibility of the job market and contribute to achieving the aims of Saudi Arabia’s Vision 2030 in advancing human competencies and work environment.

Changing jobs under new regulation.

The new reform is in place from March 14, 2021 onwards in the Kingdom. A major revamp is increased job mobility. An expatriate employee can change his job after he complies with the following conditions-

1. The employee must be registered in labor system.
2. The employee must have completed one year of service with the present employer.
3. The employee must have a valid, attested employment contract.
4. The employee has submitted resignation letter to the present employer fulfilling the notice period as per contract.
5. A job offer letter is submitted by the new employer through the Qiwi platform.

Transfer request by new employer.

There are certain pre-requisites that need to be fulfilled by a new employer before requesting transfer of an employee. The new employer must be;

1. Eligible for new visa as per regulations.
2. Compliant with Wage Protections System (WPS).
3. Compliant with the Contract Registration Program (CRP).
4. Compliant with Self Evaluation Program (SEP) regulations.

Employee can transfer without any conditions!

An expatriate employee in the private sector can transfer his job even without completion of his contract period, without any conditions attached, in the following situations –

1. When there is no works contract within 3 months of entering into the present employment.
2. When he is not paid salary for three consecutive months.
3. If the employer is not available because of long travel, death or any other reason.
4. If the Iqama or work permit of expatriate is expired and not renewed by present employer.
5. If an employee reports a commercial coverup to the authorities.
6. In case of any labor cases, the employer doesn’t appear before the court for hearings.
7. Through mutual consent from the employer.

Saudi Arabia has advanced into the reformed labor friendly economy. This requires employers to maintain human resource files, contracts and legal compliances up to date. We at Tass & Hamjit can assist the management in Human Resource procedures, HR contract drafting, HR file keeping, Payroll Management and HR compliance management.