Saudi Labor Reforms for Expats 2021.

KSA has made history on the 14th march by bringing much-needed changes in the labor laws for millions of expats and migrants, thus propelling the kingdom into a new era.

Staying true to their promise regarding changes in the labor reforms made last November by Saudi Arabia’s Ministry of Human Resources and Social Development. 

KSA brought changes which includes the changes to the Kafala/Sponsorship system. Unlike before now, the foreign workers employed in the private sector are at the liberty to switch jobs or even leave the country without taking the consent of the kafeel.

This Kafeel/Sponsorship system came into fruition in the 1950s in Saudi Arabia. It was meant to regulate the relationship between the expats and their employers. More than half a century has passed so the change was overdue. 

This dramatic change is done in a bid to create an attractive job market. Moreover, this step will allow the expat to apply for the government services directly based on their employment contracts which are documented digitally. 

At least 10 Million migrant workers (who make up about a third of the kingdom’s population) are expected to reap benefits from the subsequent changes made under the Kingdom’s Labor Reform Initiative (LRI).  

Besides having a competitive and fair working environment this initiative will also help the foreign workers get residency status that is not bound to any specific employer/kafeel. This will not only provide job flexibility and exit re-entry visas but also safeguard the rights of both the employer and the employee. 

These new initiatives have been wholeheartedly greeted by Expat workers one such expat from India Imroz Abdul Rahman said “This is one of the best things to have happened since I came to work in Saudi”.  

Indeed it is one of the best things to have happened in recent times. Mr. Rahman added “I remember some 4 years ago, when I sought to leave my former employer and go to work for a different family, but the process was very difficult and tough for everyone involved. It took months to resolve this problem. 

Adding further he said, “This is definitely a great development and it is poised to help a lot of people. I am glad that I have more control over where I can work and the fact that people like me will have more support in the future”

Yet, the chairman of information technology firm Bayt Al- Edarah Abdul Ghani Al-Ansari said that the labor reforms will prove to be a “big challenge” for private sector SME’s (small and medium-sized enterprises), adding that the government sector is spearheading the overhaul as part of the Vision 2030 objectives.  

Speaking with Arab news Mr. Ghani said that the private sector is still absorbing the changes and the employers will be required to digitally document the contracts of their employees to minimize the discrepancy between the Saudi government and expat workers.

“Right now we are facing a big challenge when it comes to developing human resources in SMEs, as they are finding it tough to absorb the concepts and mechanism of the initiative”. According to Al-Ansari, he hopes that the SME’s will be given 6 months to adapt to the new rules. 

“SME’s do not have specific laws to guard their secrets, which means that the corporate secrets of one company will go to another company,” he said. 

Abdul Ghani Al-Ansari who led the human resources committee at the Madina Chamber of Commerce said that the labor market is changing dramatically.

Having said that the minds and skills do not have a race or a nationality while the private beliefs solely in profitability and competency, this means that diversity is indeed a beneficial aspect and will uplift the national economy. 

Gloria Calinao, who has been a domestic worker in Saudi Arabia for the last decade said “I remember how tough the kafala process was, I wish this new initiative applies to domestic workers as well so that they can enjoy job mobility as well” 

Note: To deal with the reform procedures there are two government portals Absher and Qiwa.

Prior to these reforms expats/foreign workers employed in Saudi Arabia were obligated to be connected with a kafeel/sponsor. It was the permission of the sponsor that they needed to open a bank account, switch jobs, or leave the country on a vacation or something.

Courtesy of this initiative now the workers can enter and exit the Kingdom as they please without taking the permission of their employer. All they are required to do is submit an online application notifying their employer.

Now with the job transfer especially when the current contract is still active, the expat can easily change their job and get employed in a different company, provided they adhere to the notice periods and other specified terms.

Note:  Terms include 90 days prior notice to the employer, and the expat must have spent at least a year in Saudi Arabia.

The “final exit” stipulation permits a foreign worker to leave the current job immediately with the termination of their contract, with just an online notification sent to the employer without any need for his/her consent.

Under this reformed system exceptional cases like for instance workers unable to receive their work contract or not getting their salaries will get addressed as well.

Basically, these new reforms would limit the relationship between the expat workers and their kafeel/sponsors under the system. Primarily those workers working in the construction and domestic line.     

Employers take note

Other than the changes in Labor law the employers need to be aware of these 3 possible restrictions.

  1. The employment of expats/foreign employees are subjected to Nitaqat System (Saudization). Under the Nitaqat system, employers are needed to hire a minimum number of Saudi nationals in the private sector. This depends upon the number of employees and the business sector.

    Under this current system, the Ministry of Interior (which governs the system) requires a ’No objection letter for an expat employee from his/her current employer if the former wants to change the sponsor/kafeel.

    As of yet, there’s no official announcement of the removal of such a condition from the Ministry of Interior although the resolution announced the removal of such requirement, nevertheless one should be hopeful.
  2. Secondly, the Labor Law doesn’t apply to categories of employees like the agricultural, sea (some), and domestic workers, trainers, and players at sports and club unions and the likes of it. So far there’s no sign whether the Labor Reform Initiative (LRI) will apply to these employees or not.
  3. Lastly, the employers may continue to exercise the non-compete clause to protect their business interests. Being explicitly permitted by the Labor Law (under certain conditions included in Article 83), under these clauses if an employee breaches his/her non-compete clause the employer has the right to claim for damages within one year of the breach. 

Concerns over human trafficking. 

The pervasiveness of ESG (environment, social, and governance) investment criteria has fashioned a growing expectation for companies to incorporate human and social capital management goals in their internal business plans and policies. 

This is done to prevent any human rights violations. Hence the boards must familiarize themselves with how their companies are administrating their supply chains.

Fortunately, the LRI joins the global effort in countering human trafficking by addressing the issue of the black market for Huroob (absconding) workers and other violations under the Kafala system. This system, unfortunately, became a goldmine for human traffickers.  

How impactful is LRI?

Despite including such benefits the reforms however do not go as far as dismantling the kafala system altogether.

Besides these reforms neglect the expat workers who are farmers and domestic workers. Meaning migrant workers employed in these professions will not be included under the labor law.

It’s no news that the workers working under this above-mentioned profession are the least protected group of employees and easily exploited.

We learned that under these reforms the ex-pats for the first time can request an exit permit without seeking the permission of his/her employer. But they didn’t abolish the exit permit itself. 

According to Michael Page, the deputy director of Middle East for Human Rights Watch “Millions of expats working in domestic sector and workers of a similar line of work are excluded from these reforms which leave these workers entirely at their employer’s mercy”.

The reforms although considered groundbreaking is still problematic, restricted, and by no means meant to undo the medieval kafala system.

Out of 5 key elements of the kafala system only 2 (partly) elements are addressed under these reforms. These elements keep the worker chained to the employer even in abusive conditions. 

In the Labor Reforms Initiative Services Guidebook (in Arabic) certain key points have been left out.

In this guidebook the new employer is made responsible to bear the extra fees incurred during the job transfer, however, there’s no definitive guideline that elaborates exactly how the ministry plans to ensure the less-protected expat workers from not getting forced by their employers to bear those costs by themselves. 

Speaking about the guidebook there is some inconsistency between the Arabic version and the English version.

For instance, there was a case of one migrant worker against whom a case of Huroob (click to know more about Huroob) was filed which means an “absence from work complaint”.

In such a situation, the worker cannot benefit from the job change reforms. However, this particular incident wasn’t mentioned in the English version of the guidebook. 

Under this resolution, the expat workers unlike before can leave and re-enter Saudi Arabia without taking the permission of their employer. Just by submitting an online request for an exit and re-entry visa or the final exit visa from the Ministry of Human Resources and Social Development.

For this, the guidebook states that they must have a valid passport, a valid residency permit, and a duly attested employment contract. 

Note: In case of outstanding dues or debts the Saudi authorities may deny the exit visa. 

This guide book also states that the expat has to bear the fees related to the visa which right now costs around SAR200 ($53). The employer will get notified when the expat worker lodges an online request, and the former has 10 days to lodge an inquiry into the latter’s request.

These exit and re-entry visas are valid for one month (30 days), and the migrant worker cannot request multiple-use visas independently. Only the employer has the authority to extend the above-mentioned period.

Note: If an expat fails to return within 30 days then he\/she will be permanently banned from working in Saudi Arabia. This also applies to those expats as well who leave Saudi Arabia by using a final exit visa. 

It remains to be seen exactly how the ministry plans on accepting ex-pat workers’ exit requests.

More importantly, whether the employer’s inquiry application can or cannot be used by the ministry to deny the exit permit for the worker. 

In the Arabic version of this guidebook, it has been stated that this new initiative (requesting visas without asking the employer’s permission) doesn’t replace the existing system where the employer was solely responsible for issuing the visas. Instead, this system exists alongside the existing mixtures.

Now the drawback is the employees working in low-paid jobs who are completely dependent on their employer for food, accommodation, transportation, and access to online platforms (like Qiwa and Absher) may not learn anything about these reforms or their benefits.