The third in our multipart Navigating Employment Law in the Middle East webinar series considered the applicable employment regulations and immigration processes in the Kingdom of Saudi Arabia. Be sure to join us for our next webinar taking place on December 9 looking at the applicable law and processes in the United Arab Emirates.
Webinar Key Takeaways
- The applicable law in the Kingdom of Saudi Arabia is Saudi Cabinet Decision No. 219 of 1426 H on the Approval of the Labour Law issued by Saudi Arabia Royal Decree No. M/51 of 1426, as amended from time to time (the Saudi Labour Law), supplemented by Saudi Arabia Ministerial Decision No. 115921/1446 on the Approval of the Implementing Regulation of the Labour Law and its Attachments (the Implementing Regulations). The Implementing Regulations were issued in February 2025, concurrently with the most recent amendments to the Saudi Labour Law.
- When operating in the Kingdom, it is vital to be cognizant of the government’s nationalization programme, known as Saudisation, which is an initiative to increase Saudi national representation in the private sector and decrease dependency on foreign nationals. For companies with five employees or less, there is a basic requirement for the company to hire at least one Saudi national. Thereafter, there are three ways in which the Saudisation objective is pursued:
- The Nitaqat system, which determines through an algorithm the percentage of a workforce that must be made up of Saudi nationals, calculated with reference to the type of industry that the company operates in, along with the size of the workforce;
- Reserved roles for Saudi nationals – these tend to be HR and administrative functions; and
- Enhanced Saudisation for targeted sectors such as accounting and legal.
- Achieving and maintaining the required Saudisation level is important as it then allows a company to, among other things, hire expatriate workers and renew their visas and work permits in the future. In particular, under the Nitaqat system companies are categorized as either Platinum, Green (broken down further into low, medium, and high green), or Red. Only those employers who are classified as being Medium Green and above are able to:
- Apply for new visas to hire foreign nationals
- Change the occupation of a foreign national
- Renew work permits of existing foreign nationals
- Transfer the sponsorship of foreign nationals to another entity
- The Ministry of Human Resources & Social Development requires all employers to issue standard form employment contracts via its online Qiwa portal, often referred to as Qiwa contracts. In the webinar, we discussed the most recent developments in the Qiwa contracts (on which we have also written).
- Employers have the option to issue either indefinite-term or fixed-term contracts under the Saudi Labour Law; importantly, expatriate employees can only ever be employed under fixed-term contracts.
- We also discussed that any employment documentation (including any employment contract) must be issued in Arabic, and it is common to prepare documents in dual language (i.e., English and Arabic), albeit the Arabic version will prevail in case of a conflict between the terms.
The next webinar in the series will take place on December 9, 2025, looking at the applicable law and immigration processes in the United Arab Emirates. Stay tuned for more future webinars specifically for the Kingdom of Saudi Arabia, looking at key employment terms and termination of employment.