Saudi reforms labor law; what does it mean?

Since Vision 2030 was announced in Saudi Arabia, steps to transform the kingdom into a more flexible and attractive environment included an introduction of a tourism visa and mega entertainment projects among many. Next to diversifying the economy is focusing on the flexibility of the job market.

While the nationalization of jobs continues to pick up speed for some industries, recently announced changes to the Saudi labor law that governs expat-employer relations have eased some of the previous restrictions on the 10 million foreign workers living in the kingdom, aiming to improve the job market environment and attract more talent from around the world to the private sector. 

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For 70 years, Saudi Arabia operated with a sponsorship system that didn’t allow foreign workers to leave the country or change jobs unless their employer approves. Changes under the Labor Reform Initiative were announced last Wednesday by the Ministry of Human Resources and Social Development.

Starting March 2021, expats can request sponsorship transfers, re-entry and exit visas automatically through a government e-portal without the need for employer’s approval. Instead, the relationship between all foreign employees and their employers in Saudi will be based on standard contracts certified by the government by the end of March next year.

Though the reform is a step towards more flexibility for expats, it also benefits employers by allowing for easier transfer of talent, attracting more professionals, increasing public spending within the kingdom, decreasing the number of labor dispute cases, and is part of a series of initiatives to diversify Saudi’s resources away from a dependence on oil.

To benefit from these changes, expats need to complete one year of employment with their current employer and have a notarized work contract. There are five professions, however, to which the announced changes don’t apply; private drivers, home guards, domestic workers, shepherds and gardeners or farmers will continue to require employer’s approval to switch jobs or exit the country.

The ministry also announced exceptional circumstances in which an employment transfer may take place without the need for either employer approval or any of the other requirements. These conditions include: 

-      If a certified employment contract is not provided three months into employment; 

-      If employee doesn’t receive a payment for three consecutive months;

-      If employee is a victim of human trafficking;

-      If employee reports employer for involvement in human trafficking or a commercial cover-up;

-      If employer is absent for imprisonment or death;

-      If employer’s residency permit expires;

-      If employer has refused to renew their work permit or residency visa;

-      If employer or representative doesn’t attend two sessions in a legal dispute.

Here’s what people are saying on LinkedIn about the reforms:

How will these changes affect foreign professionals in Saudi Arabia in the short and long terms? Share your thoughts in the comments below.

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