Saudi Arabia: Labor Reform Initiative (LRI)

On November 4, 2020, the Saudi Ministry of Human Resources and Social Development released a labor reform initiative (LRI). The aim was to make reforms to the existing sponsorship system known as KAFALLA which establishes rules and regulations for expatriate workers’ mobility in Saudi Arabia.

Before, foreign employees sponsored by Saudi companies required authorization from their employer to change employment, create a bank account, leave the country, and do other administrative duties.

However, LRI intended to reform the existing immigration and labor laws.

Labor Law Reforms:

All work relationships covered by the Saudi Labor Law, including the kafala system, will be subjected to the reforms implemented by the Ministry of Human Resources and Social Development, Resolution No. 51848/1442. The resolution primarily addresses employee mobility.

Changes:

New labor reform allows the foreign workers to leave their jobs without the approval of the employer/kafeel after their employment contracts expire, providing that the employee has been in the kingdom for at minimum a year and has given the company 90 days’ notice.

The new law allows expat workers to switch jobs within the first year of employment.

The Ministry has introduced an electronic portal via both of which employees and employers may submit notices, job offers, and transfer requests, a responsibility that was previously solely at the discretion of the kafeel/employer.

Exit & re-entry Requirements:

The LRI considers both the entry and exit requirements for any migrant employees in Saudi Arabia. Previously, no foreign worker could enter Saudi Arabia without first obtaining an exit and re-entry visa, which could only be provided by their kafeel/employer. The new labor laws no longer require former employers’ consent to leave or re-enter the kingdom.

The LRI also permits workers to submit a request via the Saudi government’s online ”Absher” portal. Exit may be refused if the employee owes money or a fine. When the request is authorized, an automated notice is issued to the employer anytime his employee departs and returns to Saudi Arabia.

Final exit reforms:

Previously, Saudi Arabia’s immigration policy required the employer to approve an exit visa so that employees could return to their country. However, the new rules ensure that employers’ authorization is no longer required.

LRI benefits the expat workers as the regulations are eased and entry and departure criteria is more simpler than before.  The LRI will also guarantee that there is less human trafficking and exploitation, as well as increased transparency in the private sector, to ensure that employees are safe, healthy, and have full rights.

Conclusion:

Millions of foreign employees in the private sector will be affected by the LRI. It will, in particular, facilitate job mobility and place a greater focus on the contractual connection between companies and foreign employees. By improving transparency in the hiring process and simplifying immigration procedures, the reforms will help the government achieve its goal of transforming its oil-dependent economy & immigration regulation.

To learn more about labor reform contact our experts: enquiries@pangeaworldwide.sa

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