In Saudi Arabia, businesses are required to comply with specific government regulations. A thorough understanding of these regulations is essential for ensuring smooth operations and avoiding potentially costly penalties.
This article will explore key HR compliance concepts in Saudi Arabia, including Saudization (Nitaqat), labor service portals, employment contracting, and social security requirements. Along with detailed explanations, we will also highlight the benefits of adhering to these regulations.
Saudization
Saudization is a system with a primary goal to increase Saudi participation in the workforce and reduce reliance on foreign labor
To enforce this, a hiring quota system has been created by the Ministry of Human Resources in Saudi Arabia, including Nitaqat. This policy requires businesses to employ a specific number of Saudi nationals based on the company's size, department, and industry.
In fact, the next hire after the General Manager of any early-stage startup must be a Saudi national, or else the issuance of Iqama (residency permits) for other employees may be denied.
How Nitaqat Works
Under the Saudization program, businesses are categorized into five Nitaqat levels: Platinum, High Green, Mid Green, Low Green, and Red. These levels are determined by the percentage of Saudi employees in the workforce and the total number of employees. Platinum, the highest level, offers the most benefits, while Red, the lowest, may result in the denial of services by the Ministry of Labor. Each industry, (healthcare, tourism, ) has its own required percentage of Saudization of the total workforce.
Benefits
Businesses with a Nitaqat level of Mid Green or higher may:
- Renew work permits for foreign employees
- Apply for new permanent work visas
- Change the profession classification of their employees.
Drawbacks:
Businesses with a Red Nitaqat level may face restrictions, such as being unable to::
- Apply for new visas
- Use transfer visas
- Renew work permits
- Open new files for new branches or facilities
Visit Qiwa for more information on how to calculate your NItaqat percentage.
HR Governmental Portals
There are a variety of HR governmental portals in Saudi Arabia, with each serving distinct functions. These portals cover a range of business needs, from taxation and labor regulations to product safety standards and municipal compliance.
Efficient management of these platforms is crucial to your business operations, requiring regular weekly updates to be made every Saturday.
We usually strongly advise those companies operating in their first year or mainly comprised of non-Arabic speakers to outsource their HR portal management. There are both financial and operational implications,
Main Service Portals
GOSI |
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Qiwa |
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Mudad |
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Absher |
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Muqeem |
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Taqat |
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Jadarat |
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Saudi Expansion Series
This article is part of the Saudi Expansion series, where we aim to educate international entrepreneurs and business owners on Saudi Arabia's foreign investment regime for a smooth landing. This article is written by Tawaref, a tech investment community that finances top regional startups & offers entrepreneurial services