Saudi Arabia’s
Labour Reform Initiative

An end to decades-old kafala system

In addition to ensuring career mobility by doing away with the sponsorship system, the new initiative offers services to employees, including job transfer (transfer to another employer), exit/re-entry, and final exit that are available via Absher and Qiwa platforms.
The job mobility service allows mobility of expatriate workers between private sector establishments within specific controls that take into account the rights of the parties to the contractual relationship and the terms of the contract between the employer and the expatriate worker. There is no additional fee for the job mobility service via the Qiwa platform.
The conditions for the worker’s eligibility to benefit from the employment mobility service stipulate that the worker should be among the expatriate professionals subject to the labour law. He must complete his first year with the current employer from his first entry into the Kingdom.
The initiative allows the expatriate worker to move to another employer without conditions in specific cases, including, the absence of a notarized work contract, taking into account the deadline for documenting the contract, which is three months from the worker’s entry into the country, non-payment of the worker’s salary for three consecutive months, and the employer’s absence due to travel or imprisonment or death.
The LRI also allows the expatriate worker to move to another employer without conditions in specific cases, including the expiry of the expatriate’s work permit or residence permit (iqama), in the event the worker reports a commercial cover-up (tasattur) against the employer, provided that he is not participating in the concealment (tasattur), the existence of a labour dispute between the worker and employer, and the employer shows tardiness in attending the court’s litigation or amicable settlement sessions.
The initiative allows the worker to benefit from the “final exit” and “exit/re-entry” services via Absher platform automatically during the validity period of the work contract or after the end of the contract. The initiative excludes domestic workers.
Analysis
The LRI offers a great opportunity to streamline the Saudi labor market as it allows employees to switch jobs without much hassle, while following certain rules and regulations, and ensures the rights of employers as well.
The reformed system will also address exceptional cases where workers were not provided with a work contract or who did not receive their salaries.
The kafala system in Saudi Arabia previously tied workers to their employers, or sponsors, who are responsible for the employees’ visa and legal status. The new law would limit the relationship between employers and expatriate workers under the system, who primarily work in construction and domestic work.
The changes are largely viewed as part of Saudi Arabia’s plan to increase foreign talent and increase job market mobility for some 10.5 million foreign workers in the kingdom, who make up about a third of the kingdom’s population.
This new initiative will eliminate the problem of illegal employment that is wide-spread in the kingdom, as there are more than a million illegal workers. It will improve the rights of foreign workers in the kingdom, which means improving human rights as well, and this is perhaps the first step to moving toward a much better situation.
The Saudi economy will definitely improve. When all workers are registered and documented and have clear contracts, this will definitely raise competitiveness and provide greater opportunity for Saudi citizens. As the foreign worker has these rights and is largely equal to the Saudi worker, it means that employers will hire Saudi employees, thus eliminating a large proportion of unemployment.