Labor Reform Initiative to help boost Saudi Arabias private sector

We have always stressed the importance of streamlining labor market procedures and defining clear mechanisms to help improve the contractual relationship between an employee and an employer without compromising the rights of any party.

Recently, the Ministry of Human Resources and Social Development announced its Labor Reform Initiative (LRI) to improve career mobility and protect the rights of all parties.

The initial official statements have highlighted the targets the LRI seeks to achieve. However, we still await full disclosure of the mechanism of implementation for these new rules.

We know for certain that in addition to ensuring career mobility by doing away with the sponsorship system, the new initiative offers digital services to employees such as the issuance of exit and re-entry visas and the final exit service through the Absher and Qiwa platforms.

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.

Expatriate professionals should meet certain conditions in order to benefit from the job mobility offered by the LRI. Their professions should fall under the category in which foreign workers are allowed to work and the LRI is applicable. They should have completed at least one year in their current occupation since their first entry into the Kingdom. An employee intending to switch jobs must have a notarized employment contract and a new job offer received through the Qiwa platform from the new employer. He must notify his current employer about his plans 60 days prior to taking on his new role with another employer.

An employee can, however, seek another employer without meeting the aforementioned conditions in the absence of a notarized employment contract, for example, if an employer fails to prepare a contract following all legal procedures for three months since the entry of an employee into the Kingdom. In such a case, serving a notice will no longer be applicable to an employee, and he reserves the right to move to some other company.

If an employer fails to pay monthly wages for three consecutive months or is not available for the same duration due to travel obligations or imprisonment, an employee is free to switch jobs.

In case of the expiry of an employees work or residency permit and the failure of an employer to resolve the matter amicably, LRI conditions do not apply to the employee.

The initiative allows employees to benefit from the two services of final exit and exit and return. It is important to note that an employer cannot restrict an employees freedom to travel to his country because of pending rights. In such a case, employers should obtain their rights through the judiciary. However, this point needs more clarification, as it is still not yet certain as to how employers should handle such matters.

The LRI will undoubtedly bring about a positive change to the Saudi labor market and working conditions and will help boost the growth of the private sector in the Kingdom.

Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif