The new structure of the recruitment sector

We hear a lot about society suffering from the mechanisms of recruiting domestic workers and the procrastination of some recruitment agencies, especially after returning to the work that was affected by the pandemic.

The government has put the regulation of recruitment activity among its priorities to ensure the rights of all individuals, whether they are the service provider, the worker or the end user. Therefore, today we will discuss the most prominent modifications of this activity, especially in the stage of its establishment and the legal structure of the service providers.

The minister of human resources and social development has approved the rules for practicing the activity of recruitment and the provision of labor services, which includes 97 articles covering all sectoral activities. The minister also agreed to give currently licensed companies a 12-month transition period (until March 1, 2022) to reconcile their conditions with the provisions of these rules.

Recruitment offices wishing to modify the legal entity into a small recruitment company for domestic workers have a transitional period until the end of the year, through which the category of the office can be modified to a recruitment company with raising the dedicated capital to SR1 million ($266,666). It will be necessary for the company to raise its dedicated capital to SR2.5 million before the end of March 31, 2022, as well as committing to meet the entire capital specified in the rules before March 31, 2023.

The activities of this sector are classified into a human resource company that engages in the activity of providing temporary professional labor services, the activity of providing daily labor services, the activity of mediating the employment of Saudis, the activity of providing temporary national labor services, the activity of mediating in the recruitment of labor, and the activity of providing domestic labor services. The domestic labor recruitment company engages in the activity of mediating in the recruitment of labor, the activity of providing temporary domestic labor services, and the activity of providing daily domestic labor services.

We have the activity of a small domestic labor recruitment company which is also limited to mediating the recruitment of labor and the activity of providing temporary domestic labor services, while a local contracting company carries out the activity of providing local labor services, in addition to a domestic labor recruitment company as a foreign investor that practices the activity of providing domestic labor services, and a recruitment office that engages in mediation activity in the recruitment of labor.

The regulation also state getting approval for establishing a recruitment office, which requires the applicant to submit a license form approved by the Ministry of Human Resources and Social Development, as well as submitting the executive management plan for the office, providing that it includes the office managers data, as well as submitting an initial bank guarantee from a local bank that cannot be canceled in an amount equal to the value of the final bank guarantee, SR750,000.

This guarantee can be released at the request of the applicant in the following cases: Providing a final guarantee, withdrawing the license application, or the rejection of the license application by the ministry.

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