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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Following the announcement of recent decisions, the Saudi Ministry of Human Resources and Social Development (“MHRSD”) is continuing in its drive to increase employment opportunities and to improve the conditions of the labour market for Saudi nationals. We have outlined some of these developments below, including a significant change to the current system through which Saudisation is implemented in the Kingdom of Saudi Arabia (“KSA”) that all employers will need to ensure they are aware of in order to ensure continued compliance with the Saudisation requirements applicable to their business.
The MHRSD issued Ministerial Resolution number 182495 dated 11/10/1442H corresponding to 23 May 2021 (the “Resolution”) as an enhancement to the Nitaqat system through which the Saudisation policy is implemented. The Resolution is arguably one of the MHRSD’s most strategically important initiatives in recent years to increase the percentage of Saudi nationals’ participation in the labour market in KSA. The Resolution will come into effect on 1 December 2021. The Resolution introduces an enhancement to the Nitaqat system that will require employers to employ an increasing number of Saudi nationals over a three-year period in an effort to create more job opportunities in the labour market for Saudi nationals (“Enhanced Nitaqat”).
The Enhanced Nitaqat system will apply to all employers with six or more employees. Unlike the current Nitaqat system which provides static Saudisation requirements based on the size of the entity, the Enhanced Nitaqat introduces a new formula to calculate an employer’s Saudisation requirements over a three-year period. The Enhanced Saudisation system will result in Saudisation requirements that increase every year for the coming three-year period and which will require employers to employ an increasing number of Saudi nationals over that period in order to remain compliant with their Saudisation requirements. The Enhanced Nitaqat system also combines the 85 economic activities under the current version of the Nitaqat system into 32 categories to help streamline the system.
Employers should ensure they are aware of their Saudisation requirements that will be applicable for the next three-year period starting from 1 December 2021 to ensure they remain compliant and to avoid any penalties or disruption to their KSA operations.
The MHRSD issued Ministerial Resolution number 57818 dated 18/03/1443H corresponding to 24 October 2021 which will nationalise certain roles within the marketing profession. Resolution 57818 will come into effect on 8 May 2022.
Entities employing five or more employees working in specific marketing roles will be required to ensure that 30 per cent of the affected roles will be Saudised. Resolution 57818 is accompanied by a guide which describes the specific roles that will be Saudised and includes 13 marketing-related roles. The MHRSD has also set a minimum wage of SAR 5,000 for any Saudi nationals who are employed in the relevant marketing roles to meet the Saudisation quotas required by Resolution 57818.
The MHRSD has also issued a decision to reserve secretarial, translation, storekeeping, and data entry roles to Saudi nationals only. The decision will take effect from 8 May 2022. The MHRSD has also set a minimum wage of SAR 5,000 for any Saudi nationals who are employed as a translator or storekeeper to count towards the Saudisation requirements.
The Employment & Incentives team in the KSA regularly advises on all aspects relating to Saudisation and workforce planning. If you require further information on the impact of these Saudisation decisions on your business, or any other employment issue, please contact us.
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