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Find out moreWe 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 editionThere have been a couple of significant developments in KSA in recent weeks that are part of the government’s Vision 2030 reform agenda. The highly anticipated ‘green card’ equivalent residency permit for expats has received royal approval and, importantly, the Ministry of Labour and Social Development has made the electronic authentication of employment contracts a requirement for all employers.
Following the announcement first made in April 2016 by Crown Prince Mohammed Bin Salman of a ‘green card’ for expats, the KSA government has now passed the Privileged Iqama Law by Royal Decree No. M/106 dated 10/9/1440H. The Law allows a non-Saudi national to apply for the Privileged Iqama either on a permanent basis or for a one-year period that is renewable.
The Privileged Iqama will give the holder the following rights and benefits:
All applicants will have to satisfy the following conditions:
The Privileged Iqama is a long overdue and welcome step towards opening up investment opportunities in KSA to non-Saudi nationals. However, early reports are that the associated fees will be significant, suggesting that it is targeted mainly at entrepreneurs who will be able to invest in the KSA and create job opportunities or highly skilled workers, meaning that it will be out of reach for the vast majority of people. Also, the grounds in which it can be revoked are potentially wide in scope and may impact on investor confidence. We eagerly await the implementing regulations to consider the detail and understand to what extent the Privileged Iqama is going to change the landscape for employment and investment opportunities for individuals in KSA.
In a further significant development for all employers in KSA, Ministerial Resolution No. (156309) dated 18 Sha’ban 1440 (AH) corresponding to 23 April 2019 has been issued requiring the electronic authentication of employment contracts. The Resolution came into force from the date of issue (i.e. 23 April 2019) and requires employers to upload and update employment contracts through the contracts authentication service via the General Organisation of Social Insurance (GOSI) web services portal.
The requirement to authenticate contracts electronically is immediate for all new hires. As to current employees, the Resolution allows for the authentication process to be done in phases. The timetable for compliance is as follows:
Employer (by no. of employees) | Commencement Date | Timetable for Authentication | ||||||
H | AD | Q3 2019 |
Q4 2019 |
Q1 2020 |
Q2 2020 |
Q3 2020 |
Q4 2020 |
|
Giant (3,000+ employees) |
1.12.1440 | 02.08.2019 | 20% | 50% | 100% | |||
Large (500 – 2,999 employees) |
1.3.1441 | 29.10.2019 | 20% | 50% | 100% | |||
Medium (50 – 499 employees) |
1.6.1441 | 26.01.2020 | 20% | 50% | 100% | |||
Small (1 – 49 employees) |
1.9.1441 | 22.04.2020 | 20% | 50% | 100% |
By way of example, a large employer (with between 500 and 2,999 employees) will need to commence the authentication process by 29 October 2019 and upload 20% of its contracts by Q4 2019, 50% by Q1 2020, and 100% by Q2 2020. In contrast, a small employer (with between 1 and 49 employees) will not need to commence the authentication process until 22 April 2020, with completion date of Q4 2020 set.
The penalty for non-compliance is that employees whose contracts have not been authenticated will be able to change employers without the consent of the current employer.
What do you need to do?
Whilst the Resolution makes provision for the gradual uploading of contracts for existing employees, the fact that it requires contracts for all new hires to be done immediately means that it is imperative that the organisation has an up to date and compliant employment contract for all staff. If employment contracts have not been reviewed then this should be done without delay to ensure that they are compliant with the legislative changes that have been in effect since April 2016. Consideration will also need to be given to transitioning existing staff who may be on contracts that are outdated onto new contracts ahead of the relevant commencement date for the authentication process.
The Employment & Incentives team in KSA regularly advises on all aspects of the employment relationship. If you require further information on the Privileged Iqama or the Electronic Authentication of Employment Contracts, please feel free to contact:
Zahir Qayum
Senior Counsel, Employment & Incentives
Mohsin Khan
Senior Associate, Employment & Incentives
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