In Saudi Arabia, businesses are required to comply with specific government regulations. A thorough understanding of these regulations is essential for ensuring smooth operations and avoiding potentially costly penalties.

This article will explore key HR compliance concepts in Saudi Arabia, including saudization (Nitaqat), labour service portals, employment contracting, and social security requirements. Along with detailed explanations, we will also highlight the benefits of adhering to these regulations.

Saudization

Saudization is a system with a primary goal to increase Saudi participation in the workforce and reduce reliance on foreign labour.

To enforce this, a hiring quota system has been created by the Ministry of Human Resources in Saudi Arabia, including Nitaqat. This policy requires businesses to employ a specific number of Saudi nationals based on the company's size, department, and industry.

In fact, the next hire after the General Manager of any early-stage startup must be a Saudi national, or else the issuance of Iqama (residency permits) for other employees may be denied. 

How Nitaqat Works

Under the saudization programme, businesses are categorised into five Nitaqat levels: Platinum, High Green, Mid Green, Low Green, and Red. These levels are determined by the percentage of Saudi employees in the workforce and the total number of employees. Platinum, the highest level, offers the most benefits, while Red, the lowest, may result in the denial of services by the Ministry of Labour. Each industry (healthcare, tourism) has its own required percentage of saturation of the total workforce. 

Eg: 

Benefits

Businesses with a Nitaqat level of Mid Green or higher may:

• Renew work permits for foreign employees
• Apply for new permanent work visas
• Change the profession classification of their employees. 

Drawbacks:

Businesses with a Red Nitaqat level may face restrictions, such as being unable to:

• Apply for new visas
• Use transfer visas
• Renew work permits
• Open new files for new branches or facilities 

Visit Qiwa for more information on how to calculate your NItaqat percentage. 

HR Governmental Portals 

There are a variety of HR governmental portals in Saudi Arabia, with each serving distinct functions. These portals cover a range of business needs, from taxation and labour regulations to product safety standards and municipal compliance. 

Efficient management of these platforms is crucial to your business operations, requiring regular weekly updates to be made every Saturday.

We usually strongly advise those companies operating in their first year or mainly comprised of non-Arabic speakers to outsource their HR portal management. There are both financial and operational implications. 

Main Service Portals

GOSI

• A portal for managing social insurance contributions, benefits, and employee registration for both companies and individuals.

GOSI 

A portal for managing social insurance contributions, benefits, and employee registration for both companies and individuals.

Qiwa

• Responsible for drafting employee contracts, management of non-Saudi visa status, showing saudization certificates, and renewal of work permits.
• Annual subscription based on number of employees.

Mudad

• A platform for wage protection, ensuring that employers comply with wage laws and employees receive their salaries on time.
• All private sector payrolls are not transferred without updating this platform
• Most banks are integrated with Mudad 

Absher

• A comprehensive portal for various government services, including traffic violations, visa applications, and personal status updates.
• This platform will be used when you or your family members arrive in Saudi to authenticate your mobile number.

Muqeem

Exit entry visas 

• Iqama renewal of employees and their dependents
• Two subscription models, starting at 630 SR.

Taqat

• The national labour gateway provides Suadi job seekers and employers with various employment-related services, including job postings, training programmes, career counselling, and salary subsidiary programmes.
• Taqat has multiple programmes to subsidise the salaries of employees.

Jadarat

• Recently announced official national employment platform aiming to streamline job market process

Saudi Expansion Series

This article is part of the Saudi Expansion series, where we aim to educate international entrepreneurs and business owners on Saudi Arabia's foreign investment regime for a smooth landing. This article is written by Tawaref, a tech investment community that finances top regional startups & offers entrepreneurial services.