Employment law: Nationalisation in Saudi Arabia

Written by
Sara Khoja

10 May 2016

10 May 2016 • by Sara Khoja

Proposal to Saudise recruitment and HR consultancy

The Ministry of Labour is currently consulting through its on line portal Maan, regarding its proposal to require all employees employed within HR consultancy providers and recruitment agencies to be Saudi nationals. The proposal also provides that any individual performing the recruitment function or the HR function in an employer should be a Saudi national. The belief being that a national in such roles will be more minded to recruit and source nationals rather than foreigners.

Women in the retail sector

The Ministry of Labour has over the past two to three years been campaigning to ensure that the sale of women’s clothing (specifically lingerie) is entirely serviced by Saudi women. It is a legal requirement for retailers to staff such sections with Saudi women and the Ministry of Labour recently made an announcement in this regard.

The Ministry’s announcement stated that there is no relaxation of the published requirement and that it will be strictly enforced and fines imposed as applicable. In seeking to provide guidance for retailers the Ministry clarified in its announcement that retailers can make the following adjustments:

  • For small to medium retail outlets employing five employees or more and selling women’s lingerie, these outlets must be staffed entirely by women or the retailers must stop selling lingerie;
  • In large outlets with many departments or divisions, the sale of lingerie should be ring fenced or sectioned off into a separate area which should be staffed entirely by women and with a female head or manager.  This section should also have a sign stating that only women are permitted to enter it;
  • The separate section can be staffed by men in the morning and afternoon (provided proper signage is used) and only if self service is permitted, i.e. female customers may examine items and freely serve themselves during those times within that section; and
  • Outlets with mixed retail items such as supermarkets, hypermarkets, foodstores, household item stores, furnishing stores, toy stores and so on are not permitted to sell female lingerie.

The mobile phone sector

Ministerial Resolution 1592 of 28/5/1437 H provides that all employers selling mobile phones and accessories as well as providing repair services must be staffed entirely by Saudi nationals. This requirement is being implemented in two stages: a) 50% Saudisation must be achieved by 1 Ramadan 1437 (approximately corresponding to 5th June 2016); and b) 100%  Saudisation must be achieved by 1 Thu Hija 1437 (approximately two months later).

Any establishments selling other items may continue to do so provided they ring fence or separate the sale of mobile phones and accessories as well as repair services from other retail activities or products and apply, the Saudisation requirement within that sales unit. If the establishment is not able to ring fence the sale activities then it must stop selling mobile phone and accessories. 

Once the two implementing dates have passed there will be a fine of SR 20,000 per non KSA employee engaged to sell or repair mobile phones and accessories and the fines double on a repeat violation.  

Many have analysed the new resolution as a measure designed to curb fronting businesses or ‘tasattur.’

Proposal for a weighted Nitiqat

Another measure the Ministry is currently consulting on through Maan, is the proposal to introduce additional weighting through Nitiqat to encourage what it describes as quality Saudisation; meaning the employment of Saudis for sustained periods of time, the employment of highly paid Saudi nationals and the greater employment of Saudi women.

The proposal is for greater weighting to be given according to a) how many Saudi women are employed within the business as a percentage of the total number of employees; b) how many Saudi nationals (men and women) are employed within the top 25% of the most highly paid employees within the business; and c) the ability of an employer to retain Saudi nationals for three years or more, with an employee completing three years of service then being given additional weighting of 20% over the following three years subject to counting for a maximum of four employees.  The employee would be able to obtain a certificate from the Ministry under Nitiqat confirming is status as such an individual.