Out-Law Analysis | 24 Mar 2021 | 10:56 am | 2 min. read
Worker-friendly reforms to Saudi Arabia's 'kafala' sponsorship system will help to attract more talent to the country, according to Pinsent Masons, the law firm behind Out-Law.
The changes, which came into force on 14 March 2021, allow expatriate workers in the private sector to travel in and out of Saudi Arabia, for example to travel home, without prior approval of the employer. Expatriate workers may now also seek a job with a new employer once their employment contract expires without first obtaining the consent of their original employer.
Employment law expert Ruth Stephen of Pinsent Masons said that the changes would be welcomed not only by the 10 million expatriates currently living and working in Saudi Arabia, but also by private sector employers seeking to attract globally mobile staff.
"These changes to the laws provide workers with much greater labour mobility and control over career development," she said. "Historically, it would not be uncommon for disputes to arise on the termination of employment as employees tried to move from one employer to another. Now that employees are free to accept a job from another company without pre-approval, this should support increased competition in the local job market."
Now that employees are free to accept a job from another company without pre-approval, this should support increased competition in the local job market
"Employers will welcome these changes that will no doubt attract increased talent into Saudi Arabia. However, they will be equally cautious about the risk of employees leaving to take up work with a competitor company without their knowledge. Accordingly, and if they have no already done so, employers should review the post-termination restrictions, confidentiality and IP clauses in their staff employment contracts to see if they provide the business with the level of protection needed," she said.
Saudi Arabia's Ministry of Human Resources and Social Development (HRSD) announced the changes, called the Labour Reform Initiative (LRI), in November 2020. The LRI is intended to make the position of Saudi and expatriate workers in the country more equal, and to increase the flexibility, competitiveness and attractiveness of the Saudi labour market.
Private sector employment contracts must now be recorded digitally, which will enable expatriate workers to apply directly for government services. Workers can now request a transfer to a new employer, an exit/re-entry visa for return travel or a 'final exit' visa when leaving the country via the HRSD's online portal or Absher smartphone application, rather than having to do so through their current employer. The employer will be notified electronically where the employee is granted a visa.
The worker will continue to bear any financial or other consequences should they break the employment contract, the HRSD said.
The changes come as part of a wider drive by Saudi Arabia to improve the efficiency of the business and job market, Ruth Stephen said.
"Other initiatives that we have seen in recent times include the Wages Protection System, the electronic documentation of employment contracts and the out of court dispute resolution system for labour complaints," she said. "Moreover, these modifications coincide with an update from the HRSD that it is currently working on a national anti-discrimination policy that will cut across any discriminatory practices in the workplace, or during recruitment and advertising."
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