In the continuous endeavor of the Ministry of Human Resources to develop the Saudi rules for expats and non-expat workers, to guarantee the rights of both employers and employees, and to ensure the validity of all employment contracts, the ministry began the third phase of authenticating employment contracts on Dhu al-Hijjah 16, 1444, demanding each firm to authenticate at least 80% of its employment contracts. Moreover, there are penalties that can take place on employers if they don’t commit to the authentication percentage of employment contracts. What are these penalties, and how to avoid them? Here are more details.
What are the main Saudi rules for expats hiring?
- The worker must enter the country legitimately and be permitted to work.
- For the worker to have academic/professional qualifications required by the country, which no citizens carry, or for which the available number of Saudi citizens does not meet the kingdom’s demand, or which are included in the category of ordinary vacancies for which the country needs numerous ex-pats.
- To be contracted with (and under) the responsibility of an employer.
What is the percentage of employment contract authentication imposed by the Ministry?
The Ministry of Human Resources has set mandatory rates for firms to document employment contracts, which increased gradually through every quarter in 2023 as follows:
For the first quarter, firms are obligated to document 20% of their employment contracts; for the second quarter, 50%; and for the third quarter, 80%. The third phase began in July 2023. Employers must complete authentication of 80% of their employee contracts by September, and the only approved platform for documenting employment contracts for Saudis and non-Saudis is Qiwa.sa.
The authentication process aims to preserve employer rights, non-Saudi worker rights, and Saudi worker rights, providing a sense of security for employees, which can create a work environment that helps stability and increases productivity. The Ministry also aims, through the contract documentation process, to provide a labor system that ensures the accuracy of the data, reduces labor disputes and issues, and ensures more commitment to the Saudi rules for expats and non-expats.
The Ministry added that the e-contract documentation service guarantees employers’ commitment to the employment Saudi rules for ex-pats, the validity of employment contract terms, and also allows employers in the private sector to update their firms’ data, amend contracts, report an employee’s absence or escape, and follow on until the contract ends. This service also allows workers to create accounts on the Qawi platform for individuals to confirm their contract data, reject or approve the contract from their side, and suggest an amendment if they need to. Once both parties agree to the contract, it is automatically notarized.
How to start creating a contract?
Once you have selected a candidate(s) you want to onboard, whether a Saudi or a non-Saudi, you must create a contract(s) for them. To do so, follow this step-by-step guide:
- Log in to your Qiwa business account.
- Go to Services and select ‘Contract Management’.
- Click the ‘Create new contract’ button.
- Select the Single or Multiple Employee option.
- Select whether the employee is inside or outside of Saudi Arabia and whether to create a contract from scratch or from a Contract Template.
- Select the contract language (note: contracts must be in Arabic, which is why Arabic is set as a default language) and the calendar type for your contract: Gregorian or Hijiri (for the contract’s date). Then click ‘Next step’.
- Review the establishment details that are correct, and enter the following information: representative role, establishment e-mail, and work location. Then click ‘Define employee details’.
- Enter the employee’s border number and date of birth, then click ‘Load employee data’.
- Verify the employee’s identity then enter the employee’s information including education level, specialty, IBAN, mobile number, and their email address. Once you have filled out the details click ‘Define contract details’.
- Fill in the contract details:
- general information (including job title, contract period type, starting date, notice period, and trial period)
- working time details (including the working hours type and number of annual vacation days)
- financial details (including the type of salary and the basic salary rate)
- housing/transportation details – choose whether housing/transportation is provided and what the allowance is for each
- if needed, you can add custom paragraphs like non-disclosure clauses, non-compete clauses, additional terms, etc.
- Click ‘Go to summary’ and verify the details of the contract are correct. Select the checkbox and lastly click ‘Create and send contract’.
How to authenticate an employment contract?
After submitting a request to authorize the employment contract, it will be sent to the employee via the Qiwa platform; the employee can approve it, reject it, or suggest an amendment to it through his own personal account on Qiwa Individuals. Once both parties agree to the contract, it is automatically notarized.
Is it possible for an employer to modify a notarized contract?
If the notarized contract is in the status of (approval) and (active), the employer can amend it and send it to the employee for approval or rejection. If the employee rejects the employer’s request for amendments, the documented contract in its latest version remains valid until the request for amendments is approved or canceled by one of the parties. It’s worth mentioning that all terms of the contract can also be modified, including the contract duration, start date, job title, financial benefits, etc.
What is included in the employment contract according to the terms of employment of foreigners and citizens in Saudi Arabia?
The Ministry has specified an employment contract form that mainly mentions the employer’s name and location, the worker’s name and nationality, necessary identity proofs, residence address, the agreed-upon salary including benefits and allowances, the work type and place, the date of joining, and the duration specified.
What penalties may take place for violating the authentication rates specified for employment contracts?
The financial fine will fall on employers according to the size of their facilities and the number of employees whose contracts need to be documented. Penalties are as follows in Saudi riyals:
| Violation Description | Violation category | C (companies of 20 workers or less) | B (companies of 21 to 49 workers) | A (companies of 50 workers or more) |
| A firm that fails to use the Arabic language in employment contracts, data, records, files, and instructions issued to its employees. | Nonsevere | 300 | 500 | 700 |
| A firm that fails to comply with the authentication of employment contracts electronically following the ministerial decision. | Nonsevere | 300on each worker | 500on each worker | 700on each worker |
| An employer who fails to pay the expat/Saudi worker’s rights and settle them within a period not exceeding one week from the end date of the employment relationship, or within a period no more than two weeks if a contract termination was based on the worker’s will. | Non severe | 1000 | 2000 | 3000 |
The employer must pay the fine imposed within 60 days from the date of receiving an administrative decision for violating the employment Saudi rules for expats/non-expats. If the employer fails to pay within these 60 days, the services he receives from the Ministry will stop until the value of the fine is paid. Also, a grievance before the competent administrative court does not stop implementing the administrative decision to impose the stipulated fine, except through a decision by the same court.
The Ministry of Human Resources and Community Development is making its best effort towards more developments and updates to the Saudi rules for expats and non-expat labor, an effort that requires every employer’s concern to follow up and implement, to avoid falling into violations that may affect their reputation. If you’re looking for a success partner to guide you through implementing ministerial updates or carry them out on your behalf, the Saudi Manpower Solutions Company, SMASCO, can be your best choice. We support you with everything your company needs in terms of workforce solutions, we take care of the complete employment cycle, and we provide you with a labor force 100% compatible with the new rules for expatriates in Saudi Arabia. Contact the SMASCO team now.
Sources
- The third phase has begun, requiring establishments to document 80% of employee contracts through the Qiwa platform until the end of next September, 25 July 2023 – 07 Muharram 1445, hrsd.gov.sa.
- Manage current employees, Qiwa.sa/en.
- The ministerial decision for schedules of violations and penalties, istitlaa.ncc.gov.sa/en.
- Hiring non-Saudis, Qiwa.sa/en.