The Nitiqat system – Increasing the quantity and quality of employment for KSA nationals

Since its introduction the Nitiqat system has continued to be developed; the initial emphasis being on increasing the number of KSA nationals employed. In the coming months, further developments will aim to increase the quality of employment for KSA nationals, for example the award of additional points for remunerating KSA nationals with SAR 6,000 a month rather than the minimum SAR 3,000. With the impending enforcement of a two day week-end, most employers are gradually introducing this entitlement as it becomes market practice. Similarly, a 40 hour working week is slowly taking hold certainly for certain office based roles.

The employment of women has been facilitated by the Ministry of Labour specifically regulating the employment of women in kitchens, in factories, within retail, and amusement parks. Remote working is also possible for women with the percentage of women who may work remotely and be counted towards the Nitiqat rating being linked to the employer’s Nitiqat category: 7 percent of total employees for those in the premium category, 5 percent for those in the green category, 3 percent for those in the yellow category and no allowance for those employers in the red category. For women to count within these regulations, they must be employed full time, be between the ages of 25 to 35 years of age, be registered for social security and a bank certificate evidencing payment must be submitted to the Ministry of Labour on a regular basis. There are penalties on employers who engage female employees remotely in fictitious roles, simply to increase their Nitiqat rating: no new work visas will be issued and employees professions cannot be changed for 3 years or 5 years if the violation is a repeat one. Subsidies from the Human Resource Development Fund will not be provided for a minimum of 3 years (for the first violation) or 5 years (for a repeat violation). A fine of SAR 5,000 will also be imposed per fictitious employee.

The climate of promoting workforce nationalisation has had a knock on effect on work practices and potentially employment disputes. The Ministry of Labour introduced standardised regulations clarifying the procedures for employees to raise labour complaints and then disputes. These matters are still currently being heard by Labour Commissions or Committees but the long term goal is for specialist Labour Courts to be established. It has been reported that in the past six months 5,000 complaints were raised by KSA nationals and against the nationalisation backdrop, an increasing trend may be to award reinstatement to KSA nationals complaining of unjustified termination. The KSA Labour Law has always provided for this remedy but we will see reinstatement more likely to be granted rather than simply compensation.

Nitiqat links the number of visas for employing non GCC nationals (a GCC national counts in the same way as a KSA national under the system) with the number of KSA nationals employed. The greater the ratio of KSA nationals to non nationals, the better the employer category and the more visas which will be allocated. However, the reality is that any employer with any sizable operation in KSA will now have to develop and implement a long term plan for employing and training KSA nationals within the business. It has also become a marked part of the licensing regime for employers wishing to enter the KSA market to submit a plan for employing KSA nationals alongside the business plan explaining the operations to be established and the value the establishment will bring the Kingdom.