SAUDI ARABIA – Employers Can Pay to Attain Required Saudization Category
Following the implementation on 3 September 2017 of stricter Saudization requirements for businesses, the Ministry of Labour (MOL) and the Human Resource Development Fund (HRDF) have introduced the “Parallel Nitaqat” system, to allow employers to buy into the required saudization category instead of hiring Saudi nationals.
“Parallel Nitaqat” aims to help employers who are struggling to hire enough Saudi nationals with the required skills or experience to reach their preferred Nitaqat category. Employers can pay a monthly fee (or six months in advance) for each Saudi employee they would otherwise have to hire to reach their preferred Nitaqat category.
The fees paid to MOL go to the HRDF and will fund the training and developing of Saudi nationals.
What is Nitaqat?
Nitaqat is a program of Saudization, designed to increase employment of Saudi nationals in the private sector, which was first introduced in 2011.
Nitaqat requires employers in the private sector to hire a certain percentage of Saudi nationals, depending on the company’s industry and the number of employees in the company.
Under the new version of the Nitaqat system, implemented on 3 September 2017, much higher percentages of local employees are needed to attain the compliant platinum and green categories.
Nitaqat also now applies to businesses with more than six employees (previously it was more than ten).
How Does Nitaqat Work?
Nitaqat uses a colour zoning system to categorize companies into compliant zones, platinum and green, and non-compliant zones, yellow and red.
- Companies in the compliant zones, platinum and green, obtain certain benefits, that those in the other zones do not. These benefits include; being able to obtain and renew work permits for foreign employees through an expedited online process, they are able to change a foreign employee’s profession and are allowed to hire employees from red and yellow zoned companies without approval from the employer.
- Yellow and red zoned companies have limitations to their business operations as a result of non-compliance. Yellow zoned companies are only allowed to renew visas for employees that have stayed in Saudi Arabia for less than 2 years. Companies that fall under the yellow zone are also not permitted to apply for new work visas as well as issue new work permits.
- Companies in the red zone have the most restrictions; they are unable to hire new expatriate employees, renew work permits, or open a new business or branch in Saudi Arabia until they have improved their Nitaqat rating. Yellow and red zoned companies also forfeit their authority to give permission to their employees to change employers in Saudi.
- Employers should consult an immigration specialist for advice on compliance with Nitaqat requirements, and whether they could benefit from the Parallel Nitaqat system.