Aimed at both protecting Saudi Arabian citizens in the workforce and providing increased flexibility to Saudi Arabian companies sponsoring foreign employees, the Saudi Ministry of Labor recently announced two amendments to the way in which Saudization levels are calculated and how a company’s NITAQAT classification is determined.
What is the NITAQAT System?
First introduced in 2011, the NITAQAT system was implemented to protect the Saudi workforce within the country. The system groups sponsoring companies into three classes (“zones”) of employers based on the percentage of Saudi nationals employed by that company (aka their “Saudization level”):
• Premium for companies whose workforce is at least 40% Saudi nationals;
• Green for companies whose workforce is at least 10% Saudi nationals;
• Yellow for companies whose workforce is less than 10% Saudi nationals; and
• Red for companies who do not employ any Saudi nationals.
These classifications determine the requirements, limitations, and privileges applied to companies sponsoring foreign workers. Examples of such regulations include, but are not limited to, how many foreign nationals a Saudi company can employ, how often that company can apply for new work authorizations, and whether any sort of amendments can be made to already-issued work authorizations.
Employers must maintain their Saudization level in order to remain within the Premium or Green “safe zones” in the NITAQAT system.
Saudization Level Calculations
Traditionally, new Saudi employees were required to be employed by the company for 13 weeks before they could be counted towards the company’s Saudization level. With this new announcement, however, the following changes have been implemented:
• New Saudi employees can be counted towards a company’s NITAQAT Saudization level as soon as the employee has been officially hired and the General Organization for Social Insurance (GOSI) obligations are met;
• Concurrently, Saudi nationals must be withdrawn from the company’s NITAQAT calculations as soon as they are no longer employed.
NITAQAT Classification Determination
In order to account for this more fluid method of calculating the Saudization levels, the Ministry of Labor will determine the company’s NITAQAT classification based on the average weekly Saudization levels over a 26-week period. Not only will this encourage Saudi companies to employ high-levels of Saudi nationals over a long-term consistent basis, but it will also protect sponsoring companies by ensuring that their NITAQAT classification does not suffer immediately should a Saudi employee leave the company.
In other words, while employers can now count a Saudi national employee into their Saudization calculations almost immediately upon hiring, their NITAQAT classification cannot be manipulated into a higher (i.e. more beneficial) NITAQAT classification simply by hiring and then terminating jobs for Saudi nationals.
ACTION ITEMS FOR EMPLOYERS
Companies sponsoring foreign employees in Saudi Arabia should take close note of these recent changes as they affect employer’s ability to bring in and maintain foreign talent.
As these regulations are still fairly new, Pro-Link GLOBAL continues to monitor the situation closely and will provide any updates or clarifications as soon as they are announced.
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