- Saudization Restrictions Eased
- April 16, 2015
- Law Firm: Dentons Canada LLP - Toronto Office
- The unemployment rate of citizens in Saudi Arabia is a highly political issue. Under Saudi Arabia's Nitaqat program, firms operating in Saudi Arabia are incentivized to employ Saudi Arabian nationals, and face the possibility of penalties for failing to do so. This government policy of encouraging the employment of Saudi Arabian nationals in the private sector is colloquially referred to as “Saudization,” and its underlying rules and regulations experience constant adjustment.
For example, employers previously had to retain a Saudi Arabian national for at least three months in order for the individual to be counted as a full Saudi Arabian national employee under the Nitaqat program. Then, the Ministry of Labor issued new regulations to take effect on 23 December 2014 which would require employers to retain a Saudi Arabian national for at least six months in order for the individual to be counted as a full Saudi Arabian national employee for purposes of the Nitaqat program (Arab News, 2 September 2014).
Now, the Ministry of Labor has eased the above-mentioned restrictions and announced that a Saudi Arabian employee shall be treated as a full Saudi Arabian employee for purposes of the Nitaqat program as soon as the employee has been registered with the General Organization for Social Insurance and his first premium has been paid.