Managing employee performance is a key concern for every employer. The measure of success and method for harnessing employee performance to align with business needs will vary from employer to employer as well as being dependant on industry sector. Whilst employers will seek to tailor their performance management systems to their own operations employers in KSA need to be mindful of the provisions in the Ministry of Labour and Social Affairs’ Model Work Regulations regarding performance management. The Model Work Regulations are available for employers to adopt wholesale or to adopt with modifications provided any amendments receive prior approval from the Ministry of Labour and Social Affairs. Extensive modification of the standard model is unlikely to be approved for use by an employer. Broadly the Model Work regulations provide for the following.

Appraisal System

Every employee should be assessed formally and in writing at least once a year; with the appraisal covering the following:

  • The individual’s ability to perform work and their level of proficiency;
  • The employee’s conduct, cooperation with colleagues, customers, and managers; and
  • The individual’s punctuality.

Each employee should be given a performance marketing or ranking based on five performance gradings which are not specified but would include categories along the lines of high performance, upper intermediate, intermediate, lower intermediate, and poor.

Reward and Promotion

Perhaps surprisingly for many employers, the Model Work Regulations also seek to regulate the payment of bonus payments in that the regulations provide that an employee ranked as intermediate should be eligible for a bonus where an employer operates a bonus scheme. The amount and method for calculating any bonus is for the employer to determine and indeed, whether or not to provide any bonus scheme at all is at the employer’s discretion.

Internal promotions are also regulated by the Model Work Regulations and linked to the performance management and assessment scheme. Where a role is vacant then an employee is able to apply for it on the basis that it is a higher ranking role for which he is appropriately qualified and has achieved a performance ranking in his last appraisal of ‘upper intermediate’ and the promotion is approved by the General Manager. If there are competing internal applications for the same role, the Model Work Regulations provide that the following factors should be taken into account: which employee has achieved a higher appraisal ranking, has higher educational qualifications, experience, seniority within the organisation and the authorised (i.e. line of report) manager’s view.

Employment Termination due to Performance

Where an employee’s performance warrants review it is worth noting that the KSA Labour Law and the Model Work Regulations envisage the employer following the same process as that which applies for disciplinary matters. Whilst poor performance and misconduct are conceptually different, the procedure to document an employer’s steps to remedy them are the same under the KSA Labour Law and the Model Work Regulations. A three step process involving inviting an employee to a meeting in writing and outlining the concerns, meeting with the employee to give him an opportunity to explain the situation and make any representations he may have and finally confirming the employer’s decision in writing, should be followed. There are also time limits to take into account such as the requirement that any procedure is initiated within thirty days of the employer becoming aware of the employee’s poor performance. The Model Work Regulations contain a table providing guidance on the type of sanction applicable for various acts by an employee and, where poor performance is involved, an employer would be expected to issue written warnings identifying the skill gap and what needs to be done by the employee to address it. An employer would also be expected to provide training and support to an employee in order to improve his performance and where possible even consider moving him to a role more in line with his capabilities.

Generally, prior to considering termination by reason of poor performance an employer would be expected (depending on the surrounding circumstances) to have issued at least two written warnings over a six month period. Where a warning or sanction is issued (of whatever nature), these are valid or ‘live’ for a period of one hundred and eighty days following which they can remain on an employee’s file but they are not ‘live’ warnings upon which further action can be based.

Very often employers will wish to enter into discussions with employees to agree termination by mutual agreement and in accordance with article 74 of the KSA Labour Law. Care needs to be exercised when entering into these discussions as any conversation with an employee is ‘on the record’ and the concept of ‘without prejudice’ does not exist in KSA within the context of employee relations. Moreover, where a termination by mutual agreement is reached, this could have an impact on an employee’s ability to claim unemployment benefit from the General Organisation for Social Insurance (GOSI) under its Sanad program. GOSI will need to be notified by the employer that the employee is no longer in its employ and it will usually request a reason for the employment termination. Where the reason given is resignation or termination by mutual agreement this can potentially bar the employee from claiming unemployment benefit.