Legal Developments

Labor Law – weekends are not part of annual leave

The Saudi Arabian Labor Law provides that employees shall be entitled to 21 days of paid leave annually, to be increased to 25 days upon completion of five years of service with the employer. However, the Labor Law does not specify whether such days are working days or calendars.
Now, the Ministry of Labor (MOL) has clarified in an announcement that weekends are not considered as part of annual leave under the Labor Law. Employers that fail to comply with the MOL’s interpretation of the Labor Law in this regard are subject to fines and penalties of  up to SAR 100,000, which may be increased for repeat violations.

Saudi Gazette – 11 January 2016

Criminal investigation of corporate officers

The Ministry of Commerce and Industry (MOCI) referred the managers and officers of seven joint stock and limited liability companies to the Bureau of Investigation and Public Prosecution for prosecution as a result of alleged administrative and financial violations related to the Companies Law. The MOCI alleged that, during a formal inspection of the companies, its representatives discovered that the individuals had manipulated funds and hidden facts and figures about the actual financial status of the companies. 
As we have mentioned in previous Updates, with the enactment of the New Companies Law to take effect 2 May 2016, the Saudi Arabian authorities have demonstrated an increased focus on the Saudi corporate domain. Companies doing business in Saudi Arabia, including their officers and directors, should take note and be sure that they fully understand their rights and responsibilities, as well as their risks, under Saudi Arabian corporate and criminal regulations.

Arab News – 7 January 2016

Distance work program for women

As part of reducing the unemployment of Saudi females, the MOL will officially launch the distance work program for female employees this month in seven cities, including Hail, Qassim, Jazan, Najran, Al Ahsa, Madinah and Arar. It will later cover 40 other towns and cities. Business centers have been prepared in those seven cities under the supervision of the Human Resources Development Fund. 
Female employees will work for private sector companies from the business centers, and will receive the benefits of private sector contracts, including monthly salaries, annual leave, and the like. An electronic system will be used to monitor the contractual relationship between the employee and the private sector and make sure the program is not being used by companies to evade Saudization requirements.

Saudi Gazette – 23 December 2015

Fines for insurance companies that delay health insurance approvals

The Council of Cooperative Health Insurance (the Council) has informed insurance companies that they will be subject to a fine of SAR 5,000 for each incident of delayed approval upon requests from a hospital to provide medical treatments and medicines to their insured policyholders. In this regard, the Council clarified that the maximum approval time is one hour and, after that, the approval will be considered given.

Saudi Gazette – 22 December 2015

GOSI's new e-service

Employers are now able to perform easily all necessary procedures such as setting up establishments, including the registration process, changing employees' wages, subscription payments, and other related procedures through the electronic portal of the General Organization for Social Insurance (GOSI). The new service was launched recently by GOSI in order to help employers register their companies in advance and to protect the lawful rights of all parties concerned.

Arab News – 19 December 2015

Female Saudization measures

The MOL is in the process of altering the Nitaqat program to further encourage the increased employment of Saudi females. The Minister of Labor expressed concern that working Saudi females are mostly working as saleswomen, and should branch out into other fields and industries. The Minister will begin to implement measures requiring the private sector to employ more Saudi women and to offer them out-of-office employment (telecommuting) opportunities.

Saudi Gazette – 16 December 2015

Banking and Finance Developments

Establishment of new dispute resolution committees

Pursuant to Royal Order No. (A/24), the First Circuit of the Banking Disputes Committee and the First Circuit of the Appellate Committee for Banking Disputes, as well as the First Circuit of the Committee for Resolution of Financing Violations and Disputes and the First Circuit of the Appellate Committee for Financing Violations and Disputes, have been established and the chairmen of each committee have been named.

These committees will begin to carry on their tasks after the issuance of their procedural rules.

Um Al Qura Newspaper – 18 December 2015