At a Glance

  • The Ministry of Labor and Social Development (MLSD) in Saudi Arabia has implemented a law requiring private sector employers to upload their entire workforce’s employment contracts to the General Organization for Social Insurance’s (GOSI) electronic portal.
  • Employers must ensure that their employment contracts comply with MLSD regulations and must register the contracts on the GOSI portal by the relevant deadlines.
  • The new law is expected to standardize employment contracts, which should make employment terms more transparent.

The situation

The Ministry of Labor and Social Development (MLSD) implemented a law which requires private sector employers to upload their entire workforce’s employment contracts to the General Organization for Social Insurance’s (GOSI) electronic portal.

A closer look

Private sector employers must upload contracts for a specific portion of their headcount according to the following schedule, which varies depending on the number of employees in the company:

Impact

  • Actions. Employers must ensure that their employment contracts comply with the MLSD’s regulations and must register contracts on the GOSI portal by the end of each quarter. Fragomen can assist with the registration process and can review contracts to ensure that the relevant data (such as the salary, personal details and employment start date, among other information) reflects the information recorded on the GOSI portal for each employee.
  • Benefits. The new law is expected to reduce compliance issues and standardize contracts to avoid ambiguity in employment contract disputes.
  • Unknown information. The MLSD has not yet confirmed whether employers that do not meet its regulations must draft addendums to include any missing information as per the MLSD regulations. The MLSD is expected to confirm this in future publications.

Background

  • History of registration law.
  • Relaxed policies for employers. Saudi Arabia has recently begun to relax and streamline employment policies to create a more desirable business environment. Other policies that streamline the employment process that have been recently implemented in Saudi Arabia include the introduction of a permanent residence program, the reinstatement of the replacement block visa and the increased validity of block visas.
  • Regional trend. To provide additional protections for the growing number of foreign employees as more global corporations perform business in the region, many Middle Eastern countries are implementing stricter employment regulations, such as new employment laws in the Dubai International Finance Center. In general, the area lags behind the European Union, which is in the process of creating a European Labor Authority, and robust North American employment laws.

Looking ahead

The country’s continued focus on attracting foreign workers and investment (especially to non-oil-reliant industries) requires competitiveness in terms of offering high salary packages (it is one of the top countries in the region as far as salary levels); transparency in the employment process; and streamlined short- and long-term immigration rules. The Saudi government is expected to implement more rules streamlining and regulating employment relationships and work authorization as it continues to attract foreign workers.