Saudi Arabia to enforce new Kafala system

Saudi Arabia's Ministry of Human Resources and Social Development (HRSD) is all set to apply the amended sponsorship (Kafala) system from March 14. The current sponsorship law will be scrapped and replaced by a contractual system that involves three major reforms by lifting certain restrictions on foreign workers.

Current Kafala system

The existing kafala system allows sponsors or employers to have the upper hand over ex-pat workers regarding job change, opening bank accounts or even leaving the country on vacation. The Kingdom requires all expatriate labourers to have a local sponsor responsible for their visa and legal status. A foreign worker has to work for the sponsor and cannot switch jobs or work for another employer. The system had fetched widespread criticism due to its loopholes to violate the rights of expatriate workers.

Amended Reforms

The Labor Reform Initiative (LRI), in line with The Kingdom's Vision 2030, was launched to benefit expatriates and boost the labour market. Last October, HRSD announced the amended sponsorship law provisions, limiting the contractual relationship between employers and expatriate workers, primarily benefitting construction and domestic workers. The HRSD will soon acknowledge the reform changes to the public by enabling the services in its website Qiwa and smartphone app Absher.

The conditions of job mobility reforms include that the expatriate workers must be enrolled under the labour law and have completed a year with the existing employer since their initial entry into the Kingdom. The worker must have an authenticated work contract and work for another employer if the sponsorship is transferred through formal channels.

The new employer has to render the job offer through the ministry's Qiwa website and obtain their approval. The worker's current employer will be notified of the process with a request to transfer employees' services within a notice period.

However, in cases of delayed salaries for three consecutive months or work contract not being uploaded on the Qiwa portal within three months of recruitment, the worker may change jobs without the employer's approval and prior notice. The worker does not require permission to change jobs if the sponsor dies or fails to make contact within the prescribed period. The worker can approach authorities to lodge a complaint in case of their employer's involvement in a benami business or human trafficking. The expatriate worker will be excused if the employer does not appear for the court hearing and can change his job by suing his employer.

Another amendment change is the exit and re-entry visa reforms which will allow the foreign workers to travel outside the Kingdom without the employer's approval. The workers can apply to the respective authorities, who will then notify employers electronically about their departure.

The final exit visa reforms permit an expatriate worker to leave the Kingdom as soon as the employment contract comes to an end without requiring the employer's consent. However, the worker will have to bear financial consequences or any legal biding in case of breaching an employment contract.

Benefit to ex-pats

The new employer is obliged to ensure that the workplace meets specific requirements while applying for a worker's transfer. The LRI requires a new sponsor to follow the wage protection, the documenting and digitizing and the self-assessment programmes.

Currently, the Kingdom is home to more than 10 million diasporas, and the reform changes will be seen as a game-changer to many. To achieve Kingdom's visionary goals by 2030, Crown Prince Mohammed bin Salman has brought in several legal and social reforms to restructure the system, including judicial laws, the abolishment of minors' death penalty, more participation of women in major sectors, the launch of Future Investment Initiative (FII), and more.