Responding to changing times: Saudi Arabia's innovative working arrangements
Saudi Arabia Focus
Traditional employment models may not always suit Saudi Arabia's evolving and diverse labour market, and private sector employers are seeking more efficient and flexible ways to manage their workforce.
Law Update: Issue 367 - Saudi Arabia & Competition Focus
Mohsin KhanPartner,Employment and Incentives
Hayat RafiqueAssociate,Employment and Incentives
Tamam Al DakheelTrainee Lawyer,Employment and Incentives
As part of the Saudi Arabian government’s Vision 2030, the Saudi economy continues to develop into new sectors which were either previously untapped or are newly available using technology. This economic diversification, together with a number of recently announced mega and giga projects, has resulted in an environment of economic growth and job creation in the Saudi labour market. Equally, however, it has highlighted that the traditional employment model of regular, full-time employment is potentially unsuitable for the variety of employment opportunities that are arising in newly developing sectors of the Saudi economy.
Employers in the private sector are being required to manage their workforces more efficiently and flexibly and also to create new types of jobs to achieve the objectives of the national labour policy to increase the number of Saudi nationals integrated into the Saudi labour market.
Accordingly, one of the most significant challenges faced by both multi-national and local companies continues to be recruiting the right employees and achieving the right balance in working arrangements to meet customer demands as well as the needs of their resources. In response, the Ministry of Human Resources and Social Development (“MHRSD”) has introduced a number of recent developments and programmes which have increased the variety of working arrangements that are available and have facilitated greater flexibility in the Saudi labour market. In this article, we look at some of the atypical working arrangements applicable to both Saudi and non-Saudi nationals and the workforce options for employers in the private sector.
Under the Labour Law issued by Royal Decree Number M/51 dated 23 Sha’ban 1426 (corresponding to 27 September 2005), as amended from time to time (the “Labour Law”), foreign national employees may only work for their sponsoring employer. Employers are not permitted to employ employees of another employer unless the MHRSD approves the working arrangement through the “Ajeer” system.
Accordingly, the Ajeer system plays a significant role in Saudi Arabia's labour market. It regulates and manages the temporary contracting and secondment of non-Saudi national employees who are employed and sponsored by an employer but who temporarily work for another employer. Ajeer has become a fundamental tool for workforce resourcing in certain sectors as it provides a legally compliant solution for contingent employees and simplifies the contracting and secondment processes of foreign nationals.
Further, Ajeer operates by way of various types of Ajeer permits which authorise non-Saudi national employees to work for a non-sponsoring employer and at their premises for a temporary period. Employers may be eligible to obtain specific types of Ajeer permits based on the commercial activities listed on the Commercial Registration certificate of the employing entity.
The Ajeer system therefore provides for a practical solution where additional personnel resources may be required on-site for a temporary period including, for example projects, which will require different categories of employees at different phases throughout the project.
Innovative working arrangements will go a long way in supporting growth in employment opportunities
The Flexible Working programme (known as “Mrn”) facilitates the engagement of Saudi national job seekers who are seeking flexible work with employers who need to contract flexibly with employees.
The Mrn programme therefore supports private sector employers in meeting their emergency, temporary, or seasonal need for employees. Employees will have documented contracts that guarantee the rights of both the employer and employee. Moreover, under the Mrn programme, employers are not obliged to commit to various statutory employment rights as stipulated in the Labour Law, such as paid annual leave, an end-of-service award, or health insurance.
Under the Mrn programme, wages will be paid on an hourly basis, and the maximum working hours that the employee is permitted to work is 12 hours per day and 95 hours per month for the same employer.
By engaging Saudi national employees through the Mrn programme, therefore, employers can avail of the flexible working regime provided by the MHRSD in the knowledge that they are not required to provide full statutory employment rights that would otherwise be provided to full-time employees.
The Freelance Programme is open to Saudi national freelancers who have the necessary skills and knowledge in specific fields to allow them provide services to individuals or entities on a self-employed basis on an hourly, daily or assignment basis.
For compliance purposes, Saudi freelancers must obtain a Freelancing Practitioner Certificate (“FPC”) in order to enter into freelance contracts with individuals or entities.
A FPC holder is not bound to work a certain number of hours or during specific working hours and can therefore work flexibly as per their and the client’s requirements. Further, FPC holders can continue to work on a full-time basis with their employers in parallel with their freelance work.
The Telework Programme applies to any Saudi national employee whose permanent place of work is away from the employer’s office (“Teleworkers”). The Telework Programme seeks to create a local and flexible work environment that overcomes physical and transportation obstacles and connects employers with employees through the use of technology.
Saudi national employees working under a teleworking arrangement will need to be registered on the Telework platform. Teleworkers must be treated like regular full-time employees for the purpose of providing wage, annual leave, health insurance, end-of-service award calculations, and other statutory employment rights.
The Telework Programme provides employment opportunities for Saudi nationals who may otherwise be disadvantaged by the office-workplace arrangements, or those who live in regions in Saudi Arabia with fewer suitable job opportunities.
As Saudi Arabia continues to develop into a modern and diverse economy, the implementation of atypical working arrangements and the launch of various flexible working programmes will support achieving the government’s goal of accelerating growth in employment opportunities. Employers in different sectors will seek to take advantage of the variety atypical working options in order to respond to changing business requirements in an evolving Saudi economy.
Al Tamimi & Company’s Employment team has lawyers based in Saudi Arabia who advise on the full range of employment-related matters and issues, including in respect of atypical working arrangements.
For further information,please contact Mohsin Khan, Hayat Rafique and Tamam Al Dakheel.
Published in April 2024
