Kingdom of Saudi Arabia Re-categorizes Companies in Nitaqat Program in Pursuit of Saudisation

“Saudisation” is a word used to describe requirements to employ a minimum number of Saudi nationals in the workplace.

Several changes regarding Saudisation have been made to the labor market, particularly in relation to the Nitaqat program, which categorizes companies by color depending on their fulfillment of Saudisation targets.

A significant change is the reshaping of the Nitaqat program by removing the yellow category, which is second to last. Hence, all companies in the yellow category will now be classified as red. As a consequence, these companies will be subject to additional penalties, such as being unable to renew the work permits of their expatriate employees.

In addition, Saudisation of the dentistry profession became a requirement. By March 26, 2020, 25 percent of roles are required to be held by Saudis. This is expected to increase to 30 percent in the following year. The penalties for noncompliance include the suspension of services with the Ministry of Labor and Social Development, such as the issuance of visas and work permits.

Comment

No action is required if a business is in the Green or Platinum categories of Nitaqat.  Businesses may want to enact measures to manage the turnover of employees so that the Saudisation quota is maintained at least at the Medium Green level in order to avoid falling into the Red category.

Written by Zahir Qayum of Al Tamimi & Co. and Roger James of Ogletree Deakins

© 2020 Al Tamimi & Co. and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.