Saudi Arabia to end sponsorship-based ‘Kafala’ labor system

Saudi Arabia’s Ministry of Human Resources and Social Development is set to overhaul its existing ‘sponsor/employer-based’ work permit system “Kafala” for ex-pat workers. 

The current system directly links worker’s visa/residency status and their legality to their employers or sponsors. The new reform is expected to limit the relationship between employers and expatriate workers under the system, who primarily work in construction and domestic work.

Under the new regulation which is expected to be introduced in 2021, the worker/employee will not be limited by his sponsor/employee to secure exit and entry visas, receive the final passport exit stamp without a sponsor, and gain employment without approval from a sponsor/employer.

Most of the GCC countries employ the same or similar system for ex-pats in the country while countries like Bahrain and Qatar tried to amend the basic structure to offer a bit more flexibility to immigrant workers.

The system has been widely criticized for its rigidity and undue control provided to the sponsor/employee over the work agreement. The new system is part of the Kingdom’s several initiatives which are expected to benefit more than 10 million expatriates by improving their quality of life including one for housing and another for entertainment.

Public announcement on the matter was expected to happen in early 2020 but was postponed because of the rise of COVID-19. It was informed that a declaration will be made on 28 October 2020 but sources suggest a timeline of early November for the formal announcement.

Addressing the ongoing buzz about the highly anticipated announcement the officials remarked that “In reference to what has been circulated about changes in the framework of the labor contractual relationship in the Kingdom, the Ministry of Human Resources and Social Development clarifies that it is working on many initiatives to organize and develop the labor market, and it will be announced as soon as it is ready. The Ministry calls upon everyone to obtain information from its official sources.”