Saudi Arabia’s Ministry of Human Resources and Social Development (MHRSD) has officially declared the much anticipated revolutionary Labor Reform Initiative (LRI) under the National Transformation Program (NTP) which strives to make the Kingdom’s labor market attractive and in line with international labor standards.
The new regulations are applicable to all expatriate workers in the private sector and include specific control measures that have been placed within the framework to safeguard the interests of both parties in a contractual relationship.
The new reforms are expected to be in effect from March 14, 2021.
The new regulations allow an employee to move into another job under a different employer once his tenure of work contract is over. While the previous employer is updated about the transfer through a system, the employee is not required to gain any permission or consent from the previous employer for the shift after the expiry of his job contract.
The initiative also draws conditions applicable during the validity of the contract, provided a notice period and specific measures are adhered to.
The move is expected to make the Saudi labor market agile, efficient and competitive compared to any other economy around the world.
Exit and Re-entry
The new Labor Reform Initiative (LRI) facilitates expatriate workers to travel outside the Kingdom without the employer’s approval after submitting a request. The employer will be promptly informed electronically once the employee makes the departure.
Employees who would like to make the Final Exit are also allowed to do so at the end of their employment contract without the employer’s consent. Subsequently, the previous employer will be intimated electronically while the employee is expected to bear all consequences (financial or otherwise) relating to breaking the employment contract.
Digital Documentation
The new labor regulation initiates the contractual agreement between the employee and employer based on their employment contract through digital documentation of those contracts, which will contribute to reducing the disparity between Saudi workers and the expatriates.
The new regulation will complement the Kingdom’s similar initiatives including the wage protection system, the digital documentation of work contracts, the labor education and awareness Initiative, and the launch of “Wedy” for the settlement of labor disputes.
All three services will be made available to the public through the smartphone application (Absher) and (Qiwa) portal of the MHRSD.
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