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All Businesses in Saudi Arabia Now Obliged to Employ Saudi Nationals

Client Alert | 1 min read | 03.12.13

The Saudi Arabian Ministry of Labor's Nitaqat program obliges businesses in Saudi Arabia to ensure that a certain percentage of their workforce is comprised of Saudi nationals (the Saudization Obligation) and ranks businesses on the basis of the businesses' compliance with the Saudization Obligation.

Under the Nitaqat program, the specific percentage (or range of percentages) of a business’s workforce that must be comprised of Saudi nationals is determined by reference to (a) the business activity that the business undertakes and (b) the total size of the business’s workforce. Since the implementation of the Nitaqat program in 2011, businesses with fewer than 10 employees have been exempt from the application of the Nitaqat program, so that businesses with fewer than 10 employees could in principle have no Saudi employees at all. However, this exemption will expire as of 30 March 2013, at which time every business in Saudi Arabia regardless of its area of business or number of employees, will become subject to the Nitaqat program and will be required to employ at least one Saudi national.

Depending on the extent of a business's compliance with its Saudization Obligation, the Ministry of Labor will rank a business as red (non-compliant), yellow (poor compliance), green (compliant), or premium (more than compliant). Businesses that are classified as red or yellow are subject to penalties, while businesses that are classified as green or premium are awarded incentives.

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