Human Resources Ministry launches labor reform initiative for private sector

Saudi Arabia’s Ministry of Human Resources and Social Development launched today a Labor Reform Initiative (LRI) to organize the contractual relationship between employers and expatriate workers in the labor market.

The new initiative, which falls under the Kingdom’s National Transformation Program (NTP), seeks to build a new attractive market able to develop skilled workforce.

The initiative, which will come into effect on March 14, 2021, allows expatriate workers mobility and amends existing exit protocols. It aims to develop the work environment and complements the Kingdom’s similar initiatives, including the Wage Protection System (WPS), the electronic documentation of all labor contracts, and the "Widy" program aimed to settle labor market disputes.

The new step will additionally boost the market competitiveness in line with the best international standards and the Saudi labor law, helping provide more job opportunities for Saudi nationals.

Under the new initiative, employees will be permitted to change their employers upon the expiry of the binding work contract without the employer’s consent. LRI also outlines conditions applicable during the validity of the contract, provided a notice period and other specific measures are adhered to.

The move will also allow the employers to attract the best talent, ultimately increasing competition, wages, and public spending inside the Kingdom.

It also allows expatriate workers to transfer their sponsorship from one employer to another, request exit/re-entry visas, and secure a final exit visa; all will now be approved electronically without requiring the employer's consent. The three services will be made available to the public through the smartphone application "Absher" and the ministry's electronic web portal.

The new market initiative, which will reduce disputes between local employers and expatriate workers relating to employee mobility or exit visa requests, will have a positive impact domestically by adding more flexibility to the market, increasing private sector productivity, attracting highly-qualified candidates and helping implement the goals of the Saudi Vision 2030.

The initiative was developed by the Ministry of Interior, in coordination with National Information Center, private sector entities, and the Council of Saudi Chambers, in line with the best international practices.