Understanding Saudi Arabia’s Updated Labor Law Penalties: Dec-2023

Updated Labor Law Penalties in Saudi Arabia

Saudi Arabia has recently made significant amendments to its labour laws, particularly concerning penalties for various violations. These changes, spearheaded by the Minister of Human Resources and Social Development (MHRSD), Eng. Ahmed Al-Rajhi, aim to enhance the job market and boost compliance among private sector establishments. Let’s break down these revisions in a simple and easy-to-understand manner.

Categorization of Establishments

The key aspect of these changes is the categorization of establishments based on the number of employees, which affects the scale of penalties:

1. Category A: Establishments with 50 or more employees.
2. Category B: Establishments with 21 to 49 employees.
3. Category C: Establishments with 20 or fewer employees.

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Revised Penalties for Violations

The penalties have been revised to depend on the size of the establishment and the nature of the violation. Here’s a rundown of some major changes:

• Late Payment of Wages and Allowances: For salary delays, the penalty has been standardized at SAR 300 for each worker, irrespective of the establishment size. Previously, the fines ranged from SAR 2000 to SAR 5000 based on the establishment size.
• Employing a Working Woman Post-Delivery: The penalty for this violation has been significantly reduced to SAR 1000 from the previous SAR 10,000.
• Medical Insurance Coverage: The fines for failing to provide medical insurance for workers and their families now vary based on establishment size, ranging from SAR 300 to SAR 1000.
• Employing Workers in Restricted Professions: Establishments will now face a SAR 1,000 fine for employing workers in professions restricted to Saudi female workers. Previously, this penalty varied from SAR 2,500 to SAR 10,000 based on the establishment size.
• Registering a Saudi Worker Without Actual Employment: Penalties for registering a Saudi worker without an employment relationship have been significantly reduced. The fines now range from SAR 2,000 for smaller establishments to SAR 8,000 for larger ones.

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Objectives of the Amendments

The revisions aim to:

1. Improve the Job Market: By adjusting the penalties, the government seeks to create a more compliant and fair job market.
2. Promote Indigenization: These changes are part of efforts to increase the employment of Saudi nationals in the private sector.
3. Encourage Growth and Change: The reduced penalties are designed to foster growth and adaptability among establishments of various sizes.

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Conclusion

These amendments represent a substantial shift in Saudi Arabia’s approach to labor law enforcement. By scaling penalties according to the size of the establishment and the nature of the violation, the government aims to create a more balanced and equitable work environment. This move is expected to positively impact the job market, ensuring growth, compliance, and a higher level of indigenization in the workforce.