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Gulf Saudi

Saudi Arabia grants employers 6-month grace period for defaulting on labour insurance fees

Step part of efforts to boost commitments to preserve rights of employees, employers



Businesses are exempted from fines during the grace period provided they pay due fees in full. Illustrative image,
Image Credit: Bloomberg file

Cairo: Saudi Arabia has unveiled a six-month grace period for employers who have failed to pay social insurance fees with the aim of encouraging them to readjust their business status.

Under the initiative launched by the state General Organisation of Social Insurance, the employers are exempted, for six months starting March 3 (today), from the delay fines earlier levied on them.

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The step is part of the organisation’s efforts to rectify the status of non-compliant businesses, settle debt arrears and boost insurance commitments to preserve rights of employees and employers alike.

The organisation said the gesture also aims to ease financial burdens on establishments resulting from fines imposed on them due to delay in paying insurance subscription fees or committing violations.

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Accordingly, these businesses are exempted from such fines during the grace period, provided they pay due fees in full.

In recent years, Saudi Arabia, home to a large community of expat workers, has sought to regulate its job market, and boost its attractiveness and competitiveness.

Last year, the Saudi Ministry of Human Resources unveiled an authentication plan via its Qiwa platform obligating private sector institutions to document 20 per cent of their employees’ contracts in the first quarter of 2023, 50 per cent in the second half, and 80 per cent in the third quarter.

The plan is designed to preserve rights of parties to the contractual relationship, and provide a stable labour environment conducive for the employee’s productivity increase and boosting the job market in the kingdom.

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In 2020, Saudi Arabia introduced major labour reforms, drastically improving its sponsorship system. The reforms, which went into effect in the ensuing year, allow job mobility and regulate the exit and re-entry visa issuance for expatriate workers without employers’ approval.

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