Saudi Arabia proposes stricter rules for labour recruitment firms

Cairo: The Saudi Ministry of Human Resources has unveiled a set of proposed rules governing recruitment and labour service companies, inviting public feedback on the new framework.

The proposed regulations require large human resources companies to provide a bank guarantee of SR10 million and maintain a paid-up capital of SR100 million to secure a 10-year licence.

Medium-sized firms must provide a bank guarantee of SR5 million and have a paid-up capital of SR50 million for a five-year licence. While, small recruitment firms are required to furnish a bank guarantee of SR2 million and maintain a paid-up capital of SR5 million.

Recruitment offices have a two-year grace period to transition to one of these categories.

Under the proposed rules, licenced businesses must be joint-stock companies with capital fully owned by Saudi citizens. However, licences may also be granted to foreign investors meeting the criteria for foreign investment and minimum capital requirements as outlined in the Saudi Companies Law.

The regulations authorise the ministry to require insurance coverage for risks related to technical, labour, or professional failures, tailored to the company’s size, nature, and operations. Companies cannot operate if their insurance period has less than six months remaining.

The ministry may also request an increase in the bank guarantee based on factors such as market fluctuations, an increase in visa requests, rising complaints, or delays in recruitment or contract fulfilment.

Additionally, companies are mandated to display all service prices on a ministry-approved website, provide details of employees authorised to coordinate with Saudi embassies abroad, and disclose recruitment costs.

The proposed rules emphasise the need for licensees to employ personnel proficient in the languages spoken by recruited workers.

In recent years, Saudi Arabia has implemented labour market reforms aimed at making its job market more attractive and competitive.