Saudi Arabia: New salary tracking system to be implemented

From May 2012, Saudi Arabia will introduce a tracking system that is designed to monitor the wage payments of all foreign workers as well as Saudi nationals, ensuring that all monthly salaries are transferred into the relevant bank accounts in accordance with contracts of employment.

This will mean that Saudi authorities can rate companies based on the ratio of Saudis they employ and also how much of their payroll ends up with their Saudi employees.

Background

Since September 2011, Saudi Arabia has gradually been initiating changes within their immigration policy to ensure that Saudi national workers do not lose out to expat workers.  For example, the new “Nitagat” program, which we have reported on before, categorises Saudi companies in a colour-coded scheme based on the total number of the workers the company employs and with the aim of establishing Saudi worker quotas.

What are the changes?

Similarly to the “Nitagat” programme, this new scheme is designed to encourage companies to assign Saudi nationals to higher paid positions.  The Saudi Minister of Labour, Adel Fakieh has stated that the new regulations will be implemented gradually; “In the first phase it will be applied to large companies; this will be within two months or three at the latest.”‘  Smaller firms will begin the new regulations after this, but within a year, all companies should be registered.

How will they affect you?

This new tracking system will affect all foreign workers, regardless of their employment position, and is being designed in cooperation with the Central Bank of Saudi Arabia.  Fakieh has stressed that these new policy measures are not intended to limit work visas, but rather to improve the country”s national unemployment rate, which currently stands at approximately 10.5 per cent.  It could be viewed as a positive move for expatriate workers as it will mean that the process of companies depositing the full amount of salary payments in Saudi bank accounts is properly monitored.  However, it is also clear that this is primarily a measure that favours Saudi nationals by comparing the employment of Saudi nationals against that of expatriate workers.

Other News?

Since the 31st March 2012, female expatriates in Saudi Arabia are now required to register their fingerprints.  This will initially take place on request of a new residence permit (Iqama) or when changes are being made to an existing one; such as changing the profession stated or applying for a transfer of sponsorship.  Companies operating in Saudi Arabia are advised to inform their female expatriate employees in order that they can attend their local passports administrations office to have their fingerprints taken.

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