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Clifford Chance

Briefings

Saudization Update 2011

1 September 2011

The Saudi Minister of Labour recently announced that companies classified as 'red' would be penalised from 26 November 2011. Do you currently comply with the Nitaqat programme?

The term "Saudization" refers to the various initiatives of the government of the Kingdom of Saudi Arabia ("KSA") to encourage the employment of Saudi nationals in the private sector. Saudization policies have been pursued by the government since at least the mid-1990s and, in the spring of 2011, the latest Saudization initiative was launched under the auspices of the Ministry of Labour ("MOL"): the Nitaqat programme.

Under the programme, companies are categorised according to a basic colour scheme: red, yellow, green and premium. In summary, companies classified as green or premium are fulfilling MOL-sanctioned Saudization requirements and will receive specified benefits. On the other hand, those companies classified as red or yellow are non-compliant and will be subject to various sanctions.

This briefing provides an overview of the main tenets of Saudi law applicable to Saudization, as well as the features of, and the latest developments introduced by, the Nitaqat programme.

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