Nitaqat seeks to implement a more tailor

The previous Saudisation programme divided the market
into 11 activities based on which it applied the Saudisation
requirements. Nitaqat seeks to implement a more tailor
made system and the existing Saudisation system as
follows:
the activities of the establishment w ■■ ere divided into
41 activities (“Activities”) to account for the new
activities that have arisen in the market;
■■ it abolished the mandatory 30% requirement for
Saudisation applicable to most entities under the
old system;
■■ issued new Saudisation percentages based on the
establishment’s capability of employing Saudis and the
availability of local talent for such industries; and
■■ based the Saudisation percentage on the size of
the business. Therefore, each of the 41 activities was
sub-divided, based on the business’s size into the
following categories:
1. Huge (3000+ employees);
2. Large (500+ employees);
3. Medium (50 – 499 employees);
4. Small (10 – 49 employees); and
5. Very small (9 employees or less).
(together “Business Sizes”)
Therefore, given that there are 41 Activities and five
Business Sizes, under the new system there is now a total
of 205 (41 x 5) categories (“Category”) within which an
establishment can be placed.

Under the new scheme companies are classified in the
following four bands depending on the entity’s adherence
to the Saudisation requirements for their Category and
Business Size: premier green; green, yellow and red
(“Bands”). Companies that are classified as premier green
and green are compliant with the Saudisation
requirements for its Category and will receive specified
benefits. Companies classified as yellow or red are deemed
as non-compliant and will be subject to punitive measures.
Appli cati on
Companies with less than 10 employees are currently
exempt from the Nitaqat scheme but must still employ at
least one Saudi national. All other companies in KSA will
be subject to Nitaqat. We have been advised by officials at
the MOL that start-up companies in KSA will be given a
‘grace period’ to comply with Nitaqat. We understand
from our discussions that the ‘grace period’ will be around
12 months, however, as this is not set out in any
regulations we would recommend that this is confirmed
with the authorities at the time of set-up.
We understand that the ‘grace period’ that was offered to
existing entities to apply with Nitaqat has now passed.
Saudisati on per centages
The Saudisation percentage that will apply will depend on
the (i) Activity of the company; and (ii) the Business Size.
For example, in the Advisory Services and Business
Activity, the Saudisation percentages that will apply will
be as follows:

The number of Saudi employees is calculated based on the
number of Saudi employees insured with the General
Organisation for Social Insurance (“GOSI”) in the past
three months.
The number of foreign employees is calculated based on
the average number of employees over the past three
months according to the data held with the Ministry of
Interior.
The following table details how certain calculations are to
be made:

It has also been reported in the press that the MOL has
announced that four Burmese or African nationals will be
considered equivalent to one Saudi under the Nitaqat
system. At this stage it is not clear what African nations
will be considered but the list is likely to include Somalis,
Sudanese, Nigerians and any other African nationals who
are subject to danger/prosecution in their home country.
Other Africans who are in Saudi illegally will also be
considered, however, this needs to be confirmed on a case
by case basis.