The Ministry of Commerce in Saudi Arabia has mandated the use of the term 'employer' instead of 'sponsor' in all official documents for government and private entities. This move aligns with Article 2 of the Labour Law, which defines an employer as “any natural or legal person who employs one or more workers in return for a wage.”

Circular Issued to All Commerce Chambers

Federation of Saudi Chambers enforces new terminology

The directive was communicated through a letter to the Federation of Saudi Chambers, which subsequently circulated the guidance to chambers of commerce and industry throughout the Kingdom.

The circular further clarified the definition of a 'worker' as any individual, regardless of gender, working under the management or supervision of an employer in exchange for wages.

Labour Reforms Yield Positive Results

Contractual Relationship Improvement Initiative sees success

Since its launch in 2021, the Contractual Relationship Improvement Initiative by the Ministry of Human Resources and Social Development has significantly improved labour rights. Key features of the initiative include:

• Job mobility services.

• Simplified processes for exit and reentry permissions.

• Enhanced freedom for workers to make final exits.

This initiative has led to a 50% reduction in labour disputes, with over one million workers benefiting from its services.

Impact
These changes underline Saudi Arabia’s commitment to modernizing labour practices and fostering a more equitable and transparent work environment.

 

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