Is your HRMS System aligned with Updated Saudi Labour Law?
Published By
Human Resources
Apr 16, 2024
Saudi’s job market is on an exponential rise. With various companies opening up and people settling in, the government has been working for quite a while to make things compatible for both employees and employers. The Ministry of Human Resources and Social Development (MHRSD) has been actively working to make the rules more efficient and rightful for both parties in the Kingdom Of Saudi Arabia (KSA).
The most recent and significant change happened on 10th Dec 2023 which implies companies will be fined for violating any worker rights based on the number of employees. Employers with a high number of employees will face a higher fine than a small business. This is mainly made to create a fairer penalty system.
This article details the 2023 Updates of Saudi Arabia Labor Law affecting your Saudi workforce.
Saudi Labour Law Updates in Q4:
Update
Definition
Strict Measurement against Salary Days
The MHRDS through the Mudad platform (a digital payroll management platform for KSA) has mandated that 3 months of failed salary payment by any employer could face a halt in their business. Any employee who gets impacted by this can move on to a new job without needing any consent from the first one. Also, the platform tightens timeframes for employers to explain salary delays (10 days) and employee responses (3 days). This change does ensure timely salary payments.
E-documentation for Operation & Maintenance Contracts
Starting from 1st Dec 2023, companies holding govt contacts have to use an online system called Qiwa for the submission of all maintenance and operation contracts. These measures will assist the govt in monitoring the hiring of Saudi workers as mandated by law.
QIWA Implements Flexible Pay with Percentage-Based Salaries
Businesses with fluctuating income can now use the Qiwa platform to pay employees a portion of their salary as a percentage. This helps companies adjust payroll to their current earnings, keeping the business afloat while still ensuring staff gets a fair share of the profits.
Probation Period Revised to 90 Days
The probation period for workers in the QIWA platform has been revised to 90 days. This provides clarity and fairness in the probationary terms for employees.
Saudi Labour Law Updates in Q3:
Update
Definition
Skill Verification for Expat Workers
Saudi Arabia launched a new online system to verify the skills of foreign workers coming from 62 countries. This will help ensure only qualified workers fill the jobs and boost the overall attractiveness of the Saudi job market for both employers and employees.
SAR 5,000 Fine for Hiring Expats Illegally
Employers who hire foreign workers without a proper work permit or don't register them on the Ajeer program will now face a fine of SAR 5,000. It is vital to accurately track the count of employees directly under your sponsorship and those engaged through Ajeer contacts in your HRMS.
QIWA Accepts Credit/Debit Cards for Work Permit Fees
With the introduction of a new service, QIWA platform allows credit cards, MADA debit cards and even payments directly from a company's QIWA digital wallet. This eliminates the need for cash transactions, making the process faster and more convenient.
Saudi Labour Law Updates in Q2:
Update
Definition
Documentation of Employees' Contracts Via QIWA Begins
Saudi Arabia is making it mandatory for businesses to upload employee contracts electronically. They started with 20% in the first quarter of 2023 and are now requiring 80% by Q3. The QIWA platform ensures clear communication and protects both employers and employees. Businesses can upload contracts, and workers can review and approve them electronically. Once both parties agree, the Ministry of Human Resources considers the contract documented and legally binding. This helps prevent disputes and improves overall work fairness. It's ideal to generate a work contract that complies with QIWA directly from your HRMS.
Opportunities to Work in The Hajj Season
The Ministry of Human Resources is using its Ajeer portal to connect Saudi citizens and residents with temporary jobs at the holy sites. Companies can advertise available positions and job seekers can browse and apply for opportunities that suit them. This program helps manage the labor force during Hajj, improves services for pilgrims, and even creates a new platform for jobs across Saudi Arabia.
So you must be wondering how labor law can impact the HRMS (Human Resource Management System) module of an ERP system. It affects in 4 broad ways:
Compliance Updates: Any HRMS system in KSA will need a few adjustments to reflect the new legal updates. This could involve changes to calculations for minimum wage, tracking new leave entitlements, overtime pay, or mandated benefits like EOSB (End-of-service benefits).
Data Management: Implementation of new data fields to capture information mandated by the law is now mandatory. An effective HRMS will facilitate the creation of essential documents by utilizing the collected data.
Reporting: Now the HRMS system needs to generate new reports to comply with legal reporting requirements. This could involve reports on employee demographics, leave balances, or sponsorship details.
Workflow Adjustment: Depending on the labour law changes, workflows within the HRMS need adjustments. For example, multi-level approvals can streamline the complete leave approval process within the company. With a modern cloud-based system, a good HRMS solution can help you apply and approve the leaves through WhatsApp.
Why should your HRMS be aligned with the new labor law of Saudi Arabia?
Failing to maintain the new labor law, can create a severe domino effect. It can lead to hefty fines and strict legal actions. An outdated HRMS system can cause a lot of financial discrepancies for both the employee and the employer.
Secondly, an unadapted HRMS might not capture the data required by the new law, hindering your ability to report accurately. This can lead to further complications with legal authorities.
Most importantly non-compliant HRMS will not let you streamline the process. Adopting an HRMS system that aligns with Saudi labor law, you can ensure your organization stays on the right side of the law, protects your employees' rights, and maintains smooth and efficient HR operations.
HAL HRMS understands how the alignment of these laws in the system is crucial for your business. All the new developments of the Saudi labour law have been updated in our system to give you a seamless experience and an ultimately effective system.
Not only that, HAL simplifies payroll for businesses by creating a format compatible with Mudad, the Saudi Arabian payroll platform. This eliminates the need for manual adjustments. Here's the process:
Run payroll through HAL HRMS: Enter employee data and calculate salaries within the HAL HRMS system.
Generate Mudad format file: HAL automatically creates a file containing payroll information in the format required by Mudad.
Obtain bank signature file: Get the final approval file from your bank.
Upload to Mudad platform: Submit the bank-approved file to Mudad for processing.
This streamlined process saves time and ensures Mudad compliance.To understand it better, schedule an appointment with our experts who will guide you with each step.
