Provision linking insurance to labor contracts for hiring domestic workers to be activated soon in Saudi Arabia

The initiative to link the provision of insurance to labor contracts for hiring domestic workers will be activated soon as revealed by the Ministry of Human Resources and Social Development. This was disclosed by Saad Al-Hammad, spokesman of the ministry. The initiative, introduced by the ministry earlier, was recently approved by the Council of Ministers.

The spokesman said that this initiative will bring about a number of advantages such as increasing the attractiveness of the Saudi labor market; facilitating bilateral negotiations with countries; improving contractual relationships; and reducing risks in the domestic labor recruitment market. This will contribute to reducing prices and guaranteeing rights for all parties, in addition to an increased commitment by stakeholders. Al-Hammad said the ministry will review periodically the upper ceiling for the recruitment cost. The periodic review will be carried out in a way serving the interests of all parties involved in the contract, he elaborated.

He said punitive measures, including the revocation of the license of recruitment companies and establishments, will be taken in the event of failure to comply with the regulations regarding the upper ceiling of recruitment costs or any manipulation in this regard. He emphasized that if anybody wants to hire domestic workers, he shall undertake this through the Musaned, which is the official online platform for the recruitment sector in the Kingdom.

As part of a comprehensive development program for the domestic worker recruitment sector, the ministry has set a higher ceiling for the cost of hiring domestic workers. A few days ago, the ministry instructed all recruitment firms that they should not exceed the cost of hiring Sri Lankan domestic workers over the approved maximum rate of SR15,000. The ministry has set the upper limit for the recruitment of domestic workers at SR15,000, exclusive of value-added tax (VAT).

The decision is part of the ministry’s keenness to monitor recruitment costs in the labor market in a way that guarantees the quality of provided services. In September 2022, the ministry issued a directive that the licensed companies and agencies must abide by the upper limit for the recruitment cost of domestic workers of various nationalities.

The ministry had earlier announced the upper limit for recruiting domestic workers from a number of countries and that included Uganda (SR9,500); Thailand (SR10,000); Kenya (SR10,870); Bangladesh (SR13,000); the Philippines (SR17,288). These costs do not include VAT.

The ministry indicated that it has been studying all aspects of recruitment costs carefully for each country separately. The identification of these countries came after monitoring countries that are in high demand on the Musaned platform by citizens to hire domestic workers from.

The ministry said it is going ahead with the procedures to add more nationalities to the list of countries from where domestic workers are to be recruited during the coming period.

The decision to set a higher ceiling for recruitment costs came as a continuation of the ministry’s work to organize procedures and price governance in the recruitment market, as well as to monitor and follow up on their implementation.

This is in a way that guarantees the quality of services being provided. Last September, the ministry instructed the licensed recruitment companies and offices to comply strictly with the highest ceiling of recruitment cost fixed for a number of nationalities. With the aim of creating competition among these companies and offices, the ministry told them that they have the right to fix prices below the upper limit.

Saudi Arabia, represented by the Ministry of Human Resources and Social Development, has begun to improve and develop the recruitment sector since the beginning of 2022, as part of its comprehensive strategy for labor market reform. The ministry started taking several measures in this regard after the reopening of the recruitment sector following the end of the coronavirus pandemic that heavily inflicted the global economy, especially the recruitment sector.

The Musaned platform is the official platform for the recruitment sector in Saudi Arabia, and it provides many services to the beneficiaries such as issuing visas; choosing a recruitment office; electronic contracting; following up the contract journey in full, and filing a complaint in the event of any contractual dispute between the client and the licensed office.

As part of developing the recruitment sector, the ministry last year carried out many reforms, such as concluding various agreements, programs and initiatives. Agreements were signed with Sierra Leone and Thailand for employing general and domestic workers. It also resumed the recruitment of Filipino workers after several meetings with the Philippine authorities.

The ministry reinforced efforts to resume recruitment of Indonesian workers through a unified channel that serves all recruitment companies under close monitoring from the Saudi and Indonesian sides. The hiring of workers will be done through companies and not through individuals.

The ministry has worked out several specialized programs and initiatives to improve the recruitment sector in the Kingdom in general, most notably, the Wage Protection Program. This program was introduced to protect the rights of workers with regard to their wages in the Kingdom, and this was in association with Saudi banks and financial institutions. Under the program, it is mandatory on the part of employers, whether citizens or residents, to transfer workers’ wages promptly through banks and other financial agencies licensed by the Saudi Central Bank (SAMA).