In a significant move, the Ministry of Human Resources and Social Development (MHRSD) in Saudi Arabia has introduced a new rule that exempts private-sector businesses from paying government fee arrears for workers transferring their services.
This change, effective from June 9, 2022, places the responsibility of work permit fees, expatriate fees, and fines for delayed residency permit renewals on the previous employer. This article explores the implications of this decision and how it affects both employers and employees.
New Rule Implementation
Effective June 9, 2022, the MHRSD’s new rule mandates that the financial responsibility for government fees and penalties falls on the former employer when an employee transfers their services to a new employer.
The affected fees include work permit fees, expatriate fees, and fines for delayed renewals of residency permits, commonly known as Iqama. The Qiwa platform, a service under the HRSD ministry, has already begun implementing this decision, ensuring compliance and providing clarity on the fee responsibilities.
Exemption for Previous Transfers
It is important to note that this new rule does not retroactively apply to workers who transferred their services before June 9, 2022.
According to local media reports citing Qiwa sources, any service transfers completed before this date will not be affected by the new decision. This ensures that the rule change only impacts current and future service transfers, allowing businesses and employees to plan accordingly without worrying about past obligations.
Fair Competition and Financial Stability
The primary aim of this new regulation is to foster a fair competitive environment for businesses in Saudi Arabia. By shifting the financial burden of government fee arrears to the former employer, new businesses are relieved from unexpected financial commitments when hiring transferred employees.
This move is expected to help new businesses operate more smoothly and avoid financial troubles, thereby promoting fair competition within the private sector.
Impact on Employers
Responsibilities of the Previous Employer
Under the new rule, the previous employer is now responsible for settling any outstanding government fees and fines before an employee’s service transfer can be completed. This includes ensuring that all work permit fees, expatriate fees, and Iqama renewal fines are paid up to date.
This responsibility can impact the financial planning of businesses, particularly those with high employee turnover or frequent service transfers.
Compliance and Implementation
Employers must ensure compliance with this new regulation to avoid legal and financial repercussions. The Qiwa platform facilitates the implementation of this decision, providing a streamlined process for handling fee payments and service transfers.
Employers should familiarize themselves with the Qiwa system and stay updated on any further changes to labor regulations to maintain compliance and avoid potential fines.
Impact on Employees
Reduced Financial Burden
For employees, this new rule provides significant relief by removing the financial burden of paying government fees and fines when transferring their services. Previously, employees often faced difficulties if their previous employer had not settled these dues, potentially hindering their ability to transfer to a new job. With the new regulation, employees can transfer their services more smoothly, knowing that their previous employer is responsible for any outstanding fees.
Increased Job Mobility
The new rule also enhances job mobility for expatriate workers in Saudi Arabia. By eliminating financial barriers to service transfers, employees can seek better job opportunities and career advancement without worrying about unpaid government fees.
This increased mobility can lead to higher job satisfaction and productivity, benefiting both employees and their new employers.
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