New Directive from the Ministry of Commerce

The Ministry of Commerce in Saudi Arabia has mandated that government and private entities stop using the term 'sponsor' in official documents. Instead, 'employer' must be used, aligning 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."

Implementation of the Directive

This directive was communicated through the Federation of Saudi Chambers, which issued a circular to all chambers of commerce and industry across the Kingdom. The circular further clarified that a 'worker' refers to any individual, male or female, who works under the management or supervision of the employer in exchange for a wage.

Efforts to Enhance Labour Rights

The Ministry of Human Resources and Social Development had earlier launched the Contractual Relationship Improvement Initiative in 2021. This initiative was a significant step towards protecting worker rights by providing services such as:

• Job mobility: Allowing workers to change jobs without employer consent.

• Exit and reentry permissions: Simplifying travel procedures for workers.

• Final exit freedom: Facilitating the termination of contracts without restrictions.

Positive Impact on Labour Relations

Since the launch of this initiative, labour disputes in the Kingdom have dropped by 50%, and over one million workers have benefited from its services, reflecting the government’s commitment to improving workplace harmony and worker rights.