Saudi Arabia: Latest development regarding electronic employment contracts

Introduction

Pursuant to a recent announcement from the Saudi Arabian Ministry of Human Resources and Social Development (“MHRSD”), and with effect from 12 May 2022, the MHRSD has confirmed that all new employment contracts must be electronically approved and authenticated through the online Qiwa platform only.

Employers were previously required to register the electronic employment contracts for their Saudi employees on the online Mudad platform, and for their non-Saudi employees on the Qiwa platform. This new development will now centralise and unify the electronic authentication process for all electronic contracts under the Qiwa platform.

The MHRSD confirmed it is working together with the General Organization for Social Insurance (“GOSI”) to transfer all current authenticated electronic contracts from the Mudad platform to the Qiwa platform so that all electronic contracts will be managed through the Qiwa platform moving forward.

This latest announcement demonstrates the continuing development of the online Qiwa platform which is being increasingly used to provide a number of the MHRSD’s services with the objective of enhancing the electronic services provided to employers in the private sector.

Impact

The status of electronically authenticated employment contracts is taking on greater importance following a number of recent reforms to the labour and immigration system in Saudi Arabia over the last 12 to 18 months. Specifically, the employment transfer services for non-Saudi employees available through the Qiwa portal is based on electronically authenticated contracts. Similarly, Saudi employees can now only be registered on an employer’s GOSI account once they have authenticated their electronic employment contract. Employers must therefore ensure that they are compliant with the requirement to authenticate electronic contracts for all employees and that they do so in a timely manner upon commencement of employment.

Moreover, employers must ensure that the electronic contracts they issue to employees are aligned with the terms and conditions of their own standard company contracts, particularly if there are any key contractual provisions that employers will want to ensure can be relied upon in the event of a dispute. The electronic contracts on the Qiwa platform allow employers to include additional provisions to the standard terms of the contracts and employers will need to carefully consider which provisions to add to the electronic contracts to ensure their position is protected and that there are no discrepancies between their standard company contracts and the electronic contracts registered with the Qiwa platform.

How can we help?

The Employment & Incentives team in the KSA regularly advises on all aspects relating to Saudi Labour Law, including on employment contracts and the recent requirement to register electronic  contracts. If you require further information on the impact of this update on your business, or any other employment issue, please contact us using the contact details below.