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New Rules in Financial Sector Focused on Increasing Local Worker Participation

October 24, 2019

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Country / Territory

  • Saudi ArabiaSaudi Arabia

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At a Glance

  • The Saudi Arabian Monetary Authority (SAMA) issued regulations by which companies under its purview (including banks, insurance and financial technology firms) must abide when recruiting and employing individuals in leadership positions.
  • The regulations aim to ensure that skilled individuals are employed in executive positions and to increase the employment of skilled Saudi nationals.
  • SAMA also issued a list of professions in the financial sector that are now restricted to Saudi nationals.

The situation

The Saudi Arabian Monetary Authority (SAMA) issued regulations by which companies under its purview must abide when recruiting and employing individuals in leadership positions in the financial sector.

New requirements for employers

The new regulations require employers under SAMA’s purview, including banks, insurance and financial technology firms, to follow the below new rules:

New rule Impact
  • Written consent. Employers must obtain written consent from SAMA to employ foreign and local workers in certain positions. The government has published a list of affected professions in each affected sector;
  • Rules for leadership positions. Employers must develop policies and procedures related to the employment of professionals in leadership positions, including verifying the personal and professional qualifications of the candidates by way of a yet-undetermined method;
  • Training plan. Employers must develop a long-term plan to train and transfer knowledge to Saudi nationals.
  • Saudization. Saudization quotas still apply to all sectors in the country. As before, employers must fill positions that are subject to Saudization with Saudi nationals.
  • Foreign nationals in Saudi Arabia may find it harder to obtain positions in leadership roles in the financial sector due to the new written consent rule.
  • Companies operating in Saudi Arabia under SAMA’s purview should review their recruitment and employment policies to ensure they comply with the new regulations.

New restricted positions. Under the new regulations, SAMA has adopted a list of 13 professions that are restricted to Saudi nationals employed in financial institutions under its supervision, including the following job titles:

  • Director of Human Resources;
  • Director of Information Security;
  • Information Technology Manager; and
  • Compliance Manager.

Foreign nationals currently employed in leadership roles that are on the restriction list may need to obtain a No Objection Certificate (‘NOC’) when they renew their work permits. This will likely involve the employer submitting application documents and letters justifying the situation. It is not clear how long approval of this NOC will take.

 

Background

  • Role of SAMA. SAMA is the central bank of Saudi Arabia which issues the national currency, supervises commercial banks, manages foreign exchange reserves and ensures the growth of the country’s financial system.
  • Saudization. Although Saudi Arabia has sought to relax certain employment policies  to attract foreign business, the government is now focused on increasing the employment of skilled Saudi nationals, particularly within sectors that are critical to its economy, and promoting economic diversification in the oil-dependent nation.
  • Regional comparison. Oman is another country in the Middle East which has prioritized hiring local workers by setting out the minimum ratios of Omani to foreign workers in different professional levels and restricting the recruitment of foreign workers in certain sectors.

 

Looking ahead

Saudi Arabia will likely continue to pursue measures that will increase the number of Saudi nationals in the workforce as it seeks to reduce current local unemployment rates, which hover around 12% and are largely the result of high levels of university graduates seeking work in the country.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].

Country / Territory

  • Saudi ArabiaSaudi Arabia

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