Saudi Arabia: Fines for Labor Violations Significantly Reduced

The Ministry of Human Resources and Social Development (MHRSD) has significantly reduced the fines for various labor violations, with some fines reduced by more than 90 percent compared to the previously endorsed labor penalties schedule from 2021. Among other changes, the fine regime has been amended as follows:

• the fine for employing a foreign national without obtaining work authorization is now SAR 10,000 for all types of companies (down from SAR 20,000 for certain sized companies).
• the fine for engaging a worker in a profession different from the one mentioned in their work permit or employment is now SAR 300-1,000 (depending on company size) – down from SAR 2,500-10,000.
• the fine for employing a foreign national in a profession or activity limited to Saudi nationals is now SAR 2,000-8,000 (depending on company size) – down from SAR 5,000-20,000.
• the fine for not complying with prescribed Saudization ratios for select professions and activities is now SAR 2,000-6,000 (depending on company size) – down from SAR 5,000 -20,000.
• the fine for failing to upload the monthly Wages Protection System file is now SAR 500- 2,000 (depending on company size) – down from SAR 5,000-15,000.

Furthermore, as part of these changes, Saudi Arabia has amended the headcount figures it uses to categorize companies for the purpose of fines. Companies are now designated as Category C (liable to the lowest range of fines) if they have 20 or fewer workers (previously it was 10 or fewer). Meanwhile, Category B companies (liable to mid-range fines) are those with between 21 to 49 workers (previously it was 11 to 50). Category A companies (liable to the highest range of fines) are those with 50 or more workers (previously it was 51 or more). These various amendments aim to improve the labor market environment by ensuring that the penalty regime better coheres with the size of affected private sector entities.