In March 2013, the Kingdom of Saudi Arabia’s (‘KSA’) Ministry of Labour launched an investigation into companies violating foreign employee sponsorship laws. The scale of the violations, in excess of five million people working unlawfully, resulted in the government declaring an amnesty for all individuals and employers to enable them to correct the employees’ statuses. The three-month amnesty period is coming to an end on 3 July 2013.

KSA’s Labour Laws require that any foreign worker have a national sponsor, which must be formally requested by the individual’s employer through the Ministry of Labour and the Passport Office. The employee is required to complete a minimum of two years’ consecutive service before they can change employment. Further requirements must be met if the employee wishes to change job role or profession.

The amnesty only covers employers and individuals whose employment authorisation documentation does not reflect their current role or employer. The amnesty does not cover any other illegal or unlawful employment.

Since the amnesty was announced, tens of thousands of illegal residents have registered with their consulates in an effort to get airline tickets. An estimated 6,000 Pakistanis, 60,000 Indians, nearly 10,000 Filipinos, 7,000 Sri Lankans and other nationalities have sought permission to leave KSA and be repatriated. In addition, it is reported that 200,000 people have been deported and around 240,000 individuals have regularised their immigration work status.

The amnesty has made it imperative for employers to meet ‘Saudisation’ targets and targets under Nitaqat, the new localisation system for jobs in KSA. It is believed that 20% of foreign nationals forming part of the workforce can be replaced with KSA nationals.

A report published yesterday by law firm, Clyde & Co, suggests the amnesty and greater enforcement action must be viewed against a wider aim to promote the employment of KSA nationals and to rationalise the labour arrangements (particularly recruitment) within KSA and in agreement with labour exporting countries such as the Philippines, India, and Indonesia. Clyde & Co claims that a series of bilateral agreements are being signed with a number of countries, including Vietnam, Cambodia, India, Sri Lanka, Nepal and Indonesia. These agreements are designed to cover training, medical insurance cover, and employer and employee rights arising out of the employment relationship.

During the amnesty no administration fees will be charged and no legal charges will be brought against those breaching the labour laws. However, after 3 July, employers found in violation of the labour and immigration laws will be subject to a fine of USD 2,666 (SAR 10,000) per employee employed unlawfully, and a potential jail sentence of at least 2 years, and up to 5 years.