Employing Saudi Nationals - Essay Example

I-Introduction My is Sammaz, and I recently graduated from the of Tampa with a Bachelor’s of Science in Management Information Systems and a minor in Accounting. The experience and efficiency that I gained during many jobs in the past, specifically in public and customer relations, as well as the knowledge I earned through my education, have compelled me to respond to a job opportunity for one of the largest cable companies in the U.A.E. I would be so proud to be a part of Ducab. I would like to thank Ducab for giving me the opportunity to meet with you. I hope that you will consider my application for the job vacancy at the Ducab sales office in Dammam, Saudi Arabia. For my job interview, I went to see Mr. Mohammad Sayeed on two separate occasions. On my first interview, we discussed the job vacancy in greater detail,. and On the other hand, on my second job interview on the 22nd of October, Mr. Sayeed requested that I completeto do a small assignment. This task it’s had to do with the steps involved in employing Saudi nationals and expatriates in Saudi Arabia. I would like to report my findings to you. In this report, I will respond to Mr. Sayeed’s questions and concerns by ing briefly covering some steps, procedures, regulations, and legal issues about employing workers in Saudi Arabia. I will also discuss the costs of social insurance contributions, severance pay, and job contracts for both Saudi nationals and expatriates. Please note that this report is only a brief first draft in orderbrief report to give you an idea about some of the steps, procedures, regulations, and legal issues regarding employmentng in Saudi Arabia. Due to the short preparation time for this report, not to mention the time lost because of business holidays, this report may contain some information that needs updating, changing, or clarifying in more detail. Once again, thank you for considering my job application a job opportunity, and I am grateful that Ducab has taken the decision to allow me to have a final interview in Dubai. II- Employing Saudi Nationals II.1-Steps and Procedures A- Scheduling an appointment with a candidate and asking him to bring along all his official documents such as college transcripts, certificates of experience, and a copy of his national ID. B- If the candidate is found to be qualified and needed for the job, the employer should request the candidate to fill out a form with all their personal information and sign a waiver to his records from three Saudi governmental departments: 1. Ministry of Labor (ML): to find where he currently works or has worked previously, and to check that the information provided matches his CV. 2. General Organization for Social Insurance (GOSI): to find out how much his basic salary is in his current or proviso job. 3. Saudi Arabian Minatory Agency (SAMA): to find out if the candidate has any financial obligations with any companies or banks. This step is not a necessary one, but is still required on a case-by–case basis. C- After checking his records and insuring that his entire certificate is official, the employer can send the candidate a letter informing him of a job offer. D- The candidate accepts the letter of a job offer by signing it and sending it back to the employer. This step is required in order to give the candidate sufficient time to settle with their old employer. During this period, the new employer has no right to cancel the letter of a job offer that was previously signed by the candidate. E- After the candidate has reached a settlement with his old employer, he should then send a letter of disclaimer stating that he and his previous employer have no more obligations towards each other. Also, the candidate will declare that the service of the employee has concluded or will conclude on a specified date. F- The official employment contract can then be signed both parties on the first day of employment for the candidate. G- The new employer can then submit the official employment contract to GOSI and register the candidate’s name and national ID with the Ministry of Labor. After all these steps, the candidate will be considered as an official full-time employee of the company. II.2 Regulations and Legal Issues All Saudi employers are required, by law, to register and submit their employee’s contract through GOSI. This step is needed in order to protect the employer and employee’s legal rights and to ensure that Saudi nationals have the benefit of a fixed income after retirement. To register Saudi employees with GOSI requires a monthly membership cost. II.3 GOSI-Monthly Membership Cost The cost of membership with GOSI is 20% of the total amount of the basic salary of the employee. Of this percentage, 11% has to be paid by the employer and 9% has to be taken from the employee’s basic salary. The total amount is paid electronically each month to GOSI. Example: Employee’s basic salary = 10000 SR Employer has to pay (11%) = 1100 SR Deduction from employee (9%) =900 SR Total amount that has to be paid each month = 2000 SR II.4 Regulations and Legal Issues of Severance -Probation period The Ministry of Labor requires employers to include a probation period in their employees’ contract. This probation period is for 90 days and affects both the employer and the employee. The probation period starts from the first day of work. During these 90 days, the employer has the right to terminate the employee’s services without any valid reason, warning, or notice. On the other hand, the employee has the right to quit without any valid reason or notice. This can be thought of as an experimental period for both the employer and employee. After the 90-day probation period, the employer has no right to terminate the employee’s services without a valid reason. On the other hand, the employee has the right to quit with a minimum of 30 days notice. Further to this, the employer is obligated to pay the last month’s net salary plus the daily rate of the yearly vacation (2.5 vacation days per month). If the employee’s services are terminated after 90 days without a valid reason, the employer is obligated to pay upon agreement of the contract or make a settlement with the employee. - Absence -The Ministry of Labor law states that employees who are absent from duty for two continuous weeks (14 days) or 30 days randomly without a valid reason should receive a final warning. If the employee is found absent without a valid reason, the employer has the right to terminate the employee’s services without any notice. II.5 Financial obligation 1-The employer is responsible for paying a net salary on a monthly basis. 2-The employer is responsible for paying 20% of the basic salary for the cost of membership to GOSI. As previously mentioned, 9% has to be taken from the employee’s basic salary. 3-The employer is responsible for providing medical insurance to the employee or an allowance in the case of illness. 4-The employer is responsible for paying an employee’s travel costs and overtime allowance. 5-The employer is responsible for paying an employee their net salary during the 30 days of yearly vacation, state holidays, and valid absences such as funerals. 6- In the case of dismissal without a valid reason after the 90-day probation period, the employer is responsible for paying the salary owed or making a settlement with employee based upon the agreement in the employee’s contract. IV- Employing expatriates As expatriates are non-Gulf Cooperation Conceal (GCC) citizens, they need a visa as well as legal residency in order to enter and live in Saudi Arabia. As such, there are three ways to employ expatriates: 1- Out of Country Sponsorship 2- In the Country Transferring Sponsorship 3- Rent an Employee’s Services from a Company IV.1 Out of Country Sponsorship. This method is for employing candidates outside of the country. The steps and procedures of this process are: 1- Request a visa from the Ministry of Labor 2- After receiving the visa, contact the registered office of labor to search for employees outside the country for the purpose of hiring them 3- After locating a qualified candidate, a contract should be signed between the employer and prospective employee 4- The employee then will apply for a visa at the Saudi embassy in his homeland 5- If the visa is issued to the employee, the employer is required to book a ticket for him to travel to Saudi Arabia 6- When the employee enters Saudi Arabia, he needs to obtain a residency card 7- Once the residency card is issued, a new contract should be signed between the employee and employer 8- Submit the employee’s contract to the Department of Chamber of Commerce and Ministry of Labor After all these steps, the candidate will be considered an official full-time employee. IV.2 In Country Transferring Sponsorship. This method is used when employing an expatriate candidate who has a valid visa and legal residency in Saudi Arabia. I consider this way to be best because the employer gets to interview the employee face-to–face. Also, the steps to this task are less complicated than the first one. 1. Interview the candidate. If the employer is interested in hiring him, he should contact his sponsor to make an agreement to transfer sponsorship 2. A contract should be made between the old employer and the new one 3. Sponsorship should be transferred over (it may take up to three months) 4. After a three-month period, the employer and employee are required to sign a new contract 5. Submit the contract to the Department of Chamber of Commerce and Ministry of Labor After all these steps, the candidate will be considered as an official full-time employee. IV.3 Rent an Employee Services from a Company. Some companies in Saudi Arabia rent their employee’s services to another company without transferring sponsorship. This way, a candidate cannot become an official employee of the company. If the company requires the candidate’s services, then they have to use the candidate’s contract with his current employer (the sponsor). In order to rent the employee’s services for a certain time, they obligated and responsible for paying only their employer. After the contract is signed by both the current employer (the sponsor) and the temporary employer (renter), the contract can then be submitted to the Ministry of Labor. Once this is approved, the employee can proceed to work for the temporary employer (renter). V. U.A.E Employment Contract & Saudi Employment Contract In general, every section of an U.A.E employment contract is smaller than the corresponding sections of the Saudi employment contract. Hiring a Saudi national in Saudi Arabia is the same as hiring a U.A.E national in the U.A.E, but there are some terms are different. The Saudi Ministry of Labor applies some regulations and terms in order to secure the employers, to protect Saudi employees, and to reduce the unemployment rate in Saudi Arabia. Thus, employment contracts for Saudis are a little different than employment contracts for expatriates in terms and benefits. In Saudi Arabia, employers, Saudi nationals, and expatriates are required by the Ministry of Labor to sign and submit a Saudi employment contract. The first step toward this task is to customize and build a contract free of conflicts with the labor laws of Saudi Arabia. A well-known company in the U.A.E such as Ducab uses special regulations and terms when hiring and contracting employees. Thus, these special regulations and terms can be customized and transformed into a Saudi employment contract. I suggest that Ducab’s employment contracts are sent to a registered legal employment office in Saudi Arabia. This office can give a consultation on how to build a Saudi employment contract that conforms to the regulations and terms of Ducap’s employment contract. If you allow me to take this second step, I would be happy to accept this responsibility towards establishing the Ducap office in Dammam, Saudi Arabia. Your consideration for hiring me for the job that you offering is much appreciated. Read More