Nitaqat: Saudization Compliance for KSA Businesses

Do you currently operate a business in Saudi Arabia? Are you considering setting one up or expanding into KSA? Are you aware of your Saudization and Nitaqat obligations? Here is an overview of what you need to know:

What is the Nitaqat program?
Nitaqat is Saudi Arabia’s workforce nationalisation program designed to increase the employment of Saudi nationals in the private sector. It sets sector and size-specific targets for the proportion of Saudi employees a company must hire. Companies are classified into colour coded bands; Platinum, Green, Yellow, or Red, based on their level of compliance. A lower classification can limit a company’s ability to obtain new work visas, access certain government services, or expand operations. In cases of persistent non-compliance, companies may face administrative penalties, including restrictions on business activities or suspension of services.

How are the targets set?
Saudization targets under the Nitaqat program vary based on a company’s size and industry sector. Smaller companies, particularly those with fewer than five employees, generally face minimal or no Saudization requirements. In contrast, medium and large companies are subject to stricter nationalisation quotas and are expected to actively demonstrate compliance. Certain sectors such as telecommunications, insurance, retail and hospitality have higher Saudization targets due to their potential to employ large numbers of Saudi nationals. Foreign companies entering the Saudi market, particularly in these sectors, are expected to develop and implement proactive plans to recruit, train, and retain Saudi talent as part of their business strategy.

How regularly is your Nitaqat status reviewed?
Ministry checks of classifications are conducted roughly every six months, but companies can monitor their Saudization performance in real time via the Qiwa platform.

Integrated compliance
New and existing companies in KSA also need to make sure that, in addition to Nitaqat compliance, they also comply with Saudi Labour Law including submitting accurate reports under the Wage Protection System (WPS) and maintaining digital employment contracts via Qiwa.

The strategic approach
To ensure your company isn’t negatively impacted by non-compliance, the best course of action is to make Saudization a core part of your HR strategy. Plan ahead by forecasting hiring needs, structuring roles to meet quotas and invest in local training and development.

Common questions
Can you challenge your Nitaqat classification?
Yes, you will need to submit your supporting evidence and file an appeal to the Ministry of Human Resources.

Do part-time Saudi employees count?
Yes, but they are pro-rated and must meet minimum work hour and registration requirements.

Can you use outsourcing?
Yes, but conditionally. You can use outsourced labour for support roles but core positions must have direct Saudi hires to meet Nitaqat targets.

Ultimately, businesses who want to prosper seamlessly in the lucrative Saudi market, need to make sure they are fully equipped to avoid any legal risk or penalties.

If you have questions or would like to find out about how to improve your Nitaqat rating, our expert team can assist you with a professional compliance review and workforce strategy session. You can reach our team on info@eerme.com or +966 112 738 007.