Employment Law of the Kingdom of Saudi Arabia: Key Amendments 1. Introduction Employment Law of the Kingdom of Saudi Arabia has been amended by Royal Decree No. M/46 of 05/06/1436H and came in to force on 24 October 2015. It is now critical that all existing contracts of employment and internal procedures and work manuals are reviewed and amended to ensure that they comply with the new amendments. 2. Transfer of Undertakings Protection of Employment Where a business is transferred in whole or in part (sale or otherwise), the employees will automatically transfer to the transferee, who must protect in full all “rights and privileges” provided by the original employer. 3. Employment Policy Manual (the “Manual”) (a) All employers irrespective of their size must now have Employment Policy Manual drafted in accordance with the Ministry of Labour Model Employment Policy Manual (“Model”). (b) Additional provisions that do not contravene the Model may be added. (c) The Model must be displayed in a place that is easily accessible or by any other means that ensures that the employees have seen it. 4. Training Businesses that employ more than 50 employees must ensure that their Saudi employees equal to 12% of the work force undergo work related training. 5. Employment Contract (a) The Ministry of Labour will publish a Model Employment Contract (the “MEC”). (b) Additional provisions that do not contravene the MEC may be added. 6. Probationary period – The two rules (a) The 180 day rule The initial 90 days probation period may be extended by a mutual agreement in writing for another 90 days to a total of 180 days (6 months). (b) Re-employment and new probation rule An employee who leaves (by termination [...]
A Legal Warning – Make sure your lawyer is qualified On Thursday 16 January 2014, Arab News disclosed to the world that the Saudi Council of Engineers had sized over 30,000 fake foreign engineering degrees, and had had stopped a large number of such engineers from working as engineers in the Kingdom of Saudi Arabia. Having now been in the Kingdom for a number of years, I began to think about my own practice area, the field of legal services. As a rule, in the Kingdom of Saudi Arabia, only Saudi nationals are called a “lawyer” (in Arabic “Moohami”), foreign lawyers are called legal advisors, irrespective of the foreign lawyers seniority, such lawyers provide advice as a minimum with the permission of a Saudi lawyer in accordance with the Saudi Lawyers Code issued by the Ministry of Justice. Over the last seven years, I have witnessed and heard some rather disturbing facts; I discuss some of them below as a warning to users of legal services to ensure that they have vetted their lawyers. Fake legal advisors Some individuals have foreign law degrees and practice in Saudi Arabia as legal advisors, they have not qualified in their jurisdiction, accordingly not only are they not qualified to provide legal advice, but they are also committing an offence for which the individual should be reported to the police or where services have already been obtained, a complaint to the police or legal action before the General Courts (formerly known as Shariah Courts) should be commenced. Non- practicing lawyers Potential legal service users should also be careful of lawyers who have qualified as a lawyer but have not practiced as a lawyer. Client should take care to understand [...]
1. General training for bank and legal staff on how lawyers draft legal opinions and the key issues that they take into consideration. Please click on this text to view the audio training session.
Kingdom of Saudi Arabia: How to keep IPO, PO, and Private Placement costs down Saudi Arabian businesses remain to a large extent family run, there is however an increased appetite for growing the business, by accessing equity capital markets (“ECM”), whether by an initial public offering (an “IPO”), public offering (a “PO”) or by way of a private placements (“Private Placements”). The discussion in this paper is equally relevant when a company is considering growth by accessing funds through the debt capital markets (“DCM”), whether by normal debt instruments by issuing bonds (usually abroad) or through the Saudi Tadawul (the Saudi Stock Market), by issuing Sukuks. Either of the option requires an element independent due diligence, (commonly, just shortened to “DD”) to be carried out by lawyers, financial advisors and accountants for the benefit of the potential investors, (the market as a whole, open to the general public as well as sophisticated investors in the case of an IPO and PO, and generally to sophisticated investors in the case of Private Placements). Depending on the law firms, the fees can be anything from a US$25,000 to US$250,000 and sometimes even more, this does not of course include cost of remedial work, which again can be anything from a moderate sum to those that extend to hundreds of thousands of dollars. The biggest problem with remedial work is delay, and the cost of delay is not just in loss of management downtime, but also loss of opportunity cost as well the expected and anticipated direct and calculable financial costs, such as increased costs of borrowing as opposed to an injection of equity. A logical question to ask is: What can a client do to reduce costs [...]
Saudi Business Etiquette The etiquette of doing business in any country is important, although there is a shared culture in some common cultures and even continents, the Kingdom Saudi Arabia, is quite unique even within its closely related GCC cousins. This briefing note is drafted with a view to educate the uninitiated to the way things are done in the Kingdom of Saudi Arabia. Some of the things might be common sense, but it is amazing how often we all seem to forget the basics. Below is a gentle reminder of how to deal with things from the moment you land, remember this is a very different culture and environment to the one that you are used to. 1. Arrival As you’d expect to anywhere, arrive promptly, but do not be surprised if your host is late and indeed to not comment on it. Commenting on such matters may make you appear to be “too hasty” and “judgemental”. 2. Appearance Non-Arab businessmen are expected to wear a suit and a tie. It is very important to ensure that the suit is and shirt are well pressed and that the appearance does not appear dishevelled. Ensure that you have carried out your usual basic grooming. Cleanliness is a must. 3. Fragrance Saudi Arabian nationals take pride in being fragrant. It is very important that one is fully ‘perfumed’. In the West, too much is forowned upon, however the right perfume in Saudi Arabia is prized and such attention to detail is very much appreciated and respected by your host. 4. Greetings The common greetings you will hear is “Assa la mou alikum”. This basically translates to “ May peace be upon you”. This is used universally. [...]