Riyadh reports that since May 2025, the Saudi government has intensified its efforts to combat illegal immigration and labour. According to data from the Ministry of Interior, between May 8^thand June 11^th, a total of 49,401 individuals were arrested for illegal immigration, with 6,200 of them arrested for violating the Labour Law, making it a key focus of law enforcement.

Summary of Four-week Cumulative Data:

• Violation of the Residence Act: 29,968

• Violation of the Border Security Act: 12,833

• Violation of labour Law: 6,200

• Expelled persons: over 44,000

Notably, 69 people were arrested for assisting illegal immigrants, including by providing accommodation, transportation and illegal employment opportunities.

The Saudi Ministry of Interior solemnly declares that any unit or individual who assists illegal immigrants to enter, hide, hire or provide convenient conditions will face:

• Up to 15 years in prison.

• The maximum fine is 1 million riyals. (about 1.92 million yuan)

• The property, the vehicle and the tools of the crime were confiscated.

In recent years, Saudi Arabia has continuously increased the supervision of labour compliance. This is not only because of the continuous promotion of the "Saudiization" policy but also because of the transformation of " digitalisation and precision" in policy, law enforcement mechanisms and punishment standards.

Background 1: Saudi Arabia's "Saudiization" Strategy (Nitaqat)

Since the launch of Vision 2030, the Saudi government has made increasing the employment rate of its citizens a core goal. To this end, Saudi Arabia has implemented a set of local employee quota systems—the Nitaqat system, which is divided by industry and enterprise size, and linked it to visa approval, bidding qualification and subsidies.

Some industries and jobs are explicitly listed as "Saudi only", prohibiting foreigners from working in them. In recent years, more than 50 occupations have been listed as "Saudi only", including human resource management, administrative assistant, customer service representative, sales positions, etc..

Companies must hire Saudi employees in proportion to the industry and the total number of employees, or face penalties such as restrictions on work permits, fines and business suspensions.

Corporate Ratings Affect Business: Nitaqat classifies companies into four categories--platinum, green, yellow and red--that affect key aspects of the process, such as work visa approval and government project bidding qualifications.

 For  Instance ：

Retail Enterprises (50-99 employees): At least 25% of the employees must be Saudi nationals to maintain the "green" rating;

Construction Enterprises (more than 100 employees): At least 15%-20% of the employees must be Saudi nationals. If the number is less than 10%, the rating will be directly reduced to "red", and the issuance of visas and work cards will be suspended.

Companies with "red ratings" will not be able to add new visa quotas, employees will not be able to renew their cards, and companies will not be able to win government projects.

✅ For Chinese Enterprises, if the proportion of Saudi labour structure in the project is insufficient, they often face problems such as restricted bidding, rejection of work visas or visa freezes, which directly affect the performance of the project.

Background 2: Labour laws are refined, and law enforcement is digitised

In June 2025, the Ministry of Human Resources and Social Development of Saudi Arabia proposed to revise the penalty system of labour law and its administrative regulations, which have been open for public comment on the Istithlaa public platform, with the goal of formal implementation in the coming months.

The revision has the following notable features:

✅ 1. Subdivide and quantify the punishment standards

For the first time, punishment levels are divided according to the size of enterprises (number of people) to avoid "one size fits all".

All violations are divided into three categories: "Minor /Medium /Serious", and the corresponding fine range is specified.

The "Cumulative Violation Mechanism" and "Blacklist Management" are introduced. Once marked, the visa, subsidy and project application will be affected for 6 to 24 months.

✅ 2. Cover the whole cycle of labour compliance

Supervision of the whole process from recruitment, work permit, contract management, salary payment to welfare security, social security declaration and termination of employment;

Involving "telecommuting, flexible employment, freelancers", emerging forms of employment, to prevent the use of this to avoid employment obligations;

Special penalty provisions have been set up for acts such as "failure to file contracts, inadequate benefits, discrimination and information concealment".

Background 3: The rigid requirements of the localisation of the work visa and salary payment system

Employing foreign workers in Saudi Arabia is not only a compliance issue but also a highly  institutionalised localisation requirement. The Saudi government is integrating data on visas, salaries, contracts, and social security, and any violation can trigger automatic comparison and joint enforcement.1. The work permit system for foreign employees is becoming more and more strict

Foreign employees must obtain an Iqama (work permit) through their employer.

In addition to meeting the "desertification rate" requirement of 10%-30%, the Nitaqat rating must be "green" or above; otherwise, the number of visa applications will be limited or the visa authority will be completely frozen.2. The salary payment must be connected to the national WPS system

Saudi Arabia has a mandatory electronic wage supervision platform—Wage Protection System (WPS) to monitor wage payments in  real-time and ensure the rights and interests of employees:

The salary must be paid in full and on time (within 7 days after the payday) through the registered bank into the employee's account.

Payment of cash, partial withholding and oral agreement of wages are prohibited;

All salary records are automatically uploaded and cross-verified with the contract data on the Qiwa platform.

The following are some typical penalty clauses for employers and employment practices in the draft revision of the Saudi Labour Law (SR). Those with serious circumstances will also be placed on a "blacklist" or have their visa applications frozen.

Here is a summary of the latest fines:

 (I) Serious violations of law (which may affect visa qualifications and business licenses)

 (II) Labour conditions and safety violations

(3) Discrimination and unequal treatment

 (IV) General violations

Red Line 1: Affiliated Work Visa— A compliance minefield that is disconnected from actual employment

In order to save costs or bypass the establishment process, some enterprises use local shell companies to handle Iqama work visas (work residence permits), while their employees work in the project team of Chinese enterprises. The work visa unit is separated from the actual employer, which constitutes "Work Visa Affiliation".

Legal Basis:

Article 18 of the Labour Law of Saudi Arabia: The employer issuing the work permit must be the actual employer.

MHRSD Notice No.5 of 2023: It is prohibited to use shell employment, and the employment relationship with a work permit must be filed in the Qiwa system.

❗ Punishment Consequences :

Enterprises: A fine of 500,000 riyals (increased by the new regulations in 2024), suspension of all visa business for one year, and inclusion in the "high-risk enterprise list" and public disclosure.

Employee: A fine of 10,000 riyals, repatriation and -a 10-year ban on entry.

Shell Company: The business license is revoked, and the legal person faces criminal liability.

Line 2: Qiwa has not filed the labour contract—— It is regarded as "Uncontracted Employment"

Enterprises have not completed the electronic contract filing of foreign employees on the Qiwa platform, or the filing information is inconsistent with the actual situation (such as position, salary, entry time, etc.), resulting in the disconnection between "online filing" and "offline employment". Some companies still mistakenly think that signing contracts offline is enough, and do not know that filing is a mandatory obligation.

Legal basis:

Article 12 of the 2021 Labour Law Amendment: All labour contracts must be filed through Qiwa;

MHRSD makes it clear that the Qiwa registration is the basis for the legitimacy of the labour relationship.

❗ Punishment Consequences:

Enterprises: Fines of 20,000 yuan per person for the number of unregistered employees, with a maximum ceiling of 1 million riyals; suspension of visa business for 6 months;

Employee: The contract is invalid, and he can claim triple compensation for unpaid salary (the original salary + 2 times the fine);

The contract terms are missing or contradictory: It is directly identified as an "invalid contract", and the enterprise bears all the employment risks.

Red Line 3: Illegal Outsourcing + No EOR Agreement —— Constitutes "Illegal Referral"

Companies will use outsourcing agencies that are not qualified for MHRSD, or directly hire employees through "friend companies" as "temporary workers", without signing a legal EOR (Employer of Record) agreementor paying salaries to employees in cash or private accounts.

Legal basis:

Article 9 of the Non-Saudi Labour Employment Regulations: Outsourcing companies must hold an outsourcing service license issued by the MHRSD.

❗ Punishment Consequences:

Both the employer and the employee may be judged to be illegally employed;

Unqualified institutions will have their business licenses revoked.

The company will be fined between 300,000 and 500,000 riyals (depending on the number of people involved) and will be barred from bidding for future government projects.

Red Line 4: Non-Compliance With Salary Payment and Social Security— Labour Treatment is Illegal

Common Violations Include:

GOSI Social Security Base: It should be declared according to the actual total salary of the employee (including allowance), which should not be lower than the minimum wage standard of the industry (4,000 riyals/month, only applicable to Saudi employees);

Salary Payment: Salary shall be paid within 7 days after the end of the salary cycle (usually before the 5th day of each month);

All salaries must be paid through the Wage Protection System (WPS) electronic system, which is connected to the government platform using the WPS system.

Legal Basis:

Article 15 of the GOSI Act: Companies must pay 12% social security (of which companies bear 9%) on the salary base of their employees

❗ Punishment Consequences:

Credit Damage: MHRSD lists companies as "bad employers", affecting their ability to employ workers in Saudi Arabia and their brand reputation;

Salary Violation: The principal plus 50% penalty (increased in 2025) shall be paid for the overdue salary, and the WPS system will automatically freeze the enterprise bank account.

o help Chinese companies stabilise their business in Saudi Arabia, we suggest focusing on the following four areas:

 Epilogue ：

Saudi Arabia's labour supervision policies are becoming more detailed, practical, and enforcement-intensive, with less room for error. For Chinese companies operating in Saudi Arabia, understanding the policies and adhering to the right path is crucial for long-term compliance. It is recommended that companies plan their compliance strategies before personnel arrive, avoiding risky' trial and error' approaches.