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Saudi Arabia Labor Law and Qiwa Compliance: Employer Guide to Contract Registration and Nitaqat Saudization
Saudi Arabia's Labor Law (Royal Decree M/51, 1426H) was substantially amended by Cabinet-approved changes covering 38 articles, effective February 2025, and is enforced by the Ministry of Human Resources and Social Development (HRSD/MHRSD) through the Qiwa digital platform. Every employment contract, for Saudi and non-Saudi staff alike, must be documented electronically on Qiwa; MHRSD treats undocumented contracts as non-compliant for its compliance indicators and Nitaqat calculation (whether an undocumented contract is also void or unenforceable as a matter of contract law, versus simply excluded from those metrics, is not confirmed against the amended Labor Law text itself - see the unverified list). Non-Saudi hires now require a written, time-limited contract that defaults to one year from the actual start date if no duration is stated. MHRSD raised the mandatory Qiwa contract-documentation target in two steps - 85% of an establishment's workforce by 30 April 2026, then 90% by 30 June 2026 - and from 15 April 2026, only Qiwa-documented Saudi contracts count toward an employer's Nitaqat Saudization score, directly tying contract registration to Saudization band status.
Steps
- Set up and verify the Qiwa establishment file - Register the company on Qiwa and link it to Chamber of Commerce, GOSI, and Ministry of Interior (Absher/MOI) records before any hiring or work-permit activity can proceed.
- Check the current Nitaqat band before recruiting - Use Qiwa's built-in Nitaqat calculator to confirm the establishment's Saudization band and sector quota, since band status governs whether new work permits can even be issued.
- Issue the employment contract through Qiwa - Create the contract for Saudi or non-Saudi staff using Qiwa's standard-form contract tool; non-Saudi contracts must be written and time-limited, defaulting to one year from the employee's actual start date if no term is specified. MHRSD is also phasing in an enhanced Unified Employment Contract on Qiwa: the wage clause now carries a Ministry of Justice 'Najiz' execution number for direct enforcement without labor-court litigation, and contracts must show a WPS-style wage breakdown (gross pay, GOSI deductions, net pay, payment date). The updated template is mandatory for new/amended contracts from 6 October 2025, for fixed-term contracts on renewal from 6 March 2026, and for indefinite contracts from 6 August 2026.
- Obtain the work permit and visa/Iqama for non-Saudi hires - Apply for a block visa or work permit and process entry and Iqama issuance via Muqeem, tied to the Qiwa-registered contract and the establishment's current Nitaqat band.
- Register the employee with GOSI - Enroll both Saudi and non-Saudi employees in the General Organization for Social Insurance, since GOSI data feeds directly into the Nitaqat calculation.
- Maintain ongoing Qiwa documentation and monitor Nitaqat status - Keep contracts current on Qiwa toward MHRSD's two-step documentation target - 85% of the establishment's contracts by 30 April 2026, then 90% by 30 June 2026 - and track the weekly-reassessed, 26-week rolling Nitaqat score. Red-band status restricts issuance and renewal of work permits for non-Saudi staff; sources reviewed describe this restriction as applying as soon as an establishment is classified Red rather than after a fixed grace period, so treat a Red-band reading as an immediate hiring risk, not a delayed one.
Timeline
Qiwa establishment setup and contract registration can typically be completed the same day once supporting documents (Chamber of Commerce registration, GOSI file, MOI record) are in order. Work permit and Iqama issuance for non-Saudi hires runs in parallel through Muqeem and takes longer depending on medical and visa processing. The Nitaqat band itself is recalculated on a rolling 26-week average with weekly reassessment (typically every Saturday), so an employer's compliance status can shift week to week.
Cost & fees
Registering a contract on Qiwa itself is a free government platform service. The recurring employer costs sit around it: the non-Saudi work permit/visa fee, annual Iqama issuance, GOSI social-insurance contributions, and a monthly expatriate levy per foreign worker (reported as a lower rate when Saudi headcount matches or exceeds expatriate headcount, and a higher rate when expatriates outnumber Saudis). Exact SAR figures were found only in secondary/aggregator sources this session, not confirmed directly on an HRSD/GOSI fee schedule, so they should be verified before budgeting - see the unverified list.
Some figures on this page vary by jurisdiction, zone or nationality, or could not be independently confirmed from a public source at time of writing - confirm the current figure with the regulator before relying on it.
Sources
- Ministry of Human Resources and Social Development (HRSD) - official news, Cabinet approves Labor Law amendments
- Qiwa (official platform) - What is Nitaqat and how is it calculated
- KPMG Flash Alert - Saudi Arabia government increases Qiwa employment contract compliance requirements
- Morgan Lewis - Employment Contract Enhancements in the Kingdom of Saudi Arabia
- King & Spalding - Amendments to the Saudi Labor Law Approved
- EIG Law - Saudi Arabia Saudization Updates: Qiwa Contract Documentation Impacts on Nitaqat Calculations
- Pangea Worldwide - Nitaqat Saudization Update 2026: Why Qiwa Contract Documentation Is Now Non-Negotiable for Saudi Employers
Frequently asked
Is registering an employment contract on Qiwa mandatory in Saudi Arabia?
Yes. MHRSD requires every employment contract to be documented electronically on Qiwa; contracts that are not documented are excluded from the establishment's compliance indicators and Nitaqat count (whether non-documentation also voids the contract itself, as opposed to just those metrics, could not be confirmed against the amended Labor Law text - see the unverified list). The Ministry raised the required documentation rate in two steps: 85% of an establishment's contracts by 30 April 2026, then 90% by 30 June 2026.
What is Nitaqat and how does it affect a company's ability to hire?
Nitaqat is HRSD's Saudization classification system that bands establishments (from Red up through Platinum) based on the proportion of Saudi nationals employed, calculated as a rolling 26-week average and reassessed weekly via Qiwa. A company classified in the Red band cannot issue or renew work permits for non-Saudi staff until it raises its Saudi headcount and moves out of Red; the sources reviewed describe this restriction as taking effect upon Red classification rather than after a fixed grace period.
Can we hire a non-Saudi employee on an indefinite, open-ended contract?
No. Following the Labor Law amendments effective February 2025, non-Saudi employees must be engaged on a written, time-limited contract; if the contract does not state a duration it is automatically treated as a one-year contract running from the employee's actual start date.
Does documenting Saudi employees' contracts on Qiwa actually affect our Saudization score?
Yes. As of 15 April 2026, MHRSD only counts Saudi employees toward an establishment's Nitaqat calculation if their contracts are electronically documented on Qiwa, directly linking contract-registration compliance to Saudization band status.