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Many entities, contractors, and operational businesses in Saudi Arabia rely, formally or informally, on placing non-Saudi employees at another entity’s premises to deliver services, cover project peaks, or share specialist resources. This reality creates recurring legal tension around who remains the employer, what documentation proves lawful placement, whether this affects Saudization rates and Nitaqat requirements, and which entity carries day-to-day compliance exposure on site.

To organize the Saudi labor market, regulate the outsourcing of services between establishments, and ensure smooth and compliant operations through the Ajeer platform, the Saudi Ministry of Human Resources and Social Development (MoHRSD) issued the “Rules Regulating the Outsourcing of Services Between Establishments through Ajeer” under Ministerial Decision No. 60339, effective 26 January 2026 (the Ministerial Decision).

Why is this critical?

In the Saudi Arabian market, establishments frequently require flexible labor solutions to meet operational demands or to procure specialized services from third-party providers, provided this does not affect their Saudization rate.

From a commercial perspective, the misclassification of labor relationships can lead to regulatory exposure and fines. The primary objective of these regulations is to provide a structured mechanism for the presence of employees at a beneficiary establishment’s site in a practical, documented, and compliant manner that is clearly distinguishable from illicit labor practices.

How does the new framework work in practice?

The Ministerial Decision is centered on the Ajeer platform, an electronic service that allows establishments to document contractual relationships and issue regulatory permits.

The Ministerial Decision distinguishes between two primary types of internal outsourcing: (i) Internal Service Outsourcing and (ii) Manpower Outsourcing. The critical distinction lies between providing a service and providing manpower to an entity.

Internal Service Outsourcing

This involves a contract between two entities to provide a specific service within an economic activity for a fixed duration and scope. In this model, the service provider manages its own resources and employees to achieve defined outputs. Payments are typically linked to the delivery of those outputs or results.

Internal Manpower Outsourcing

This type of outsourcing involves the placement of a non-Saudi employee at a beneficiary establishment other than the one that sponsors them. In this model, the beneficiary establishment supervises the employee, integrates them into its operations, and provides the necessary tools. Payments are generally linked to hours worked or labor rates rather than specific service outputs.

Procedural compliance

To operate within these outsourcing frameworks, the service provider must ensure the following:

• Documentation: All employee data must be recorded through an electronic Ajeer Contract on the platform.
• Regulatory adherence: Both entities must comply with the Wage Protection System, Nitaqat requirements, and hold valid commercial registrations or professional licenses.
• Employee consent: The employee must consent to the outsourcing arrangement unless this is already provided for in their original employment contract.
• Permit issuance: A valid Ajeer Permit must be issued, serving as legal proof of the employee’s presence at a third-party site.
• Duration: The duration of an Ajeer Permit is linked to the service contract and may not exceed three years.

These rules also apply to labor transfers between parent companies and their subsidiaries.

What businesses should do differently

Establishments must strictly adhere to the operational limits of their Ajeer Permits to avoid legal liability.

Professional alignment and prohibited acts

A fundamental requirement is that the employee performs the same profession for the beneficiary as stated in their work permit. The Ministerial Decision explicitly prohibits:

• Registering a non-Saudi employee under a profession that does not reflect their actual role
• Assigning tasks outside the scope of the employee’s registered profession or the service contract
• Commencing work at a beneficiary site before the Ajeer Permit is issued

Assigning tasks outside the registered profession or failing to maintain valid permits will trigger statutory penalties under applicable regulations.

Under Clause 9 of the Ministerial Decision, if a non-Saudi employee remains at a beneficiary establishment after the Ajeer Permit expires, a violation is deemed to occur from the first business day following expiry. In such cases, the service provider remains liable even if the employee continues working without its direct instruction.

Responsibility for issuing and renewing work permits remains with the service provider as the original employer. Any delay or refusal to renew during an outsourcing period results in full legal liability for that provider.

These issues are particularly critical in labor disputes. Legal standing is determined by the contractual relationships between the employee, the service provider, and the beneficiary. All disputes are resolved under the Saudi Labor Law and relevant ministerial decisions.

Conclusion

The Ministerial Decision represents a significant step toward modernizing and organizing the Saudi domestic outsourcing market. The rules aim to improve market structure, promote proper outsourcing practices, and strengthen compliance with Saudi labor laws and regulations.

Both employers and beneficiaries must ensure that all secondment or outsourcing-based labor arrangements are correctly classified. Failure to do so constitutes a direct violation of MoHRSD regulations and may result in fines, regulatory exposure, and adverse impact on Nitaqat requirements.