As a business in the Kingdom, you might be wondering how to stay green within the Nitaqat guidelines that have accompanied Saudization. It is important to know that red-zone companies face business limitations as a result of non-compliance, and as of February 2020, the yellow band of Nitaqat has been canceled; if you do not stay green, you are in the red.
Nitaqat and Saudization are essential components of operating in the Kingdom, and without proper knowledge and application of the program, your company is at risk of unnecessary consequences. Many companies are unsure of their Nitaqat requirements and with recent changes such as the cancelling of the yellow zone in Nitaqat make it vital to know.
In order to avoid non-compliance and earn the privileges that come with the green band, your business’s Saudization rate must meet that range’s assigned rate. The green band includes low, medium and high ranges, and the more compliant a business is, the ‘greener’ it places within the green band, thus earning further compliance perks. Your green Nitaqat status could mean the difference between acceptance and rejection of a new employee’s visa, the renewal and issuance of work permits and, in many cases, the potential loss of an employee.
In calculating the Saudization rate, the Ministry of Labor depends on the databases of the National Information Centre of the Ministry of Interior and GOSI (The General Organization for Social Insurance). Upon receiving the information, the calculation goes as follows:
Saudization rate = (Total averages of Saudis in entity / Total averages of Saudi’s + Total average of expats) x 100
The range of the entity in the Nitaqat program is determined according to the entity’s performance in Saudization in the last 26 weeks by calculating the average weekly Saudization rate in accordance with the previously mentioned formula so that those rates of 26 weeks are added together and then divided by the number of 26 weeks.