The Ministry of Human Resources and Social Development (MHRSD) in Saudi Arabia has introduced a draft of new rules governing recruitment activities and labour services. They have amended the support labour ratio standards for human resources companies under Decision No. (28624), issued on 06.07.1446H.

The draft regulations are open for public feedback from 9 January to 9 February 2025 and aim to enhance the recruitment process, close legislative gaps, and establish effective procedural guidelines.

These proposed regulations reflect Saudi Arabia’s ongoing efforts to improve transparency and efficiency in the recruitment sector while ensuring compliance with national labour policies.

The Proposed Regulations Licensing Requirements

• Large Companies: SR100 million paid-up capital, SR20 million bank guarantee (10-year licence).
• Medium Companies: SR50 million capital, SR5 million guarantee (5-year licence).
• Small Companies: SR5 million capital, SR2 million guarantee (5-year licence).

Companies must be joint-stock entities fully owned by Saudis, with provisions allowing compliant foreign investors.

Operational Standards

• Companies must document and update all recruitment data in ministry-approved systems.
• Publishing pricing details, recruitment costs, and key staff information on official websites is mandatory.
• Compliance with localisation requirements and avoidance of prohibited activities are strictly enforced.

Insurance and Oversight

• Mandatory insurance coverage for operational risks, with a minimum validity of six months.
• Bank guarantees may increase based on market conditions or recruitment delays.

The new decision replaces fixed support labour ratios with variable ones based on company performance and expansion plans, allowing businesses to enhance service quality while meeting customer needs.

Emphasising performance and market organisation, the decision enables companies to offer varied service packages—hourly, short-term, and long-term—expanding customer options.

Effective 5 January 2025, this change promotes a balanced, flexible work environment, fostering growth in the human resources sector. The Ministry reaffirms its commitment to partnering with the private sector, refining labour market regulations, and supporting economic and social development.

How can we assist? 

If you need assistance with setting up a recruitment company or with any other related company formation in KSA, we assist GCC Nationals and foreign investors with all formation, restructuring, local partner, PRO support, or any other related service, please contact us on +966 (0)535 377 578, email us at ksa@sovereigngroup.com, or complete the contact form below, and we will be delighted to assist.