SAUDI ARABIA Trends and Developments Contributed by: Christiana O’Connell-Schizas, Baker McKenzie
headquarters). Locally incorporated entities cannot have a “catch-all” object clause, as is often possible in other jurisdictions. Sanctions for acting outside the scope of an entity’s objects would be on the service provider, not the receiving entity; however, if discovered, the service provider’s activities could be suspended or cancelled, and this may carry a business interruption risk for the receiving entity. Therefore, it is advisable for entities who wish to avail services from local providers to ensure the provider is licensed to provide said ser - vices. This can be confirmed by requesting a copy of the service provider’s commercial registration cer - tificate. Among other details, an entity’s commercial registration certificate usually includes its objects (or at least some of them) and a QR code with a link to the Ministry of Commerce’s portal, which will display the complete list of the entity’s objects. Personnel The service provider’s personnel would perform their employer’s obligations under a services agreement and should remain under the service provider’s direc - tion and control at all times. The service provider would bear all employee-related obligations, such as paying its employees’ wages, accruing statutory end of service, making the relevant contributions to the General Organization for Social Insurance, and providing its employees and their dependents with medical insurance. The employees would count in their employer’s (the service provider’s) Saudisation ratio. The receiving entity should not: • instruct or manage the service provider’s person - nel on a day-to-day basis – it can have a contact/ representative at the service provider who would manage its employees performing said services; • be involved in hiring/firing or disciplinaries – it can request a particular team at the service provider to perform the services and provide feedback on the performance of the services; or • reimburse the service provider for its employees’ costs – it should pay the service provider a fee to perform said services. If the service provider’s employees need to be on the receiving entity’s premises to perform the services, the service agreement should be registered with Ajeer .
The foreign national employees should hold valid Ajeer certificates to work on the receiving entity’s premises to mitigate the risks outlined above in case of an inspection. Ajeer Ajeer is an online portal designed to regulate and document the temporary work of foreign nationals working on non-sponsors’ premises. Under the Ajeer programme, one of the main service lines is “contract - ing”. This is where a party conducts a valid services contract on another party’s premises that requires the service provider’s employees to be deployed on the counterparty’s premises (the contract should be a true contract, and the services should fall within the service provider’s objects). This service line generally applies to the following activities: • construction and building; • cleaning and catering • maintenance and operation • consulting and business services; and • institutes and colleges. Other service lines include (but are not limited to) sea - sonal hire during Hajj season, seasonal hire during entertainment seasons, seasonal hire for parcel trans - portation, entities in the health or education sectors to engage foreign nationals on dependent residency, and temporary work during a labour dispute. An Ajeer certificate would include the following infor - mation: • the employee’s name, nationality, profession and iqama number; • the service provider’s data (name and MHRSD entity number); • the service beneficiary’s data (name and MHRSD entity number); and • details about the service contract, start date, end date and work location. Should there be an inspection, a foreign national’s iqama would confirm their sponsor, and the Ajeer cer - tificate would confirm their sponsor and the receiving entity’s details – and the location they are permitted to work at.
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