The tech companies, including Amazon, Google, and Microsoft, have recently obtained approval from the Saudi Arabian government under new regulations to establish regional headquarters. While these companies already have a presence in the UAE, establishing offices in KSA further bolsters their presence across the Middle East region. However, this opportunity also comes with challenges, particularly concerning the treatment of the region’s workforce. With ongoing layoffs in the tech sector, it further necessitates these companies in the Middle East to implement fair work policies by adhering to labour laws and compliance regulations as laid down by the respective governments, as criticisms emerge globally.

On this International Workers' Day, also known as Labour Day, we highlight some preventive measures, compliance strategies, and regulations that tech giants and foreign companies can adhere to and implement in their work policies, to nurture skilled labour and mitigate criticisms similar to those faced globally. 

#1 Comprehensive contract of employment

Both the UAE and Saudi Arabia have implemented new reforms in their labour laws concerning contracts with skilled workers in their respective regions. In the UAE, labour laws are outlined in Federal Decree Law No. 33 of 2021, while in KSA, they are defined in Royal Decree No. M/51 of 2005. Foreign companies operating in these regions should also adhere to these labour laws and regulations, which specify conditions of work, including working hours, clear guidelines for remuneration, labour rights, terms of employment, and prohibitions. Adherence to these reforms and proper contracts is mandatory in the Middle East, as they provide a balanced framework for both employers and employees. Therefore, clear and comprehensive employment contracts should be provided to all employees, outlining their rights, responsibilities, and terms of employment for sustained relationships, as well as compliance with state regulations. Furthermore, they should also maintain work records mentioning details of their employees, track of their work regular hours, overtime, vacations, and any benefits they get. In addition to this, If someone leaves their job or is terminated, keep records of the date of termination/ resignation and reasons for leaving, along with any compensation they received, to ensure adherence to laws. 

#2 Implementing fair work policies and a positive environment

The labour laws of the UAE and KSA have undergone stricter reforms regarding work policies, which include prohibitions against forced labour and discrimination based on gender, race, colour, sex, religion, national or social origin, or disability. These laws also specify employers’ obligations towards employees, including those for foreign companies establishing their presence in the regions. These employers must promote equality, diversity, and inclusion, and implement fair work policies as mandated by the KSA’s Ministry of Labor and Social Affairs, Department of Labor Relations, and the UAE’s Ministry of Human Resources and Emiratisation.

In particular, regarding women and young workers, adherence to conventions regarding night working hours, forced labour, minimum wage standards, equal remuneration, and fair treatment is crucial. Additionally, fair policies for women, such as treatment during pregnancy, mandatory maternity leave, coverage for medical expenses, and support for well-being, should be implemented.

#3 Understanding the cultural nuances

Foreign companies establishing a presence in the Middle East encounter socio-cultural challenges, as they may not be accustomed to the region's skills and work ethics. While they may initially prefer hiring employees familiar with their cultural backgrounds and work ethics, this approach is not sustainable, especially considering government regulations emphasising the hiring of local talent.

Therefore, these companies must exert additional efforts to recognise and respect cultural nuances in the region. Understanding local customs and practices can help build stronger relationships with employees and communities, as well as aid in talent attraction and retention. When employees feel welcomed in a work culture that supports their cultural backgrounds, norms, expectations, work ethics, and communication styles, it fosters a more inclusive and productive environment. 

#4 Employee well-being and compensation for work-related injuries 

The rising temperatures, worsening weather conditions, and situations like the COVID-19 pandemic brings back attention to workers' health and safety, highlighting the importance of workplace safety regulations and compliances. Therefore, to maintain a sustainable relationship with regional workers and governments, foreign companies must adhere to labour law provisions concerning the health and safety of workers. They should prioritise the well-being of employees by offering health and wellness programmes, flexible work arrangements, and resources for mental health support. Furthermore, offering comprehensive wellness checks, holistic health packages extending to family members, accident coverage encompassing work injuries and occupational diseases, compensation for medical expenses, as well as preventive tools and training, including adherence to the mid-day break rule for frontline workers, are some of the mandatory obligations that employers in the region must abide by. By prioritising the well-being of their employees and adhering to regulations, especially during challenging times, these companies can foster a positive work environment and avoid legal implications.

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#5 Transparent sponsorship systems

The GCC countries follow a kafala or sponsorship system that binds employers and employees in a relationship where the employer provides visas, accommodation, and travel expenses to migrant workers, but it also restricts workers' mobility. To prevent the exploitation of workers, foreign companies must understand the responsibilities associated with sponsorship and fulfil their obligations towards their sponsored employees. This includes providing accommodation, ensuring health and safety measures, timely work visa renewals, and social security benefits. Additionally, they should consider hiring expatriates who can blend in or are familiar with the cultural nuances, work ethics, and local languages of the region. Implementing transparent sponsorship systems, especially in regions where sponsorship is required for employment visas, ensures that employees are not exploited and have legal protections.

#6 Adherence to national initiatives by governments

Foreign companies expanding their footprint in the Middle East should familiarise themselves with national initiatives related to labour laws, regulations, and economic development strategies. For instance, the Saudization or Saudi Nationalisation Programme, mandated by the Ministry of Labor in KSA, requires companies to prioritise the hiring of Saudi nationals, particularly in the private sector, based on a quota system determined by factors such as company type, industry, and size. This programme aims to address employability challenges among Saudi nationals, providing them with career growth opportunities, closing the skills gap, maximising their employability potential, and ultimately contributing to KSA's economy and social sustainability. Additionally, Vision 2030, a comprehensive plan in Saudi Arabia, focuses on economic diversification, global engagement, and enhancing the quality of life. It recognises women as crucial assets for economic growth and development, aiming to empower them through various initiatives.

In the UAE, the National Strategy for Artificial Intelligence 2031 targets AI adoption and the transformation of industries. This strategy emphasises the importance of developing highly skilled professionals to meet the demand for AI-related roles and drive innovation in various sectors. 

#7 End-of-service gratuity and indemnities payables 

With global tech layoffs on the rise, job security is a top concern for workers in the Middle East right from the start of their employment. In the event of termination, they expect severance pay and benefits. Furthermore, organisations must provide gratuity or lump-sum payments when service terms end, demonstrating their long-term commitment to employees.

The EMEA region is known for contracts that include proper severance packages. In Saudi Arabia, according to Article 105 of the Labour and Workmen Law, employees are entitled to end-of-service awards and indemnities upon termination, calculated based on half or full monthly salary accumulations. In the UAE, as per Article 51 of the Labour Law, workers are entitled to gratuity for each year of service, calculated based on the last wage excluding allowances, and to be paid within 14 days of the contract's end. Employees with 1-5 years of service receive 21 days' salary per year, while those with more than 5 years receive 30 days' salary per year. However, the total gratuity shall not exceed the wage of two years.

Moreover, ensuring that you do not exploit workers' rights under their employment contract will also help you avoid legal penalties.