Authorities to eliminate yellow category from Nitaqat

IMPACT – MEDIUM

What is the change? Saudi Arabia has announced plans to eliminate the Nitaqat yellow category.

What does the change mean? Companies currently categorized in the yellow category will be moved later this month to the red category and will not be able to renew work permits, apply for residence permits, apply for block visas or submit commercial registrations until they move to a green category.

• Effective date: Jan. 26, 2020.
• Visas/permits affected: Block visas, work visas, residence permits and commercial registrations.
• Who is affected: Employers in the yellow category.
• What’s next: Employers in the yellow category will be moved to the red category, and companies that are not compliant with Saudization rules will now be categorized in the red category.

Background: The Nitaqat color-grading system is used to rank employer compliance with the “Saudization” regulations. Currently, employers in the yellow category are able to apply for residence permits and renew work permits for employees who have not yet completed two years of service. Once transferred to the red category, however, employers will not be able renew work permits or apply for residence permits. Similarly to employers in the yellow category, they will not be able to apply for new block visas, hire non-Saudi nationals, or transfer sponsorship. Additionally, commercial registrations will be blocked until the company moves to a green category.

Analysis & Comments: Companies currently in the yellow category should improve their Nitaqat ranking as soon as possible to avoid moving to the red category. If they are moved into the red category, employers will not be able to hire non-Saudi nationals, renew current work permits or apply for residence permits for current employees.

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