Saudi Arabia is a popular destination for foreign workers seeking a livelihood and settling in the country. Migrant workers often face financial challenges, particularly when their employers fail to pay them promptly.
Starting October 6, 2024, Saudi Arabia has taken steps to protect the financial interests of foreign workers while working in private sector establishments. The coverage for expatriate workers covered by the insurance product has begun from October 6, 2024. This service does not cover expatriate workers in establishments that defaulted before this wage insurance service came into effect.
The Ministry of Human Resources and Social Development and the Insurance Authority have introduced an ‘Insurance Product’ to protect expatriate workers’ entitlements in private sector establishments who default and fail to pay wages to their workers. This initiative guarantees the rights and entitlements of expatriate workers in the private sector.
The wages covered are the monthly wages, allowances and other entitlements not paid by the establishment, excluding end-of-service benefits.
The maximum insurance coverage is 17,500 Saudi Riyals per worker. If the total claims exceed the establishment’s insurance coverage limit, compensation will be provided up to the coverage ceiling for the establishment, distributed proportionally among eligible workers.
The benefits include, for example, a ticket if the expatriate worker wishes to return to his country. An expatriate worker may claim a travel ticket if they wish to leave Saudi Arabia, have not transferred to another employer and can provide proof of completing all legal departure procedures, including obtaining a final exit visa. A travel ticket for the worker to return to their country is capped at 1,000 Saudi Riyals. Workers are not required to leave the country to claim their rights and can claim compensation even if they have transferred to another employer.
Under the Saudi Arabia ‘insurance product’ for foreign workers, an expatriate worker is eligible for compensation if their employer delays(or defaults in) wage payments for over 6 months and the delay affects 80% or more of the workforce and if this delay happens during the insurance coverage period (12 months from the policy’s start date).
Defaulting Establishment is an establishment that, as per the Ministry’s laws, has delayed wage payments to 80% or more of its workers for 6 months or longer. An expatriate worker is a non-Saudi worker employed by a defaulting establishment and registered according to the Ministry’s rules, meeting the conditions for compensation.