January 15th, 2024 Legal Updates

Saudi Mandate Requires Private Sector Internships to Enhance Workforce Skills

In a significant move to address the critical issue of youth employability, Engineer Ahmed bin Suleiman Al-Rajhi, the Minister of Human Resources and Social Development (“MHRSD”), has recently issued a ministerial decision No. (51/M) issued on 01/06/2024 (“MHRSD Decision”) aimed at bolstering cooperative training opportunities for students within the private sector in Saudi Arabia. This decision, targeting private entities with 50 or more employees, reflects the government’s commitment to developing and enhancing the overall competence of its workforce.

The issue of preparing young individuals for the workforce is paramount for any country striving for economic development and stability. The recently issued ministerial decision signifies a proactive approach by MHRSD in fostering a skilled and well-prepared workforce that can contribute effectively to the nation’s growth.

The decision specifically mandates private sector establishments with a workforce of 50 or more employees to provide cooperative training opportunities for students. This cooperative training is to be aligned with the student’s educational curriculum and the specific requirements of the job market. The primary goal is to facilitate the seamless integration of students into the workforce by equipping them with practical skills and experiences during their academic journey. Additionally, establishments are required to allocate a minimum of 2% of the total number of employees for the cooperative training program, ensuring a meaningful and impactful learning experience for participating students.

The decision reflects a two-fold objective, as follows:
  • Firstly, it seeks to enhance the quality and efficiency of training programs within private sector establishments. By mandating these entities to provide cooperative training, the government aims to ensure that such programs are robust, relevant, and contribute meaningfully to the students’ overall development. This proactive approach aligns with global best practices in workforce development.
  • Secondly, the decision is geared towards sustaining opportunities for growth and development within the private sector. By actively involving students in cooperative training, private entities are encouraged to invest in the development of the upcoming workforce, ensuring a continuous pool of skilled individuals ready to contribute to the country’s economic prosperity.

For the decision to be effective, private sector entities are required to enter into a with the student. This contract, governed by existing labor laws, serves as a legal framework defining the parameters of the cooperative training. This contract should outline the specific skills that will be imparted, the profession to be trained, and the various stages of the training process. Importantly, upon successful completion of the cooperative training period, the entities are obligated to issue a certificate of completion to the student, recognizing their efforts and acquired skills.

In the event of non-compliance with the Decision, establishments may face additional penalties, aligning with Labor Law – Article 229:
  1. Financial Fines: Up to one hundred thousand Saudi Riyals.
  2. Temporary Closure: For a duration not exceeding thirty days.
  3. Permanent Closure: In cases of persistent non-compliance.

The penalty may be doubled for repeated violations, and fines are multiplied by the number of individuals involved, as per Labor Law – Article 229.

In conclusion, the new ministerial decision represents a forward-thinking approach to addressing the critical issue of youth employability in Saudi Arabia. By actively involving private sector entities in cooperative training initiatives, the government is not only preparing students for the workforce but also elevating the standards of training programs within these entities. This comprehensive approach is anticipated to make the Saudi workforce more stable and productive, supporting the country’s overall aim of growing its economy and ensuring prosperity for all.

How can we help?

Our GLA team of qualified employment lawyers are happy to assist the companies to provide clarity and guidance on the implementation of the MHRSD Decision and provide a roadmap to ensure compliance with the MHRSD Decision. Additionally, we can assist in drafting or reviewing the documented training contract, ensuring it aligns effectively with regulatory requirements and best practices.

Authors:  Hegui Taha, Partner, and Hussain Bu Najimah, Associate.

For further information, please contact Alex Saleh (alex.saleh@glaco.com

Stay Updated

Stay ahead of the curve with our comprehensive Monthly Newsletter designed to keep you informed about the latest industry developments and trends, as well as access to our comparative Practice guides. We've got you and the MENA Region covered, Subscribe now!

Subscribe Now