Contingent Workforce

What a contingent workforce is

A contingent workforce (القوى العاملة الممتدة) is a description that groups together the people who do work for an organisation without being on its register of workers: independent contractors, workers who arrive through another establishment, and people brought in for a project or a season. Each person in that group can be called a contingent worker.

The label is a management term, not a legal one. It is a container for arrangements that come from different sources, and each arrangement is governed by the text that applies to it. Treating the container as if it carried a single rule is a mistake made at the first step.

The register of workers that marks the edge of a contingent workforce

Article 5 of the Implementing Regulation (اللائحة التنفيذية) of the Saudi Labor Law (نظام العمل) requires the employer to include in the register of workers’ names the names of the establishment’s workers, the occupation of each, their ages, nationalities and identity numbers, and, for workers who are not Saudi nationals, the numbers and dates of their work permits.

So the first question about any arrangement is not what to call it but who appears on that register. The answer comes before everything else, because describing a person as the establishment’s worker brings with it a chain of obligations that the name given to the contract does not change. The broader test of whether a relationship falls under the Labor Law at all is covered in our glossary term on employment status.

The seven records behind the contingent workforce boundary

Article 5 of the Implementing Regulation does not create a single register. It requires the employer to include specified data in the registers, records and files kept at the place of work, whether they are on paper or electronic. That qualification removes the argument that records held on a digital system fall outside the rule. There are seven of them:

• The register of workers’ names, with the data described above.
• The register of wages, showing the wages, the dates on which they were received, any deduction made from the wage and the reason for it.
• The register of fines, showing the worker’s name, the amount of the wage, the amount of the fine and the reason for and date of its imposition.
• The attendance record, with the time of arrival at and departure from the place of work.
• The record of training given to Saudi workers.
• The record of medical examinations, in establishments whose workers may be exposed to occupational diseases.
• A work file for each worker, holding the worker’s details, address, a copy of the employment contract and any certificates or documents the worker provides.

Set the last item beside the first, and together they show that the boundary is more than a line in a table of names. For a person who is the establishment’s worker, the records Article 5 of the Implementing Regulation describes include an employee file holding a copy of the contract, wages recorded in the register of wages with their dates, deductions and reasons, and attendance entered in a record. The description an establishment writes into a contract is therefore tested against the records it actually keeps on that person, not the other way round.

We found no article in the Implementing Regulation that sets a period for keeping these registers, records and files, and a period taken from another context should not be carried across to them.

Two contingent workforce arrangements the Ajeer decision separates

Ministerial Decision No. 60339 issued the rules governing the outsourcing of services of workers who are not Saudi nationals between establishments through the Ajeer programme (أجير). Article 2 of Decision 60339 states that its purpose is to focus on the outsourcing of services “and to distinguish it from the outsourcing of manpower”. That distinction is the line that disappears when the two arrangements are filed under one name:

• Internal outsourcing of services. It contracts for a specified service, bounded by a scope of work set out in advance and by a period of time. Payment is tied to the outputs and to achieving the results set in the contract, and the providing establishment manages its own resources and workers.
• Internal outsourcing of manpower. It contracts for the employment of a worker who is not a Saudi national at another establishment for a set period. Payment is tied to hours or rates of work, and the beneficiary establishment supervises and evaluates the worker and integrates them into its operations.

Put simply, in the first the establishment buys a result, and in the second it buys a worker’s time. The scope of work here means a scope of tasks, not a location.

What stays with the provider when Ajeer workers join a contingent workforce

The provider’s side is what gets missed when the arrangement is taken to be the transfer of a worker from one party to another. Decision 60339 leaves a set of responsibilities with the providing establishment, and the worker’s arrival at someone else’s premises does not lift them:

• The worker’s rights and duties under the employment contract, the Labor Law and the Implementing Regulation remain where they were.
• The work permit is issued and renewed by the provider. Renewal may not be delayed because of the outsourcing, and a provider that delays or refuses it keeps the full legal responsibility.
• The service contract is independent. It is a contract between two establishments, and it does not carry the terms of the contract between the provider and its worker across to the beneficiary.
• Disputes between the worker, the provider and the beneficiary are settled under the provisions of the Labor Law and the related decisions.

Decision 60339 also sets conditions on both parties before they contract. On the provider’s side, the contract is documented on the Ajeer platform; the worker must not have entered the Kingdom for a visit, for temporary work or for temporary Hajj and Umrah work; and the worker consents, unless the employment contract provided for this from the outset. On the beneficiary’s side, the establishment is entered in the commercial register or licensed, and the worker works for it in the same occupation that is licensed on the work permit.

The consent condition on its own is enough to answer a possible assumption: that the arrangement is a deal between two establishments in which the worker has no say. That is not what Decision 60339 provides, unless the worker’s original contract already included it.

On work permits, then, Decision 60339 says who issues and renews the permit and which occupation the worker may perform. In the sources we reviewed for this term, we did not examine how each of the other arrangements in a contingent workforce affects registration with the General Organization for Social Insurance or work permits, and that effect should not be inferred by analogy from the Ajeer rules.

What the Ajeer decision does not cover in a contingent workforce

The subject of Decision 60339 is workers who are not Saudi nationals, provided between establishments. It does not describe every arrangement outside the register of workers, and it is not a model by analogy for contracting with an independent professional or engaging a consultancy firm. Arrangements that provide Saudi workers between establishments, in the way Decision 60339 deals with workers who are not Saudi nationals, have their own sources, and we did not review them for this term.

Decision 60339 sets no percentage cap on outsourcing, and the percentage and the duration limit that circulate in unofficial sources do not appear in its text, which is the result of reading all twelve of its articles. The time limits it does set apply to the term of each Ajeer permit and to the renewal of the service contract, not to how much of a workforce may be outsourced. That finding is confined to the rules themselves: for the operational settings of the programme, the reference is the text of Decision 60339 or the Ajeer platform. Beyond that decision, in the sources we reviewed we found nothing that sets an upper limit, as a percentage or a number, on how far an establishment may rely on a contingent workforce.

Decision 60339 also provides that an Ajeer permit is issued to the worker to establish that the worker’s presence at another establishment’s place of work is lawful, and its term for the establishment to which the worker belongs is “the establishment the worker is attached to” (المنشأة التي يتبع لها). The word sponsorship is not part of the vocabulary of Decision 60339, and it has no place in describing the arrangements it governs.

What a contingent workforce is not

The container is wide, but it does not stretch to some arrangements that may be assumed to belong in it. The deciding factor each time is the register:

• A person appointed on a fixed term contract. The length of the contract does not stop that person from being the establishment’s worker. The worker is on the register of names, has a file holding a copy of the contract and has wages entered in the register of wages. A short term describes the contract, not the relationship; how such a contract ends is covered in our guide to fixed term and indefinite contracts.
• A person appointed for a season or a project on a contract with the establishment itself. The position is the same as for a fixed term appointment. The confusion arises because the word “temporary” is used in the management description of a contingent workforce and also in the names of certain types of contract, and the two meanings differ.
• A person who works remotely and is the establishment’s worker. The place where the work is done is not the boundary drawn above. The boundary lies in the register, not in the location.
• Another establishment’s workers delivering a service with a defined result. They are outside the establishment’s register of workers, but they are inside the provider’s register, and the beneficiary is not the one managing them. The management description groups them with others, while the legal position separates them.

Between these cases sits one that deserves a warning: a contract written in the language of outsourcing where in practice the establishment allocates the tasks, sets the hours and evaluates the performance. That is the situation the name of the contract does not settle.

The question to ask before choosing a contingent workforce arrangement

Who manages the work from day to day, and who carries its obligations? If the establishment sets the tasks, allocates the hours, evaluates the performance and integrates the person into its operations, the description it writes into the contract does not change the facts against which the obligations are assessed. This test follows the same line on which Decision 60339 bases its separation of the two arrangements.

Note that Decision 60339 did not separate the two arrangements by the name of the contract or by the status of the contracting party. It separated them by three things that can be seen in performance: what is being contracted for, what the payment is tied to, and who manages and supervises. These three are shown by how the parties behave as well as by the clauses, and in any other arrangement they are the same questions to ask first, even where that arrangement is not one Decision 60339 governs.

How a particular contract is characterised depends on its terms and on what happens in practice, not on its title and not on a definition in a glossary.

Before building on a contingent workforce arrangement

Bringing in people from outside the register of workers is an operational decision with a legal side, and the two are best examined together before signing, not after the first inspection. For the rules on workers who are not Saudi nationals, the reference is Ministerial Decision No. 60339 itself. For the description of a relationship with a worker the establishment employs, the reference is the Labor Law and the Implementing Regulation, including what must be entered in the register of workers’ names. In both cases the starting point is one question that can be checked: on whom does the establishment keep these records? The answer to it should come before any label is chosen.

This is an explanation of the concept and of the statutory provisions cited, not legal advice.

Related terms

• Employment Status
• Employee File
• Wage Protection System (WPS)
• Payroll Statement
• High Volume Hiring