Employee Secondment

What employee secondment is

Employee secondment, also called employee lending, is a market label for an arrangement in which an establishment’s workers work for another establishment for a period, while their contractual relationship with their original establishment remains in place.

The label is not the one the texts use. Neither the Saudi Labor Law (نظام العمل) nor the rules on internal outsourcing call this arrangement secondment or lending (إعارة). They describe it under other names, and different rules attach to each name. That is the first point to make about the term, because a search of the Labor Law for the word finds nothing, and the missing word can be mistaken for a missing regulation.

Employee secondment under Article 39 of the Labor Law

Article 39 of the Labor Law provides that, without following the statutory rules and procedures in force, an employer may not leave its worker to work for a third party or for the worker’s own account; that a worker may not work for another employer or for their own account; and that an employer may not employ another employer’s worker. Article 39 of the Labor Law also gives the Ministry the task of inspecting establishments, recording violations and taking the steps needed to apply the penalties, and of referring to the Ministry of Interior the matters within its competence.

The third prohibition is the one addressed to the receiving side of an employee secondment. In that prohibition the receiving establishment is a party to the arrangement, not an outsider that merely benefits from it. Article 39 of the Labor Law turns on the qualifier at its head: a lawful route exists, and its condition is that the route is the statutory one.

For one group of workers, the Implementing Regulation (اللائحة التنفيذية) names that route. Article 13 of the Implementing Regulation provides that, in applying Article 39 of the Labor Law, a worker who is not a Saudi national and whose work the Ministry approves through the procedures of the Ajeer programme is not in breach of that article.

The two regulated forms of employee secondment, and how they differ

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, by clarifying its terms and distinguishing it from the outsourcing of manpower. Article 1 of Decision 60339 defines both:

• Internal outsourcing of services (التعهيد الداخلي للخدمات). It is a contract for a specific service in any economic activity, bounded by a scope of work set out in advance and by a defined period. Payment is tied to outputs and to achieving the results set in the contract, and the providing establishment manages its resources and its workers.
• Internal outsourcing of manpower (التعهيد الداخلي للقوى العاملة). It is the deployment of a worker who is not a Saudi national at another establishment for a defined period. Payment is tied to hours or work rates, and the beneficiary establishment supervises the worker, evaluates them and integrates them into its operations.

Put in one sentence: in the first an establishment buys a result, and in the second it buys a worker’s time. What the market calls employee secondment is closer to the second. The scope of work in the first form means a scope of tasks, not a location. Both forms, alongside the other arrangements that sit outside an establishment’s register of workers, are compared under contingent workforce. Neither form is outsourcing in its general management sense.

The Ajeer permit, the statutory channel for employee secondment

Article 1 of Decision 60339 defines the Ajeer permit (تصريح أجير) as an approved electronic document issued to the worker through the Ajeer programme to establish that the worker’s presence at another establishment’s place of work is lawful. These are the points of the permit that bear on employee secondment:

• Its term. Under Article 6 of Decision 60339, the permit runs from its date of issue and ends after three years at most, or when the service contract ends, whichever comes first.
• When it is required. Article 6 of Decision 60339 requires a permit whenever the worker who is not a Saudi national is present at the beneficiary’s premises performing continuing tasks. The exception is a single purchase (عملية شراء واحدة), which Article 1 of Decision 60339 defines as one service agreement a year, lasting no more than a month and ending on delivery, with no continuing tasks at the beneficiary.
• Parent and subsidiary companies. Article 6 of Decision 60339 does not permit outsourcing between a parent company and its subsidiaries without an Ajeer permit, in either direction. Common ownership can be taken to make the permit unnecessary, but the text gives it no such effect.
• One worker, one purpose. Under Article 6 of Decision 60339, a permit issued for one worker may not be used for another, nor for any purpose outside the documented contract.

What does not move with the worker in an employee secondment

This is the point at which the costliest errors can arise. Decision 60339 keeps the following with the providing establishment:

• The worker’s rights and duties. They remain governed by the employment contract, the Labor Law and its Implementing Regulation, under Article 4 of Decision 60339.
• The work permit (رخصة العمل). It is issued and renewed by the provider under Article 11 of Decision 60339. Renewal may not be delayed on account of the outsourcing, and any delay or refusal leaves full responsibility with the provider. The renewal process is covered in our guide to work permit renewal for expatriate workers.
• A separate service contract. It does not carry the terms of the contract between the provider and its worker across to the beneficiary, under Articles 4 and 11 of Decision 60339.

Under Article 11 of Decision 60339, disputes between the worker, the provider and the beneficiary are settled in accordance with the Labor Law and the related decisions. Where a settlement cannot be reached, such a dispute follows the same route as any other labour dispute and reaches the labour courts; the stage before a claim is covered in our guide to amicable settlement before the labour courts.

Employee secondment and the beneficiary’s Nitaqat band

Article 11 of Decision 60339 provides that workers who are not Saudi nationals and are registered in the service contract do not affect the band of the beneficiary establishments. They are not counted in the beneficiary’s ratio under Nitaqat (نطاقات), so they do not lower its Saudization ratio. How the band is calculated, and what it governs, is set out in our guide to Nitaqat band classification.

The rule has two limits. It concerns the beneficiary establishment alone: Decision 60339 says nothing about removing those workers from the provider’s band. It is also a rule about the band and nothing else, so it does not extend to registration with the General Organization for Social Insurance, to the count of work permits or to the levy (المقابل المالي), and Decision 60339 is silent on all three.

Employee secondment rules that the Ajeer decision does not contain

Decision 60339 sets no 20% cap on the share of manpower that may be outsourced, and no limit of twelve months within two years. Neither appears in the text of the decision in force, although both circulate in secondary sources about Ajeer. The time limits the decision does set apply to the term of each permit and to the renewal of the service contract, which Article 7 of Decision 60339 allows for no more than three years. For the detailed operating settings of the programme, the reference is the Ajeer platform or the text of the decision.

Where the regulated form of employee secondment stops

The regulated form that corresponds to employee secondment in Decision 60339 concerns the worker who is not a Saudi national; that is how Article 1 of Decision 60339 defines it. A Saudi employee may also go to work for another establishment for a period while their contract stays in force. In the sources we reviewed, we found no text naming a channel, a permit or conditions for that arrangement. The Ajeer rules are not applied to that employee by analogy, and nothing that is left unnamed is to be assumed either permitted or prohibited. Article 39 of the Labor Law applies in every case in its general terms, and it refers to the statutory rules and procedures in force.

An internal assignment between departments of the same establishment is a different matter, and it falls outside employee secondment altogether.

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