Saudi Arabia’s Ministry of Human Resources and Social Development, in collaboration with the Insurance Authority, recently launched an insurance product to cover the entitlements of expatriate workers in private sector establishments in case of financial default.
The insurance product aims to protect expats’ financial rights in the event a company defaults and is unable to pay wages for a specified period. The initiative outlines several benefits, including a travel ticket for expatriate workers who wish to return to their home country.
Raising labor market’s attractiveness
The launch of the insurance product is part of ongoing efforts to improve Saudi Arabia’s labor market through policies and regulations. It aims to to secure the contractual rights between workers and employers, and increase the attractiveness and efficiency of the labor market to align with international levels.
The insurance product is one of the ministry’s procedures that seek to protect the rights of both parties in the labor relationship, including the Wage Protection Law and contract documentation.
Coverage of expatriate workers included in the insurance product started on October 6, 2024.
Service benefits
In a recent statement, the ministry outlined the benefits of the insurance product:
- Unpaid wages and entitlements for a maximum of six months prior to the default of the establishment.
- A travel ticket for the worker to return to their country worth SAR1,000 at most.
- The maximum insurance coverage is SAR17,500 per worker. If the total claims exceed the establishment’s insurance coverage limit, the insurance product will provide compensation up to the coverage ceiling for the establishment, distributed proportionally among eligible workers.
The ministry also noted that the insurance will cover monthly wages, allowances, and other entitlements that establishments default from paying. However, it excludes end-of-service benefits.
Who is eligible for the insurance product?
The ministry said that an expatriate worker in Saudi Arabia is eligible for compensation if their employer delays or defaults wage payments for over six months and the delay affects 80 percent or more of the workforce. Expatriate workers are also eligible if this delay happens during the insurance coverage period (12 months from the policy’s start date).
“Workers are not required to leave the country to claim their rights and can claim compensation even if they have transferred to another employer,” added the statement.
As for travel ticket eligibility, 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.
Who is exempted from the insurance product?
The provisions of the insurance product exempt several expat workers in Saudi Arabia, including workers in establishments wholly owned by the government, and workers exempted by the ministry in accordance with the probation period and the date of their arrival to the Kingdom.
The service also exempts domestic workers and their equivalent, seasonal or temporary workers, and members of the employer’s family who work in an establishment comprised solely of them; of whom are the wife, the children, and the offspring of the children.
Other exempt workers include:
- Athletes from sports clubs or sports federations and their coaches.
- Agricultural workers and farmworkers, and their equivalent.
- Non-Saudi workers arriving in the Kingdom for a specific task and for a period of less than two months.
Expatriate workers can verify whether they are covered by the wage insurance service by accessing the following link and entering the residence permit number (Iqama): https://labor.aletihad.sa/.
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How to apply for the insurance product?
In its guidebook, the ministry also outlines the steps expatriate workers in Saudi Arabia must follow to apply for compensation:
- The expatriate worker must submit a compensation claim either personally or through a legally authorized representative to the appointed insurance company.
- Workers must complete the designated compensation claim form, including a pledge and declaration, agreeing not to file any further claims related to the rights and entitlements they have received compensation for from the insurance company.
- The worker must, if available, provide evidence of the most recent wages and entitlements they received from the defaulting company.
- The worker must attach a copy of the employment contract.
- The worker must provide a copy of the documented legal instrument specifying the wages and entitlements they are claiming for compensation.
- A copy of the expatriate worker’s ID or an equivalent document must be included.
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