Forces enabling the transfer of employees from closed institutions: details and steps

In an important regulatory step aimed at addressing labor market challenges and improving the business environment in the Kingdom of Saudi Arabia, informed sources revealed to Okaz that the “Qiwa” platform, the digital arm of the Ministry of Human Resources and Social Development, has launched a new service targeting owners of individual establishments who face the dilemma of canceled commercial records with professional workers still registered under their sponsorship.

The new service mechanism in the Qiwa platform

The new mechanism allows business owners to open multiple profiles for their establishment within the platform, even if the commercial registration has been cancelled. However, the ministry has established specific controls to ensure this procedure is used correctly; the new profile will be used exclusively for the "employee transfer" service from the cancelled establishment to another existing and legally registered establishment.

The platform clarified an important technical detail: the new file will be classified as "penalized." This procedural penalty entails the suspension of all expansion and recruitment services, with the exception of employee transfer services. This restriction aims to encourage employers to focus on rectifying the status of their stranded employees. The platform confirmed that once the transfer process is complete and the file associated with the canceled record is closed, the penalty will be lifted from the new file, allowing the user to fully utilize all platform services thereafter.

Context of regulating the business environment and the five-year grace period

This step aligns with the regulatory efforts led by the Saudi Ministry of Commerce, which previously announced the need for merchants to rectify the status of their branch commercial registrations. The Ministry granted a five-year grace period from the effective date of the new system, which is set to expire on April 3, 2030. After this date, branch registrations will be automatically cancelled, with the merchant given a brief period (60 days) to retain or dispose of the trade name.

Options for correcting business records

To facilitate business operations, the relevant authorities have identified three main mechanisms for rectifying the status of sub-registries, namely:

• Converting the subsidiary registry into a new, independent company.
• Transfer of ownership of the sub-registry to another owner (legal or individual) not registered in the current registry.
• The branch record was permanently cancelled and its obligations were settled.

The ministry also clarified that the licenses and approvals associated with these records will be transferred according to the type of action taken, whether to the new company or the new owner, in order to ensure business continuity and preserve the rights of creditors.

Economic and organizational importance

These measures are of paramount importance within the framework of the Kingdom's Vision 2030, as government entities strive to eliminate commercial concealment and regulate the contractual relationship between workers and employers. Allowing the transfer of employees from closed establishments resolves a significant legal and humanitarian issue, preventing workers from violating residency regulations due to business closures, and protecting employers from accumulating fines and government fees. This digital integration between the Ministry of Human Resources and the Ministry of Commerce reflects the move towards a smart e-government that removes obstacles for the private sector and guarantees the rights of all parties.