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New Labor Courts in Saudi Arabia to expedite settlement of labor disputes

May 03,2019

Saudi Arabia launched its first labor court in October 2018 for the first time in history, as part of reforms in the legal system.

 The objective of these new labor courts is to organize the labor market, protect the workers and boost direct and indirect investment. These labor courts are among the latest in the series of specialized courts that was launched by the Kingdom. The specialized courts have been created to new standards for the courts across the Islamic Kingdom.

 In total, there are seven courts established in major cities like Riyadh, Dammam, Makkah, Jeddah, Madinah, Abha, as well as Buraidah. In addition to this, 27 circuit courts were also established in various provinces and the governorates while six appellate courts will be reviewing judgments which are issued by the lower courts. The judges of labor court have vast experience and were trained specially to handle the labor cases.

 Earlier, the labor disputes were under the jurisdiction of the country’s Ministry of Labor and Social Development, while the Primary Commissions for the Settlement of Labor Disputes addressed the employee grievances which lacks real judicial powers. The new structure, which has been approved by the Saudi Supreme Judicial Council, makes way for the labor disputes now to be resolved inside the specialized labor courts, which fall under the Ministry of Justice.

 According to Article 34 of the Law of Civil Procedures, that came to effect before the Shari’a courts, the labor courts exercise jurisdiction over any disputes related to wages, rights, employment contracts, labor injuries, and providing compensation to it. It also deals with disputes related to the imposition of disciplinary penalties by the employers on employee or the exemption thereof; lawsuits applied for executing the penalties created through the labor law; disputes which arise due to lay-off; complaints made by employers and employees whose objections are against any agreed resolution, and issued by any of the competent bodies in the General Organization for the Social Insurance, related to the subscription, registration, or compensation; disputes between employees subject to labor law provisions including the civil servants as well as disputes which arise due to the application of labor law and social insurance laws without any prejudice to the current competencies of other courts as well as the Grievance Board.

 The new labor courts will have procedures that will be entirely digital for expediting the settlement of disputes since labor courts are integrated with all the government bodies which are relevant to the areas of law that considers. The concept of paperless-court reduced procedures which are bureaucratic and also reduced the period for judicial execution orders from two months earlier to 72 hours now.

 According to this new system, the justice ministry categorized the labor cases into three categories like 1) Dispute between employee and employer 2) matters related to the domestic workers, and 3) complaints made by employees as well as employers against the decisions issued by the General Organization for Social Insurance (GOSI) related to the registration, subscription, and compensation.

 In the first set of the category, employer or the employee should be filing a case with the concerned labor office to work for an amicable settlement according to the directives which has issued by the Council of Ministers. In case, there is no settlement within a period of 21 days; the labor offices should be reporting the status of the dispute in an electronic form to the labor court for proceeding with the necessary judicial procedures. It is important to note that the labor minister has recently approved the proposed amendments for rules and procedures regarding arriving at an amicable settlement of the labor disputes. This involves 26 articles and standard definitions of the terms, along with that of proper format for general rules, procedures for sessions, jurisdictions, and regulations for issuing the final verdicts because it is the Labor Ministry which grants the licenses for people while mediating labor disputes. The office of General Administration for Amicable Settlement of Disputes and the Ministry of Justice will coordinate to make arrangements involving the electronic transfer of cases to labor courts in a situation where the two parties are unable to arrive at an amicable settlement to this dispute.

 The labor courts will not be accepting claims which are beyond 12 months old after terminating the contractual relationship which exists between the employer and employee. The courts will be considering such cases only if the claimant can  provide a valid excuse which is acceptable to the court regarding the delay that has occurred in filing the lawsuit beyond the12 month period or if the defendant doesn’t raise any objection to the legal right of the aggrieved party in filing a lawsuit at any period of time and the lawsuit has to be preceded by a complaint made to the labor office for taking up the necessary procedures for amicably settling the case between employee and the employer. In situations where the labor office fails in resolving the dispute, then it will consent for the concerned parties to approach the labor court.

 These labor cases can also be filed collectively by many of the workers in the labor court provided the Supreme Judicial Council gives a ruling against such a move. Labor disputes turn into collective when it arises between the employer and then two or more of his employees. While this case is being considered, there is no right by the employer to modify or alter the terms and conditions of the particular contract.

 In the category of domestic workers, the complaint of the domestic workers or by the employers will be referred to a separate committee for reconciliation within five days. In case there is a failure to settle, this committee will be pronouncing its decision within the next ten days. There are also provisions for appeal against the committee’s decision at the labor court through electronic means.

 Regarding the complaints of workers and employers against the GOSI decisions involves three phases. Firstly, the employee or even the employer has to register the case with the relevant department concerned under GOSI. This is followed by clients who can now appeal the decision by the department to GOSI. If this appeal is overturned, then the employee or employer would be able to approach the labor court.

 Labor courts and panels have commenced exercising their legal jurisdiction vigorously, as stressed in the Civil Procedure Law. The labor courts have notably issued rulings in absentia against those companies which have failed from attending the hearings despite being given electronic summons and the judgments which are now issued are final, and not subject to any contest or appeal.

 Before the labor courts were established, the hearings were being postponed several times when the case defendants failed to appear. With new labor courts being established along with the introduction of electronic subpoena which specifies the time and also the place of the hearing, the case would be considered and taken up, even if the defendant doesn’t appear in court. The labor courts might be issuing their verdicts during the initial session itself especially if the plaintiffs show all the required documents since the courts were started to give the quick ruling on all labor disputes with an objective that the interests of the employees will be safeguarded.

 The decision has identified about six minor types of cases which cannot be legally contested after the first instance court issues a judgment. For example, this includes cases with a financial claim of less than SR20,000, experience certificate request, or the documents of workers kept by the previous employers, and complaints made regarding the decisions of the commissions over domestic employment.

 The labor courts will also be imposing fines against the companies and even establishments which delays the disbursal of employees’ salaries. The penalties represent double the amount that has to be duly paid to the employees. The amount will now be deposited in the Human Resources Development Fund (Hadaf) for supporting the employment of more Saudi citizens in the private sectors. The ministry hopes that the real threat of fines will substantially reduce the situations where employers delay payments of the salaries to their employees.

 Labor courts across the Kingdom of Saudi Arabia have issued more than 1,860 verdicts in January 2019 alone according to statistics posted on the portal of Justice Ministry. It is also important to note that the recent verdicts given by labor courts reflect the protection of employee’s rights while taking into account verdicts like 1) instructing the owner of a medical center for paying the unpaid monthly wages to a nurse who has been on contract from a year. 2) awarding SR1 million in compensation for a Saudi employee after he was sacked from his job without reason, in addition to the unpaid salaries and terminating the end of service benefits. 3) forcing a company towards compensating a female Saudi employee who was removed without reason from her job. 4) ordering a government agency to increase the salaries of five Saudi employees retroactively based on the qualifications and the official salary scale of the agency. 5) ordering a foreign consulate to pay nearly half a million Saudi riyals to a Saudi citizen after it had arbitrarily dismissed from his service after four complete years of work.

 The transfer of the labor courts to the Kingdom’s Ministry of Justice is only the latest episode in the workplace where the specialized justice system is being applied as stipulated in the Saudi Law of the Judiciary.  This strategy is to end the employees’ woes in general and then expatriates in particular as it expedites the quick delivery of justice while adhering to the relevant regulations and also effective judicial processes. It will be ending the protracted court proceedings while resolving labor disputes, even as the new courts would be ensuring the stability, as well as safety, and attractiveness of the local job market in tune with the goals of Saudi Vision 2030.