Executive Summary
Groups operating in Saudi Arabia should reassess arrangements under which their non-Saudi employees work from the premises of subsidiaries, affiliates or joint ventures. New rules issued by the Ministry of Human Resources and Social Development (MHRSD) now expressly regulate many of these arrangements and, in many cases, require Ajeer permits.
Overview
The MHRSD has issued the Rules Regulating the Outsourcing of Services Between Establishments through the Ajeer Program under Ministerial Resolution No. 60339 (the Rules), which came into force on 26 January 2026.
The Rules are important for groups that deploy non-Saudi employees across multiple Saudi entities, particularly in shared-service or support-function models. They clarify when non-Saudi employees may work from the premises of another legal entity while remaining employed by their original employer, and they materially narrow the scope for informal intra-group arrangements that have historically been common in the market.
What Changed Now?
Article 39 of the Saudi Labour Law prohibits non-Saudi employees from working for any entity other than their legal employer, and prohibits employers from allowing their non-Saudi employees to work for others or hire non-Saudi employees of other employers, except in accordance with the applicable legal procedures.
In practice, many groups have historically operated on the basis that employees ofone entity could provide ongoing support services to another group company fromthat company’s premises under an intercompany services arrangement. This was common for finance, legal, HR and other centralised functions. However, the legal treatment of those arrangements was not always clear, particularly where no Ajeer permit had been obtained.
The Rules regulate what they describe as internal outsourcing of services between two legal entities. Broadly, this covers an arrangement where:
- one entity agrees to provide a specific service to another entity for a defined period;
- non-Saudi employees of the service provider are physically present at the receiving entity’s workplace;
- the service provider remains responsible for managing and supervising those employees; and
- payment is linked to agreed outputs or deliverables, rather than hours worked by individual employees.
This is the model most likely to capture many existing intra-group service arrangements.
Implications of the Rules
The practical implications of the Rules include the following:
1. Ajeer permits may now be required for intra-group service arrangements.
Where a non-Saudi employee performs continuous or recurring work at the premises of another legal entity for a specified period, an Ajeer permit is required. The Rules expressly contemplate this in the context of parent companies, subsidiaries and other controlled entities.
2. The Contracting Division is now broader in scope.
Previously, use of the relevant Ajeer route for service arrangements was generally limited to specified sectors. The Rules appear to remove that sector-based limitation, meaning a wider range of companies can now use the Contracting Division under Ajeer.
3. There is a limited short-term exemption.
An Ajeer permit is not required where the relevant activity is a single defined service lasting no more than one month in a year and does not involve ongoing or recurring work at the receiving entity’s premises.
4. Multiple permits may be issued.
The Rules contemplate that a non-Saudi employee may hold more than one Ajeer permit at the same time in relation to services provided to different entities.
5. Additional compliance conditions apply.
These include employee consent (unless already covered in the employment contract) and compliance with other MHRSD requirements, including wage protection, work permit and establishment data requirements.
Services versus Secondment
A key issue for many businesses will be whether an arrangement is properly characterised as outsourcing of services or as workforce outsourcing / secondment.
That distinction is important because the Rules focus on the former, not the latter.
Outsourcing of services
This is the model addressed by the Rules. It is characterized by:
- supervision and management remaining with the service provider;
- employees attending the other entity’s premises to deliver services on behalf of their employer; and
- payment being linked to outputs or deliverables.
Workforce outsourcing / secondment
By contrast, a secondment typically involves:
- the receiving entity directly supervising the worker;
- the worker being integrated into the receiving entity’s operations;
- the receiving entity evaluating performance and providing tools and materials; and
- payment being based on time worked or labour rates.
Secondments do not appear to fall within the scope of the new Rules. However, they remain subject to the broader restrictions under Article 39 of the Labour Law and should continue to be processed through the Employee Secondment Division under Ajeer. This means they still require registration, albeit through different forms.
Risks
The Rules do not appear to make an intercompany services agreement contractually invalid simply because it has not been registered through Ajeer. However, if the arrangement involves non-compliant deployment of non-Saudi employees, it may still constitute a labour law breach.
In that case, both entities may face regulatory exposure, including on the basis that:
- one entity allowed a non-Saudi employee to work for another without proper authorisation; and/or
- the receiving entity engaged a non-Saudi worker who was not authorised to work for it.
These breaches may lead to fines, inspection issues and other enforcement consequences. Risk is likely to increase where multiple employees are involved, and employees themselves may also be exposed to penalties.
Early compliance planning and proper use of the Ajeer platform will be key to managing labor law risk and ensuring the continued operability of services arrangements going forward.
Companies with intra-group operating models in Saudi Arabia shouldnow review existing arrangements, particularly where non-Saudi employees are working on-site at another group entity or joint venture. Priority actions include:
- identifying non-Saudi employees who regularly work from another entity’s premises;
- assessing whether each arrangement is properly classified as service outsourcing or secondment;
- obtaining Ajeer permits where the Rules apply and no exemption is available;
- updating intercompany services agreements to align with the new framework;
- ensuring employment contracts contain appropriate consent language; and
- confirming that workplace, branch and location records accurately reflect where employees actually perform their work.
K&A’s advisory team would be happy to assist.
