Saudi Arabia Abolishes Kafala System, Introduces New Digital Contract Framework for Expat Workers

In a landmark move to safeguard the rights of millions of expatriate workers, Saudi Arabia has rolled out sweeping labour reforms, replacing the decades-old Kafala (sponsorship) system with a modern, contract-based framework. The new regulations, implemented through digital platforms such as Qiwa and the Wage Protection Program, mark a historic shift in the kingdom’s approach to managing its vast foreign workforce.

Under the previous Kafala model, employers—known as Kafeels—held extensive control over their employees, including the authority to terminate contracts, restrict job changes, and even block workers from leaving the country. With the new system, such powers have been curtailed, ensuring a more balanced employer-employee relationship.

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Through the Qiwa platform, all employment contracts are now digitally recorded, reviewed, and approved by both parties. Each contract is automatically linked to the Ministry of Human Resources’ database, ensuring full transparency and legal protection. If the contract duration is not explicitly stated, it defaults to one year, renewable by mutual consent. Workers can transfer to new employers or return to their home countries upon contract completion without requiring prior approval.

The reforms also allow employees to serve a notice period if they wish to resign, while employers must follow a formal process for termination. This system, widely praised as a “game changer,” has already reduced disputes and brought clarity to labour relations.

Complementing this digital framework is the Wage Protection Program, which electronically tracks salary payments across the private sector. If wages are delayed, the system alerts authorities, and affected employees are permitted to switch jobs without penalties. The measure is seen as a strong deterrent against exploitation and non-payment of wages—a persistent issue under the old regime.

Saudi Arabia’s decision to dismantle the Kafala system, announced in June 2025, comes after decades of criticism from international rights groups and labour organisations. Introduced in the 1950s, the system was originally designed to regulate the influx of foreign labour essential to the kingdom’s oil-driven economy. Over time, however, it became a source of exploitation, with reports of withheld salaries, passport confiscations, and severe restrictions on mobility—conditions often compared to “modern-day slavery.”

The International Labour Organization (ILO) and other global watchdogs had long urged Gulf nations to reform their labour frameworks. With approximately 13.4 million migrant workers—accounting for 42 percent of the population—Saudi Arabia’s dependence on foreign labour has been immense. Workers from India, Bangladesh, Nepal, and the Philippines form the backbone of sectors like construction, agriculture, and domestic services, where abuses were most rampant.

The abolition of the Kafala system is part of Crown Prince Mohammed bin Salman’s ambitious Vision 2030 initiative, aimed at economic diversification and improving the country’s global image. By moving to a contract-based model, Saudi Arabia seeks to align its labour laws with international standards, enhance investor confidence, and make the kingdom a more attractive destination for skilled talent.

Under the new framework, migrant workers now have the freedom to change employers without their current sponsor’s consent and can leave the country without an exit visa—ending a decades-old restriction. Expanded access to labour courts and complaint mechanisms also ensures faster redressal of grievances.

The reforms are expected to transform the lives of more than 13 million expatriate workers and reshape the labour landscape of the Gulf. For many, it marks the beginning of a new era—one where rights and dignity finally replace control and dependency.