Why compliant Saudi private sector companies are facing Nitaqat penalties In 2026

Saudi companies are getting flagged for violations in Saudization hiring mandates they haven't necessarily committed — and bad data is to blame, Mohamed Akkar, the CEO of payroll and compliance platform Jisr, tells EnterpriseAM.

How does this happen? Many establishments are comfortably in compliance with their overall Saudization rate, but are still receiving violation notices, because the 2026 reforms made the calculation far more granular and far less forgiving of messy records, Akkar explains.

REMEMBER- The screws tightened across the board when the new Nitaqat Mutawar cycle began. As we reported in April, the Human Resources Ministry expanded its 100% Saudization mandate to 69 job types and gave companies until 4 October to localize middle-management and specialist roles.

SOUND SMART- Nitaqat — Arabic for “bands” or “zones” — is the Kingdom’s Saudization rating system: companies are scored on their share of Saudi staff against a target set for their sector and size, then sorted into colored tiers. Red means non-compliant, with visa issuance and renewals frozen and expat staff free to transfer to a rival without their employer’s sign-off. The green tiers (low, mid, high) mean compliant, with smoother processing and the right to poach from competitors in the red band. Platinum is the top tier; the 2026 changes scrapped the middle “yellow” tier, so borderline firms now drop straight into red.

The tier system got an update earlier this year: The new three-year phase that took effect in late April (the same ones that scrapped the yellow tier) raised the general salary floor to SAR 4k from SAR 3k, widened profession-level quotas to 269 roles, and made Qiwa contract documentation mandatory from 15 April.

The macro picture says the localization drive is working. The program localized some 550k jobs in three years, we were told in April. Jisr — whose platform handles payroll and compliance for roughly 800k employees, around 7-8% of the private-sector workforce — recorded that 51% of new hires across its client base between January 2024 and June 2026 were Saudi nationals. For a private sector long built on expat labor, that's the balance tipping.

So why the violation notices? Because the expanded profession-specific quotas mean a company can sit in green on its headline rate while breaching in a single department — and since April, only Saudi employees with contracts documented on Qiwa count toward the calculation at all. “When we looked into it, we saw that there were some employees categorized under the marketing department, but the reality was that they were in a different department entirely,” Akkar says.

Retention is now a pressure point, particularly in labor-intensive sectors like retail, where the higher Saudization bar has made local talent harder to both attract and keep, Akkar says. This, in turn, has made offering competitive salaries in the sector a de facto compliance tool.

By the sector: Jisr’s data shows the bulk of Saudi new hires between January 2024 and June 2026 were concentrated in food & beverages (17%), general services (12.5%), retail, wholesale and distribution (11%), construction and building (9%), healthcare and medical services (6%), and contracting (5.5%).

The missing middle: While Jisr is seeing Saudization quotas being filled across employment levels, “the middle layer is historically where we normally see some gaps when looking at the data,” Akkar says.

What’s next: The current Saudization cycle runs through 2028, with the Kingdom targeting more than 340k additional localized private-sector jobs by then, and the Saudization benchmarks are scheduled to rise for most activities over the next two years. A company sitting in in the middle of the green band today can slide toward low green without changing a single hire, which means the data-hygiene problem Akkar describes gets more expensive, not less.