Regulating Labor Accommodation in KSA

The onset of the pandemic accelerated organizations’ response to health and safety issues, of which the de-densification of overcrowded spaces is paramount. To this extent, the Ministry of Municipal, Rural Affairs and Housing (MOMRA) in Saudi Arabia issued a series of new laws to regulate and standardize labor accommodation across the Kingdom.

Stakeholders from both the private and public sectors were issued detailed guidelines specifying where labor accommodation is to be located, away from residential districts but within the city boundaries. The measures also aim to ensure access to essential health services, fresh water, light and amenities, such as equipped kitchen and dining halls, is met.

The revised regulations also emphasized the need for more space per bed for each individual, where individuals live in separate rooms, or a maximum of 4 people are allocated to a room with a minimum space of 4.8 square meters per person. Space would allow for social distancing, even when several residents are in the same room. Health protocols also call for regular sterilization and cleaning of the facility and the availability of soaps and sanitizers. Lastly, the new protocols call for the presence of a health specialist, or a contract with a specialized company, to combat public health disasters.

Undeniably, the improvements in living standards are a welcome move and in line with the Kingdom’s overall strategy of improving its citizens and residents' quality of life. While it may appear as a challenge to reassess and restructure operations, it provides opportunities for both developers and landowners.

On the face of it, these regulations may impose several challenges on business owners. For starters, existing facilities may need to incur capital expenditure to rebuild or restructure the facilities to suit the new regulations. Also, requiring more space per bed would mean owners have to charge higher rents to make up for the loss of revenue due to the decline in the number of residents per room.

From a legal perspective, contract terms may require an amendment while the facilities are being refurbished. This would mean they are temporarily vacated until changes are accounted for. Since the law also includes specifications on location, this poses further pressure on business owners since they will need to move their staff and laborers from their current locations and find new facilities or use existing facilities that adhere to the criteria.

Having these new, improved regulations presents landowners and developers with several opportunities. Current labor accommodation facilities may be demolished and re-developed based on the highest and best use of the land to ensure maximum value taking into consideration current market conditions and future potential. Besides that, with the current shortage of high-quality labor facilities, institutional clients may use this opportunity to buy new land, or use existing ones, to develop quality labor accommodation to cater to the upcoming demand. Alternatively, and to mitigate risks, companies may take accommodation spaces in third party specialized facilities.

In summary, the COVID-19 pandemic presented a risk to all members of the community, especially those who live in densely populated accommodation camps where the virus transmits faster. The labor accommodation laws follow the government’s wider contingency plan to improve the quality of life for all its residents through prioritizing their health and wellbeing.