The Kafala (سُبْسِيّـة الكفالة) system has long been the cornerstone of foreign labour regulation across the Gulf Cooperation Council (GCC) countries—particularly in the Kingdom of Saudi Arabia. Essentially a sponsorship regime, it ties a migrant worker’s residency and employment status to a local sponsor (known as a “kafeel”). Introduced in the 1950s during the early oil-driven labour expansion, the system gave employers broad control over migrant workers: the right to hire, dismiss, approve exits, and transfer sponsorship. Critics have described the Kafala system as legally enabling exploitation, restricting mobility, and at times resembling modern-day bonded labour.

In Saudi Arabia, the Kafala regime operated through the “iqama” (residence permit) under which a foreign worker’s visa, job change, exit/re-entry, and even re-employment required the kafeel’s approval. The system was intended to manage the inflow of labour while retaining employer oversight—but over decades it became a subject of mounting criticism by international labour organisations, non-governmental organisations (NGOs), and worker rights advocates. Issues such as confiscation of passports, delayed or withheld wages, inability to change jobs, and restricted movement were repeatedly flagged. Business Today+2Business Standard+2⁣
⁣
While the Kafala system served as a regulatory framework for decades, its legacy contributed to structural power imbalances in the labour market and hindered migrant worker mobility. As Saudi Arabia pursues its ambitious Vision 2030 agenda—focused on economic diversification, improved labour standards, and a more open investment climate—the Kafala system has come under intense scrutiny, leading to rumours and legislative shifts. This article explores what the Kafala system entailed, how Saudi Arabia has moved to end or reform it, the 2025 updates, and whether the regime is truly abolished.

Saudi Arabia Ends Kafala System

Saudi Arabia’s decision to end (or at least fundamentally reform) the Kafala system marks a watershed moment in Gulf labour policy. In 2025, reports emerged that the kingdom had officially abolished its decades-old Kafala sponsorship system. According to international media, this move aims to grant greater autonomy and protection to more than 13 million foreign workers. prameyanews.com+1⁣
⁣
The reform announcement—formally declared around June–October 2025—coincides with Saudi Arabia’s larger labour reforms and global engagement on migrant rights. Under the new model, workers are purportedly able to change jobs more freely, exit and re-enter the country without requiring their employer’s approval, and access grievance mechanisms and labour courts. The Saudi Press Agency and related outlets reported that the old sponsorship model had been dismantled as part of the Ministry of Human Resources and Social Development’s (MHRSD) workforce strategy. Saudi Press+1

While the official narratives highlight the end of the Kafala system, implementation will be key. The abolishment is often framed as enabling a contract-based employment model, rather than a sponsorship-only model. Workers who formerly were tied exclusively to one employer may now have greater mobility, though critics continue to caution that practical constraints and company practices may still restrict full freedom. Business Today+1⁣
⁣
By abolishing Kafala, Saudi Arabia aims to enhance its reputation as a global hub for talent and investment, align with international labour standards, and underpin its Vision 2030 goals. EURASIAN TIMES

Kafala System in Saudi Arabia 2025 Update

What Has Changed?

As of 2025, the most significant updates to the Kafala system in Saudi Arabia include:

• Transition from sponsorship (kafeel-based) to contract-based employment. Workers are increasingly hired under fixed or renewable contracts rather than being tied to one sponsor. SAUDI ARABIA BREAKING NEWS+1

• Removal or reduction of exit/re-entry visa requirements in many cases. Migrant workers no longer universally need employer permission to leave or re-enter the country. Business Standard+1

• Enhanced ability for workers to transfer jobs or change sponsors, often via electronic systems like the “NAQAL” (transfer) system or platforms like Qiwa. YouTube+1

• Expanded access to labour courts, complaint mechanisms, and monitoring of employer compliance—part of a broader effort to enforce rights and reduce abuse under the system. Amnesty International

• Introduction of digital wage monitoring, improved contract transparency, and stricter penalties for employer misconduct under MHRSD reforms. EURASIAN TIMES

• Implementation and Scope

  According to Business Standard and other sources, the reforms benefited around 13 million migrant workers, including large numbers from India, Pakistan, Bangladesh, Nepal and the Philippines. Business Standard+1
  ⁣
  However, despite the legislative announcements, practical implementation remains a focus of monitoring. Some workers on forums report that aspects of the old system persist or that employer cooperation is still required. Reddit+1
  ⁣
  Notably, certain sectors such as domestic workers, low-wage labour, and small contractors may see slower rollout of full freedoms compared to large corporate assignments. Human rights reports caution that without full enforcement, some elements of Kafala—such as employer control over passports or job change—could still linger. Amnesty International

Is Kafala System Abolished in Saudi Arabia?

The short answer: Yes, officially—but with caveats.
Saudi Arabia has officially declared the end of its conventional Kafala system and framed the new era under contract-based labour. But many observers note that the transition is ongoing and practical realities still vary.

Official Stance

• Media outlets state that the system was abolished “in a landmark reform” in 2025. India Today+1

• Legislative and regulatory changes reflect the end of sponsorship with unlimited employer control and the freedom to change jobs and exit the country without employer consent. Business Today

Practical Reality

• Workers still report needing employer cooperation to transfer jobs or exit the country in some cases. Reddit

• Some companies or sectors may continue applying old practices due to inertia, lack of enforcement, or contractual fine print. Reddit

• The reforms are part of a broader “labour market modernisation”, meaning full abolition of all features of Kafala may take time and oversight remains necessary.

Bottom Line

While the formal Kafala system is abolished, the actual experience of migrant workers will depend on how the contract-based model is applied, how quickly employer practices shift, and how effectively rights-monitoring mechanisms work. For employers, recruitment agencies, and workers, it is essential to stay informed of the new rules, check compliance, and adapt to the evolving landscape.

Why the Change?

International Pressure & Reputation

Saudi Arabia faced intense criticism from the International Labour Organization (ILO), human rights groups, and foreign governments for the Kafala system’s exploitative aspects. The move to abolish it is also part of improving the Kingdom’s global labour reputation ahead of major events, foreign investment drives, and its hosting of mega-project infrastructure. AP News
⁣

Vision 2030 & Economic Reform

Prince Mohammed bin Salman’s Vision 2030 blueprint emphasises economic diversification, localisation of the workforce (Saudisation), and modernising labour laws. Reforming the sponsorship model was a necessary step to facilitate a more open, skilled, and mobile foreign workforce. EURASIAN TIMES
⁣

Talent Attraction & Mobility

In a global labour market, Saudi Arabia must attract high-skilled workers and enable more dynamic deployment of talent. Abolishing Kafala helps reposition the Kingdom as an employer of choice rather than a restrictive environment. SAUDI ARABIA BREAKING NEWS

Reducing Exploitation & Enhancing Rights

By giving workers greater mobility and access to complaint mechanisms, the reform aims to reduce instances of wage theft, job-lock, forced labour, and other abuses linked with the old system. Amnesty International

Key Features of the New System in 2025

Contract-Based Employment

Under the reformed model, employment is increasingly determined by a contract between the worker and employer, rather than tied indefinitely to one sponsor. The contract may be renewable or fixed-term and specifies rights, duties, termination conditions, and mobility provisions.
⁣

Job Mobility & Sponsor Transfer

Workers can now change employers or sponsors more freely, often via platforms like Qiwa and without needing the old “kafeel” permission (though employer objections may still delay matters). YouTube
⁣

Exit & Entry Freedoms

Exit/re-entry visa requirements have been relaxed; many workers can leave the country or return without needing explicit employer approval. This freedom reduces dependence on the employer for exit permissions or final-exit decisions. Business Standard
⁣

Enhanced Rights & Monitoring

New systems for wage monitoring, grievance tools, labour court access, and oversight mechanisms empower workers to file complaints and ensures employers adhere to proper practices. Amnesty International
⁣

Digitalisation & Transparency

Many formerly manual processes—such as sponsorship transfers, contract registration and monitoring—are digitised, offering greater transparency and traceability in the labour market. SAUDI ARABIA BREAKING NEWS

What This Means for Migrant Workers and Employers

For Workers

• More autonomy over job changes and leaving the country.

• Better rights protection, ability to resort to labour courts if needed.

• Less dependency on one employer for sponsorship, exit visa or change.

• Potentially better negotiating power on contracts and working conditions.

For Employers & Agencies

• Referral agencies and employers must comply with new contract-based frameworks and digital oversight.

• Employers need to ensure contract clarity, legal compliance, payroll digitalisation and proactive rights-compliance.

• Recruitment agencies must stay updated on the new mobility rules, job-change requirements, and exit-/final-exit regimes.

• It is crucial to mitigate transition risk: old practices may still legal hold for existing contracts, and change management is required.

For Saudi Labour Market

• Potential increase in foreign worker mobility, which may lead to more competitive wages, improved skills deployment and improved productivity.

• Better international image for Saudi Arabia as a progressive employment destination.

• Strengthening of Saudi Vision 2030 goals in shifting from low-cost labour to skills, productivity and localisation.

Challenges and Transition Issues

Existing Contracts & Legacy Arrangements

Workers still bound by older contracts may have limited mobility until contract expiry. Transition rules and grandfather-ed conditions may apply.
⁣

Employer Resistance & Practical Implementation

Some employers may resist full mobility due to perceived loss of control, administrative burden, or cost concerns. Reports suggest some aspects of “kafeel” influence persist in practice. Reddit
⁣

Enforcement & Monitoring Gaps

Legislation is one thing; effective enforcement is another. NGOs warn that sectors like domestic work, low-wage labour, and labour-intensive industries may not fully see change without strong monitoring. Amnesty International
⁣

Worker Awareness & Access

Migrant workers must be aware of their new rights and processes. Language, legal literacy, and access to grievance mechanisms are important.
⁣

Recruitment Agency Adaptation

Agencies used to the old system must adapt to new compliance, worker mobility, and contract frameworks. This may require training, system upgrades and re-design of recruitment operations.

Looking Ahead: What’s Next?

As of 2025, Saudi Arabia’s labour market reform is in full process. Looking ahead:

• Full abolition of all residual sponsorship features may occur by the end of the decade.

• Greater reliance on skill-based visas, “Green Card”-style residency, and premium-visa models to attract highly skilled talent. EURASIAN TIMES

• Continued digitalisation—platforms like Qiwa will increasingly manage job mobility, contract registration and worker rights.

• Stronger alignment with international labour standards, especially ahead of mega-event infrastructure projects (e.g., the 2034 World Cup).

• Potential for wage increases in certain mobility-enhanced sectors, improved working conditions, and elevated status of long-term expatriate workforce.

10 Frequently Asked Questions (FAQs)

1. What is the Kafala system in Saudi Arabia?
The Kafala system is a sponsorship regime where migrant workers’ residency and employment are tied to a local employer (kafeel). It restricts job mobility, exit/entry and gives employers broad control.

2. Has Saudi Arabia abolished the Kafala system?
Officially, yes. In 2025 Saudi Arabia announced that it ended the traditional Kafala system and moved to a contract-based employment framework. prameyanews.com+1

3. What changes do migrant workers see under the new system?
Workers can transfer jobs more freely, exit/re-enter without employer consent, access labour courts and are less tied to one sponsor. Business Standard

4. Are there any residual aspects of the old system?
Yes. Some employer practices and old contracts still operate under aspects of the old system; full practical freedom may vary by sector. Reddit

5. How will this affect recruitment agencies?
Agencies must adapt to contract-based hiring, digital monitoring, job-change rules, and ensure legal compliance and portability of workers.

6. Do workers still need an “exit visa”?
For many jobs the exit/re-entry visa requirement has been relaxed. However, practical implementation may differ across sectors. Business Standard

7. Can workers change jobs without employer approval?
Yes—under the new reforms job transfers are permitted without the kafeel’s (former sponsor) consent in many cases, though procedural steps may apply. YouTube

8. Does this mean workers are now fully free?
While legal rights are significantly improved, actual conditions vary; employer cooperation, contract terms, sector specifics and implementation affect how “free” workers are in practice.

9. Why did Saudi Arabia implement these reforms?
To modernise the labour market, improve migrant worker rights, attract skilled talent, align with Vision 2030 goals, and depend less on low-cost, tied labour. EURASIAN TIMES

10. What should employers and workers do now?
Employers: Ensure compliance, contract clarity and digital registration. Workers: Know your rights, check contract terms, monitor job-change options, and register grievances if needed.