Contractor’s Social Insurance

Social insurance is an obligatory system enforced by governments to protect workers (regular – irregular). The system is applied by the employer whereby they deduct a percentage of the employee’s salary each month and pay it to the social insurance as a protection to the Employment, whether regular or irregular, from the dangers of work.

Relevant Laws, Regulations, and Decisions

1. Social Insurance and Pensions Law No. 148 of 2019 and its amendments.
2. Prime Minister’s decree No. 2437 of 2021 regarding issuing the executive regulation for the Social Insurance Law and its amendments.
3. Law No. 12 of 2003 promulgating the Labor Law.
4. Resolution of the Minister of Manpower and Immigration No. 162 of 2019 regarding issuing financial and administrative regulations for the employment, care, and protection of irregular workers (contracting, agricultural, seasonal, and temporary Employment and the like).

What is the Contractor’s Social Insurance?

It is a sector regulated by the National Organization for Social Insurance “NOSI” Law no 148 of 2019 that imposes subscriptions on any construction contracts, whether governmental, or non-governmental, or private sector.

NOSI calculated the percentages from these contracts based on the types of works in each contract. These are percentages are stated in the executive regulation for the Social Insurance Law No. 2437 of 2021 and are imposed on all companies operating in the contracting sector based on uninsured (temporary) workers, and the contractor is obligated to open a social insurance file in the contracting social insurance office where the contract is executed and determine the subscription percentage of the work that shall be executed.

The Contractor’s Social Insurance according to the abovementioned Laws

• The contractor is obligated to notify the Authority of every contract he carries out before starting execution and of every change that occurs in the size of the contract. He shall attach to this notification a copy of the contract, operation order, supply order, invoice, the approved bill of quantities, and other documents, as the case may be, and this specification shall be reviewed at the conclusion of the works.
• In addition to the contractor’s obligation to submit the abovementioned documents before NOSI, the contractor is obligated to pay to NOSI the due subscriptions for each payment or extract due to be paid no later than the first of the month following the receipt of notification of the payment.
• As per article (144) of Law No. 148 of 2019 states that: “Anyone who assigns the implementation of any work to a contractor is obligated to notify the Authority of the contractor’s name, address and information about the operation at least seven days before the start of work, and not to pay any dues to him before he submits evidence of payment of social insurance subscription for these works. The contractor shall be jointly responsible for the work in fulfilling the obligations stipulated in accordance with the provisions of this law in the event of his breach of the aforementioned obligations”.
• Which means that anyone who entrusts the implementation of any work to a contractor is obligated to notify the Authority of the contractor’s name, address and information about the operation on Form #42 at least 7 days before the start of work, The contractor shall be jointly responsible for the work in fulfilling the obligations stipulated in accordance with the provisions of this law in case of his breach of the aforementioned obligations, and the competent authorities issuing construction or demolition licenses, or registering violations thereof, are also obligated to provide the Authority with the licensing data, the name and address of the contractor who is implementing it, or the name and address in which the violations were issued within the period referred to in the previous paragraph, in case the contractor breaches any of these obligations, the works contractor is considered to be in solidarity with the contractor regarding the fulfillment of those obligations.

According to Article (204) of the aforesaid executive regulation “The contractor is obligated to provide the Authority with the following:

1. A monthly statement of all workers in the operation subject to the provisions of this chapter in accordance with Form No. (39) attached.
2. Subscription number for subcontractors (if any).
3. Project plan (duration – stages – number of workers for each stage).

In light of this, the Authority must open an insurance file for uninsured workers and register them”.

Article (206) of the same regulation, obliges the assignor to:

1. Notify the Authority of each contracting operation or any change or amendment that occurs to it before the start of implementation of the contract or change or amendment, provided that the notification is accompanied by the acknowledgment submitted by the contractor stating his commitment to insure all workers in the contracting process in accordance with the provisions of Article (23). From Law No. 182 of 2018 regulating contracts concluded by public entities.
2. The notification document shall state the contractor’s name, address, and insurance number, the name of the person to whom the contracting process is assigned, his insurance number, the location of the contract, its total value, and the value of the change, as the case may be. An exact copy of the contracting contract written in Arabic shall be attached to this notification.
3. Notifying the Authority with a statement of each payment or extract due for disbursement, indicating the date on which the contractor received the due notice, as well as the conclusion of the process.
4. Suspending the disbursement of each payment or extract, or disbursing the final payment according to the closing of the works, upon the contractor’s submission of the certificate proving the payment of the Authority’s dues for the contract. If the contractor fails to comply with any of the above obligations, he will be jointly responsible with the contractor for paying the subscriptions and additional amounts due in accordance with the provisions of Article (144) of the law.

Article (214) of the Executive Regulations exempted some works, stating that:

Without prejudice to the provisions of Articles No. (203 and 206) of these regulations, the provisions of this chapter do not apply to the following operations:

1. Operations carried out by the state’s administrative apparatus, public bodies, local administration units, public sector units, and the public business sector itself.
2. Operations for which the employer submits a request to be exempted from paying contributions in accordance with the provisions of this chapter during implementation and before the end of the operation if the committee formed in Article (217) of these regulations deems that, according to their nature and size, they are carried out with the employer’s permanent employment.
3. Supply or leasing operations if the role of the supplier or lessor under the supply or leasing contract is limited to merely supplying or providing the thing being rented.
4. In the operations stipulated in clauses (1, 2, 3) it is required that the implementing entity participate on behalf of the workers working for the Authority in accordance with the standard subscription rules.
5. Operations of residential buildings in which reinforced concrete is not used, whether in foundations or columns.
6. Operations of places of worship that are carried out through personal efforts and are not part of a building used for purposes other than worship. Self-employment means volunteering to work in the construction of the building without pay and not donating the value of the financial cost.

A decision shall be issued by the Chairman of the Authority to determine the maximum cost of the operations referred to in Clauses (4, 5) of this Article.

Labor Law no. 12 for 2003 enforcements and the Minister of Manpower Decision no. 162 of 2019:

According to Article 6 from Decision No. 162 for 2019 subject that “The employer who employs workers subject to the provisions of these regulations must notify the competent department of the directorate, within whose jurisdiction the work site is located, and his employment data, within a maximum of ten days from the date of starting work at that site”.

Types of irregular employment

1. Contracting Employment.
2. Sea Employment.
3. Miners and Query Employment.
4. Seasonal Agricultural Employment.

It is clear to us in regard to the social insurance that it is a mandatory system imposed by governments to protect workers (regular and irregular), and employers implement it through applicable Laws, Regulations and Decrees to insure the worker, whether regular or irregular, from the dangers of work and ensure a decent life for the worker.