In a major change for labour rights in the Gulf, Saudi Arabia has officially ended its long-standing Kafala system. This system had tied the legal status, employment and residency of the migrant workers to their employers. The announcement was made public in June 2025 and is now being put into effect. Approximately 13 million migrant workers in Saudi Arabia, many from India, Bangladesh, Nepal and the Philippines, will be affected.
The Kafala system, which comes from the Arabic word “kafala” meaning sponsorship, began in the 1950s. It was created to manage a large influx of foreign labour in oil-rich Gulf economies. Under this system, each migrant worker had to be linked to a local sponsor or employer, known as a Kafeel. This sponsor controlled the worker’s visa, residency, job transfer and exit rights. Over time, human rights organizations and labour advocates widely criticized the system for allowing exploitation. This included practices like confiscating passports, delaying or withholding wages, blocking job changes, preventing exits from the country and limiting access to legal recourse.
The decision to dismantle this system is part of Saudi Arabia’s broader reform agenda, known as Vision 2030. This initiative aims to diversify the economy away from oil, improve labor productivity, attract foreign investment and enhance the kingdom’s global image. International pressure also played a role. The global outcry over migrant labor abuses in the Gulf, especially following large events like the 2022 FIFA World Cup in neighboring countries, pushed for these reforms.
Several key changes stand out under the new labour framework. Workers can now change employers without needing their sponsor’s consent, which is a significant shift from past practices. They will also be able to exit the country without approval from their sponsor or needing an employer-issued “exit visa”. Access to labour courts and complaint processes will also improve. Migrant workers will no longer be stuck under a single employer’s control; they will now have more freedom and better legal protection.
For Indian migrant workers, this reform has significant implications. India sends a large number of laborers to Saudi Arabia, with hundreds of thousands working in sectors like construction, hospitality, domestic work and healthcare. The end of the Kafala system allows these workers to negotiate jobs or switch employers more freely. They can leave abusive situations without facing penalties and travel home or abroad without bureaucratic obstacles related to sponsors. Many Indian workers previously dealt with poor conditions, unpaid salaries and confiscated passports. This reform could greatly improve their daily lives.
However, while this reform is a bold move, several important points must be considered. Changes in the law are only one part of the equation; how these laws are enforced will affect how much daily life improves for individual migrant workers. Rights groups warn that there might still be a significant gap between what the laws say and what happens in reality. Some employers may continue to exert undue control on vulnerable workers, like those in domestic roles, might still face risks not fully addressed by the new laws.
It’s also important to note that while Saudi Arabia has ended the Kafala system, other Gulf states still maintain similar systems or have implemented only partial reforms. For Indian workers abroad, this means that even if Saudi Arabia provides a better environment, careful and informed decision-making will still be crucial for migration to the larger region beyond Saudi Arabia.
From the viewpoint of the Indian government and labour-sending states, this reform should lead to renewed engagement. Pre-departure training, clearer contracts, better mechanisms for complaints and coordination with Saudi labour authorities will all be important. For Indian workers already in Saudi Arabia, understanding their new rights is essential. Knowing that they can change jobs and do not need to give consent will be key to empowering them. Employers will be more required to follow formal contracts rather than informal agreements.
Economically, this reform can benefit both parties. For Saudi Arabia, a more open labour market can boost productivity, attract better skills and improve workplace conditions, aligning with its goals to diversify the economy. For migrant workers, including Indians, improved rights can reduce abuse, increase job mobility and potentially lead to better wages and living conditions.
Ending the Kafala system in Saudi Arabia marks a historic shift in the employer-sponsored labor model that has affected millions of migrant workers for decades. Indian workers in the kingdom will gain meaningful freedom, including the ability to switch jobs, leave the country and seek legal help. Yet, the ultimate impact will depend on how well the new laws are enforced, how informed and supported the Indian workers are, and how strong the connections become between Indian states and Saudi authorities will be in protecting migrant rights. This reform is a significant milestone, but it also begins a new phase where laws, practices and enforcement must work together to ensure dignity and protection for migrant workers.
