Manpower supply or recruitment? The distinction that decides your liability

Clients ask us for “recruitment” when they mean supply, and for “supply” when they mean recruitment, roughly as often as not. It rarely causes a problem in the first conversation and it frequently causes one six months later, because the two arrangements put the liability in completely different places.

Here is the distinction in the terms that actually matter.

Who sponsors the worker

Under manpower supply, the worker stays on the supplier’s commercial registration. He works on your project under an Ajeer contract registered with the Ministry of Human Resources and Social Development, but he is not your employee and he never appears on your establishment.

Under recruitment, the worker becomes yours. His Iqama is transferred to your sponsorship, he sits inside your Nitaqat calculation, and from that point he is an employee like any other.

Who pays, and who carries GOSI

This follows directly from sponsorship and it is where the money is.

With supply, wages are paid by the supplier through the Wage Protection System from the supplier’s account, and GOSI registration and contributions are the supplier’s. Your exposure to a wage-protection breach on that worker is nil, because he is not on your payroll to breach.

With recruitment, all of it is yours: payroll, WPS compliance, GOSI, and — critically — end-of-service benefit, which accrues from day one and is the cost most often left out of the comparison.

Which one is right

Ask two questions.

How long do you need him, and how certain is that? A four-month structure package is a supply arrangement. A site engineer you intend to keep for five years is a recruitment arrangement, and using supply for it means paying a margin indefinitely on someone who should be on your books.

Do you want the headcount to move? Supply lets headcount follow the programme. That flexibility is the product, and it is why contractors use it — you demobilize with notice rather than with a settlement negotiation.

The comparison that gets made wrongly

People compare the monthly supply rate against a salary and conclude supply is expensive. That comparison is missing GOSI, end-of-service accrual, Iqama and medical costs, recruitment cost amortised over the stay, idle time between projects, and the management overhead of the paperwork.

Run it properly and supply is usually cheaper for anything under about a year, and recruitment is usually cheaper for anything you are confident about beyond that. Where it lands in between depends on how certain your pipeline is — and if you are honest that your pipeline is not certain, that uncertainty has a price and supply is how you stop paying it.

A third option people forget

You can start with supply and convert. If a worker turns out to be good and you want him permanently, the Iqama transfer is a routine process, and any reasonable supplier will handle it rather than obstruct it.

That path is worth asking about at the start rather than at the point you want to use it, because a supplier who resists it is telling you something useful about the relationship.