In this briefing, our employment partner, Gorvinder Pannu, considers the recent announcement made on 31 December 2020 by the Oman Ministry of Labour extending the financial assistance to be offered to employers. 

In recognition that businesses in Oman continue to suffer from financial hardship arising from the on-going Covid 19 pandemic, the Ministry of Labour has announced an extension to the financial measures to be made available to private sector employers to alleviate some of the pressures they face. A number of these measures were first introduced by the Supreme Committee for Dealing with Covid 19 in April 2020 (as reported in our earlier article)

The extended measures include:

• permitting employers to negotiate salary reductions with employees for a maximum period of three months, subject to a commensurate reduction in working  hours, provided that the employees have first utilised their annual leave entitlement (at full pay);
• a reduction to the labour clearance fees for expatriate employees from OMR 301 to OMR 201;
• removal of fines (for first offences) for the period 15 March 2020 to 31 March 2021 imposed on employers in relation to late or erroneous renewals of documents/labour clearances and other services;
• renewal of expired residence/labour cards of expatriate employees who have been unable to return to Oman during the lockdown period and cancellation of fines for non-renewal;
• renewal of expired establishment cards for those companies which employ Omani nationals;
• approving temporary work visas for expatriate employees;
• the secondment of employees to other employers within the same shareholding group of companies; and
• the secondment of employees to other employers subject to a written agreement.

These measures will remain in effect until 31 March 2021.

As previously sanctioned by the Supreme Committee, the Ministry of Labour has confirmed that employers who face financial hardship may terminate the services of their expatriate employees, subject to all entitlements being paid out and repatriation arranged. However, employers should exercise caution as ultimately, the Oman courts will be the final arbiter in deciding whether such terminations are lawful. 

In contrast, the moratorium on the termination of Omani national employees remains as confirmed by the Ministry of Labour in the same announcement. Employers will need to follow the statutory redundancy procedure (see our earlier article)

Whilst it has been recognised that there are a number of private sector employers facing financial hardship at this time, some employers may be disappointed that the extended measures do not include a suspension of the annual 3% January salary increment mandated for Omani employees. Employers will therefore be obliged to increase salaries by 3% (unless the employee has been appraised as a poor performer).  

As a result, employers will see their social insurance bill increase from this January. Not only will the social insurance contributions payable to the Public Authority for Social Insurance be higher, employers will also have to pay an additional 1% of Omani employees' salaries towards the job security fund which has been established by the Job Security Systems Law.

For further information, please contact our Oman employment team