Oman responds to COVID-19 with economic stimulus package to bolster the private sector

OmanMiddle East

Correct as of 9am, 19th April. This article is not being maintained.

On 15th April 2020 the Supreme Committee for Covid-19 in the Sultanate of Oman issued a statement in relation to a comprehensive economic measures package designed to bolster the private sector. This statement follows on from other measures taken by the Government of Oman in the fight against Covid-19 and the catastrophic impact it has had on the world’s economy.

This package is directed mostly towards the private sector and focuses primarily on employment matters. The overarching message to be taken from this statement is that the employment contracts of Omani nationals cannot be terminated, however it is permitted for companies operating in the industries which have been demonstrably affected by Covid-19 outbreak, to grant their Omani nationals full paid leave during the lockdown. Furthermore, after employees have utilised their annual leave the company may reduce their salaries and in return reduce their workhours for the next three (3) months. These measures for Omani employees can only be taken with effect from May 2020 onwards, and not beforehand.

In addition to the foregoing, financial institutions in the Sultanate are asked to cooperate, by postponing and rescheduling the repayment of loans for affected employees after their salaries are reduced. Financial institutions are being asked to accommodate these repayment holidays for the duration of the months in which the employee’s salaries are reduced and do not apply interest or other charges during this time.

Furthermore, payment of utilities’ bills (electricity, water and wastewater) will be postponed until after June 2020, and utility providers are being asked to offer the possibility of paying amounts owed through a series of instalments. Some of the affected employees should consider whether or not they would be eligible to fall within the categories of employees that can benefit from the National Subsidy System for fuel.

The measures specific to expatiates include: (i) reduced pay (subject to an agreement between the affected company and the employee); (ii) forced paid leave; and (iii) termination, provided always that the employees in question have received all amounts owed to them at law before leaving the Sultanate.

The fees for renewing Labour cards have also been reduced until the end of June 2020.

Companies that are willing to reduce the salaries of employees will need to notify the Ministry of Manpower of the reduction and it must prove that it has been heavily affected by the pandemic, before such salary reductions will be considered “legal”.

If you are a company considering introducing measures to protect your continuity during this time, you are strongly encouraged to seek legal advice and support before implementing them, so as to reduce legal risk and limit financial exposure through various claims further down the line.

Article co-authored by Bassam Al Raisi.