Royal Decree No.82 of 2020 (RD) creates the new job security fund (Fund) and comes into force on 1 November 2020. The Fund is a step towards greater social protection for Omani employees whose services have been terminated and job seekers (the Insured).

The RD effectively applies a levy on all employers in Oman (Employers) to cover Omani employees for a limited time after they have lost their income. Non-Omanis cannot benefit from the Fund.

The Public Authority for Social Insurance (PASI) has the overall role of administering the Fund. From January 2021, Employers must deduct the Insured's contributions of 1% of the basic monthly salary and make an equivalent 1% contribution. Employers should pay the contributions into a bank account, as instructed by the PASI. In the future, job seekers will also be eligible to benefit from the Fund. By Royal Directive, OMR 10 million has been donated to the Fund.

The RD provides for both unemployment insurance for Omani employees and for private sector employers to notify the new Ministry of Labour (Ministry) no less than three months before the Employer terminates a group of Omani employees.

Eligibility to receive the benefit will be determined by the Committee established by the PASI. The eligibility criteria for an Omani employee to be paid the benefit includes if the Insured:

1. has completed certain eligibility periods with the Employer stipulated in Article 11 of the RD;
2. does not receive a retirement benefit;
3. has not wilfully left his or her employment;
4. has not been dismissed from employment for disciplinary reasons;
5. is capable of working and is looking for employment (in accordance with regulations and rules set by the Board of the PASI); and
6. is not enrolled as a student in any educational institutions.

Subject to satisfying the eligibility criteria, the Insured may start to apply for benefits one year after establishment of the Fund. Supporting regulations will be issued by the PASI.

The Insured's benefit eligibility will be limited to monthly payments for a maximum of six months. The benefit will be 60% of the average contributions made during the 24 months preceding the termination or, if the period is less than 24 months, the average contributions for that lesser period. In any event, the benefit will not be less than the minimum wage for Omanis, which is currently OMR 225 basic salary and OMR 100 allowances.

The job seekers benefit will be available for three years after the effective date of this RD (1 November 2023).

In keeping with the many recent legislative changes we have seen in Oman, providing unemployment insurance to Omani employees who have lost their jobs or those who are job hunting continues the government's focus on supporting Omanis. However, this support does come at an increased cost of doing business in Oman and as a levy on employed Omanis.