the Omani Council’s discussion of the Labor Law and the Social Protection Law in a joint session before submitting it to His Majesty . There are several topics related to both laws, with end-of-service benefits being a prominent issue.
The current Labor Law, in Article 39, stipulates that non-beneficiary workers under the Social Insurance Law are entitled to an end-of-service benefit based on their length of service. It is known that non-beneficiary workers refer to foreign workers. Many argue that including a benefit for foreign workers in the Labor Law while excluding it for Omani workers, who already benefit from the Insurance Law, creates a disparity in rights. The current law obliges employers to pay contributions to the Social Insurance Authority for Omani employees, while they are required to pay an end-of-service benefit to foreign employees.
This disparity in rights can be viewed from two perspectives. The first perspective is that employers find hiring foreigners to be less costly than hiring Omanis because employers do not bear any monthly contributions for foreigners. For example, if a foreigner is employed with a monthly salary of 500 Omani rials, hiring an Omani with the same salary would result in monthly contributions of 62.5 rials borne by the employer, making the cost of the Omani employee 562.5 rials. This may lead employers to either reduce the salary of Omani employees or prefer foreign workers, which contradicts the localization and Omanization policies.
The second perspective is the potential disparity created by granting the end-of-service benefit to foreign employees while denying it to Omani employees, which creates a difference in the benefits ensured by the Labor Law for employees from their respective employers.
Since the new Labor Law and Social Protection Law, which will replace the Social Insurance Law, are currently under discussion in the Council of Oman, addressing this disparity becomes necessary. One effective solution to this issue could be unifying the entitlements owed by employers, imposing contributions on employers for all Omani and non-Omani employees. This would eliminate the cost difference resulting from contributions between employing Omanis and others, which would positively impact the localization and Omanization efforts.
The contributions of foreigners could be directed towards a program with fixed contributions that does not include any benefits. The collected and invested funds over the course of their employment would serve as a substitute for the current employer-provided benefits, eliminating this disparity. Thus, the overall cost for employers would not be affected, as the benefits would be replaced by equal contributions.
Implementing such measures to align the law projects with the incentives they entail is crucial at this stage. The laws should encourage employers to voluntarily undertake localization and Omanization initiatives, which would not be achieved if cost disparities between national and non-national workforces persist. Such regulations would support a positive view of the labor system in the Sultanate, eliminating any negative perceptions of disparities.
