New Omanisation Mechanism for Businesses: Key Regulatory Developments

3 min 41 sec

On 5 May 2025, and as part of its efforts to support national workforce development and regulate the labour market, the Ministry of Labour (the “MOL”) published a statement requiring companies in Oman to appoint at least one Omani employee for every commercial registration that had completed one year since its establishment (the “Omanisation Directive”). On 15 June 2025, the MOL clarified the implementation mechanism for the appointment of Omani nationals into the Omani workforce pursuant to the Omanisation Directive (the “Mechanism”).

The Mechanism applies to all companies, with specific provisions depending on the nature and size of the entity. In particular, it addresses foreign investment establishments, establishments employing more than 10 employees, establishments employing fewer than 10 employees, as well as entrepreneurs and full-time business owners.

Foreign investment establishments:

Under the Mechanism, foreign investment establishments whose commercial registration has completed one year of operation are required to submit an employment plan to the MOL to recruit at least one Omani employee within a period of three months from the date of MOL notification. This requirement may be satisfied either through direct recruitment or by submitting a clear and actionable employment plan that results in an actual appointment of an Omani national.

In the event of non-compliance, the Mechanism provides for the imposition of a comprehensive ban, irrespective of the number of employees registered with the establishment. These requirements and enforcement measures have been implemented in coordination with the Ministry of Commerce, Industry and Investment Promotion (the “MCIIP”), which regulates the framework applicable to foreign investment establishments.

In alignment with this, the MCIIP issued Decision No. (411/2025) on 2 October 2025, amending the Executive Regulation of the Foreign Capital Investment Law (the “MCIIP Decision”). The MCIIP Decision requires foreign-investor businesses to:

• Appoint at least one Omani employee after one year of commercial activity;
• Register the Omani employee with the Social Protection Fund; and
• Comply with the prescribed Omanisation percentages.

Existing businesses that have completed one year of operation must regularize their status within six months from the earliest of:

1. Renewal of commercial registration;
2. Issuance of a work permit; or
3. Renewal of the license to practice the activity.

Establishments employing more than 10 employees:

Establishments with 10 or more employees are required to submit an employment plan to recruit at least one Omani employee within period of three months from the date of MOL notification. This requirement may be satisfied either through direct recruitment or by submitting a clear and actionable employment plan that results in an actual appointment. The MOL will notify the company via its online electronic system of the requirement to employ Omani nationals.

In case of non-compliance following notification, the system shall automatically apply a ban on the issuance of new licenses, which will be reflected directly on the system’s interface. This will inevitably result in a freeze or disruption of business operations.

Establishments employing fewer than 10 employees:

Similarly to that above, establishments with fewer than 10 employees are required to submit an employment plan to recruit at least one Omani employee within a period of six months from the date of MOL notification. Such establishments will be subject to a case-by-case review within the same timeframe to assess their contribution to local value addition. Compliance may be achieved either through direct recruitment or by submitting a clear and actionable employment plan that results in an actual appointment, or, where sufficient local value addition is demonstrated, the establishment may be granted a temporary exemption from the employment recruitment.

Likewise as where a company employs more than 10 employees, in instances of non-compliance following notification, a ban will automatically be applied on the issuance of new licenses.

Entrepreneurs and full-time business owners:

Establishments owned by entrepreneurs or full-time business owners are granted a one-year grace period to comply with the Omanisation requirement. During this period, a case-by-case review will be conducted within six months from the date of MOL notification. to assess each establishment’s contribution to local value addition.

The Mechanism further provides that entrepreneurs who do not hold a “Riyada Card”—being the official Entrepreneurship Card issued by the Small and Medium Enterprises Development Authority (“SMEDA”) — may apply for registration with SMEDA to obtain one and benefit from the associated facilities and exemptions. The Riyada Card enables eligible small and medium enterprise owners to access various government and private sector benefits, including financial incentives, training and mentorship programs, preferential access to government tenders, and discounts on telecommunications services, thereby enhancing business credibility and supporting sustainable growth.