It is a toy version of Mr. Krabs. However, unlike the real Mr. Krabs, toy Mr. Krabs has no eyebrows.
Role in episode
SpongeBob tries to find something to get his mind off the Krusty Krab during his vacation. He then finds his Krusty Krab playset, which contains this toy, along with a toy SpongeBob, toy Patrick, and toy Squidward. However, after he reenacts the scene where Mr. Krabs kicks him out of the restaurant earlier in the episode, the toys only worsen the situation for him.