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Oman Employment Law (2024): An Essential Guide for Employers

Oman is one of the wealthiest Emirates in the Middle East, known for its oil reserves. The country is, however, diversifying its economy to move away from its reliance on oil reserves. In doing so, Oman is introducing amendments to its long-standing employment law to attract workforce from other countries.

The Oman Labour Law (Royal Decree No. 35/2003) and its subsequent amendments govern Oman’s employment law. This guide explores the legal framework for employer-employee relationships in the Sultanate. We will also establish how the new labour law in Oman affects various aspects, including employment contracts, working hours, leave entitlements, termination procedures, and the rights and obligations of both employers and employees.

Understanding Oman Labour Law is crucial for employers to ensure compliance with legal requirements. Given the diverse workforce available in Oman, fostering a positive employment environment and avoiding potential legal disputes will require knowledge of updates in 2024 for maintaining lawful and effective business operations.

Oman employment law sets out the general principles and regulations governing employment in the country. Every employer, irrespective of the state of their business license, must adhere to these labour laws. They cover various issues, including recruitment, employment contracts, working conditions, and termination.

The key provisions of the new labour law in Oman include regulating working hours, wage payment, and employee benefits. The law aims to protect workers’ rights. It includes significant amendments to reduce work hours, paternal leave, leave carry-over, bereavement leave for non-Omani women, and collective labour agreements.

The Labour Law stated new provisions which regulate the process for termination, aimed at making sure that there is an equitable process for employee and employer both.

Also, the New Labour Law has increased the duration of some categories for leaves and even added new categories.

  • Annual leave- 30 days per year
  • Sick leave- 182 days per year
  • Paternity leave- 7 days
  • Maternity leave- 98 days
  • Marriage- 3 days
  • Death of family member- depending on the relation
  • Hajj leave- 10-15 days
  • Examination leave- 15 days
  • Unpaid leave for childcare for women- 1 year

Omanization Policy

The Omanization policy is a national initiative aimed at increasing the employment of Omani nationals in the private sector. Under this policy, which took effect on April 1, 2024, all Omani companies owned by foreign investors must employ at least one Omani citizen within one year of their formation. Additionally, if companies fail to comply with the policy within a year, they will be provided a 30-day grace period, beyond which they will be subjected to fines. This policy is designed to reduce reliance on expatriate labour and promote the development of local talent.

Strategies for Localising Workforce – The employer must share with the Ministry of Labour the annual strategies for localising the workforce. The data which includes specifics like count of Omani workers, gender diversity, job positions, and wage must be accessible within the workplace.

Training and Leadership – The New Law states that every company must create a plan for choosing and training the Omani employees for the leadership positions and ensure that the plan is well implemented.

Omanisation Promotion – The New Law also permits termination of non Omani employees when the termination reason is to replace them with some Omani national.

Employment of Expatriates

Oman has a high number of foreign workers. Currently, expatriates make up 42.26% of the total population, so employers must know the labour law in Oman for expatriates. 

Visa and Work Permits

Before expats can be hired, employers must ensure they have the necessary visas and work permits from the Sultanate before they can commence employment. The visa and work permits have a thorough application process, including medical examinations and security clearances.

Labour Laws for Expatriates

Of all the emirates in the Middle East, Oman has the most straightforward labour laws for expats, as they are subject to the same labour laws as Omani nationals. However, additional regulations concerning their recruitment, employment contracts, and termination include visas, work permits, and medical history.

The Labour Law 53/2023 ensures safety of expats through various articles. The employees are entitled to annual leaves with comprehensive pay of not less than 30 days, which he or she can take as per their requirements and they may not take leave before expiry of 6 months from date of joining with the employer.  Further, the employer may pay basic wage for days of annual leave that the worker did not take if he/she agrees in writing.

The expats are also covered by Oman labour law for salary increments. It is good to see that the law appreciates the contribution of expat workers and ensures fair treatment.

Expatriate Taxation

Oman does not impose personal income tax on expatriates. Additionally, expats are exempted from social insurance contributions. However, they must pay Job Security Fund contributions.

Recruiting Expatriate Talent

Employers must ensure that the recruitment of expatriates aligns with the Omanization policy and obtain necessary clearances from the Ministry of Labour. The expat must have professional competence or technical skills or qualifications required by the Sultanate. Also, the employer has the permit to hire the expatriate and the latter must have entered the country in a legal manner. Expat must also satisfy the conditions set out in Foreign Residence Law i.e. valid passport, sponsorship, valid visa etc. Further, the expat employee is required to be medically free and fit of all chronic and contagious diseases mentioned by the Ministry of Health.

Onboarding Expatriates

Effective onboarding includes cultural orientation, ensuring legal compliance, and providing necessary training to integrate expatriates into the workforce smoothly. 

Cultural Integration

Cultural integration programs help expatriates adapt to the local culture and workplace environment, fostering a harmonious working relationship.

Employment Contracts for Expatriates

The same rules of employment contracts apply to expatriates as for Omanis. They can have finite and infinite employment contracts that clearly outline the terms of employment, including job duties, salary, benefits, and termination conditions, and must comply with Omani labour laws.

Social Insurance Law

Effective January 1, 2024, the Omani government introduced a new social insurance law through royal decree No. 52/2023. As per the new law, employers must contribute towards insurance for:

  • Old Age, Disability, and Death- The employee share is 7.5% and the employer share is 11%
  • Work Injuries and Occupational Disease- there is only the employer share of 1% with maximum salary (OMR) of 3000
  • Employment Security- the employee and the employer have 0.5% both, making it a total of 1%
  • Maternity Leaves (effective July 2024)- here the employer share is 1%
  • Sick and Other Leaves (effective July 2025)- here too there is the employer share of 1%

All these monthly contributions are calculated based on the number of working days in each month.

Laws on Labour Unions

Labour unions in Oman are permitted if the employer policies allow them. Employers and employees can participate in collective bargaining, dispute resolution, and worker rights advocacy.

However, the law provides a framework for establishing and operating labour unions to protect and promote employees’ interests.

Working Hours

Previously, the standard working hours in Oman were 8.5 hours a day. Under the new amendments, this time is trimmed to 8 hours a day or 40 hours per week. During Ramadan, Muslim employees are entitled to reduced working hours of six hours per day or 30 hours per week.

The Oman Labour Law 2003 says that the minimum employment age is 15 years while the minors from 15-18 years of age are not allowed to work between 6 pm to 6 am.

New Rights for Employers

The new Oman employment law provides some new rights to employers for improved management of a multicultural workforce. Here are new rights every employer in Oman must know:

Recognition of Non-compete Clauses (Article 69)

Article 69 recognizes the validity of non-compete clauses in employment contracts where the nature of an employee’s role puts him in a position to compete with the employer. However, the clauses must be reasonable in scope, duration, and geographic area and necessary to protect the employer’s legitimate business interests.

Termination due to Redundancy (Article 43(4))

Employers can terminate employees due to redundancy, provided genuine business needs justify it. It can be due to a change of business operations, the closing of an establishment, or the need for a reduced number of staff.

Reduction of Staff due to Economic Cause (Article 44)

Economic conditions that necessitate a reduction in workforce upon approval by the Ministry of Labour can make ground for the reduction of staff. It is applicable if an employer suffers economic losses for no less than two consecutive years. 

Termination of Underperforming Staff (Article 43(3))

Employers can terminate employees for underperformance but must first provide a grace period of six months. The employer can terminate employment if the performance is not improved within the grace period.

Definite Period Contracts (Article 34)

The renewed contracts will remain definite period contracts if they do not exceed five years. Employers must specify the duration and conditions under which they can be renewed or terminated.

Employer Obligations and Responsibilities

As an employer, there are certain obligations that you are expected to fulfill under the revised Oman employment law:

Work Permits and Fair Job Offers

  • Employers ensure all employees have valid work permits and offer fair employment terms that comply with Omani labor laws.
  • Employers must secure the appropriate work permits and visas for expatriate employees before they can legally work in Oman. Expatriate employees must undergo a medical examination to ensure they meet the health requirements set by the Omani authorities. Additional
  • Employers must also provide fair and transparent job offers, ensuring that the offer clearly outlines the job role, responsibilities, and expectations. The offer should specify the salary, allowances, benefits, and other compensatory elements.

Health and Safety

Employers must provide a safe working environment, conduct regular safety training, and adhere to occupational health and safety regulations. Regular health inspections are conducted to identify and mitigate potential hazards.

Non-Discrimination

Discrimination based on gender, nationality, religion, or any other prohibited ground is strictly forbidden. Employers must promote equality and inclusivity in the workplace. Also, they must establish procedures to address and prevent harassment and bullying in the workplace.

Social Security

Employers must contribute to the social insurance schemes as discussed above. Ensuring employees are registered and covered under the social security system is also essential.

Payment of Wages

Wages must be paid on time and in full per the employment contract. According to Article 51 of the Oman Labour Law, monthly salaried employees must be paid regularly once a month. In case of piecemeal, weekly, or period exceeding two weeks:

  • Payment for the first week of work must be made within one week of completion
  • Payment of the remaining balance within one week of the job’s completion

Deductions from Wages

Deductions from wages are only permissible if mentioned in the employment contracts outlined by the Labour Law, such as for social insurance contributions or disciplinary fines. No deductions can be made without the consent of the employee.

Penalties for Employers' Non-Compliance

Non-compliance with labour laws can result in significant penalties, including fines, business license suspension, and legal action.

In serious non-compliance, authorities can issue the suspension of services until the issues are resolved and full compliance is established.

Confidentiality and Non-Compete Clauses

Omani labour laws allow confidentiality and non-compete clauses in the employment contracts. Confidentiality clauses can be included to protect sensitive business information such as trade secrets and client information.

Confidentiality Clause

a. Clarity of clauses: Clearly define what constitutes confidential information.

b. Reasonable Scope: Ensure the scope is reasonable in terms of duration and breadth because confidentiality clauses cannot restrict public knowledge.

Non-Compete Clauses

Non-compete clauses prevent employees from joining competitors or starting a competing business for a specified period. In Oman, non-compete clauses are more strictly implemented than confidentiality clauses.

Employers can include non-compete clauses only if they demonstrate the need for a non-compete clause.

Royal Decree on the Protection of Workers' Rights

The Royal Decree on the Protection of Workers’ Rights enhances employee protections, including provisions for fair treatment, dispute resolution, and enforcement of labour rights. It underscores the government’s commitment to safeguarding worker welfare.

Rest Period & Leave Policies

Under the new labour law in Oman, the rest period and leaves are further improved. Here are the benefits offered:

Annual Leave: Employees are entitled to at least 30 days of paid annual leave after six months of service.

Bereavement Leave: Employees are granted bereavement leave for the death of close family members, typically ranging from 3 to 7 days.

Al-Hajj Pilgrimage Leave: All Muslim employees are entitled to special leave for performing the Al-Hajj pilgrimage for up to 15 days once in their employment period.

Study Leave: 15 days for Omani employees to pursue further education.

Public Holidays: It depends on the annual holiday calendar issued by the authorities.

However, employees are entitled to paid leave on public holidays recognized in Oman, which include Islamic and national holidays.

Sick Leave: The new labour law in Oman entitles employees to up to 182 days per year of sick leave with the following payment structure:

  • Day 1 to Day 21 on full payment
  • Day 22 to Day 35 on 75 percent payment
  • Day 36 to Day 70 on 50 percent payment
  • Day 71 to Day 182 on 35 percent payment

Special Leave: Special leave provisions exist for events such as marriage, childbirth, and emergencies, as specified in the employment contract or company policy.

Marriage Leave: Employees may be granted three days’ leave for their marriage. This is the 3 day paid marriage leave with a gross salary. This leave is granted only once through the entire service period.

Employment Contracts & Agreements

In Oman’s labour market, several types of employment contracts are allowed. Employers can choose from one of the following types to cater to their needs.

Types of Contracts

Permanent Contracts: Indefinite duration with ongoing employment until terminated by either party. It requires mutual agreement or notice period service for termination.

Fixed-term Contracts: Fixed-term contracts for a specific period or project. As per the Civil Transactions Law, the maximum duration for a fixed-term contract can be five years.

Part-Time Contracts: Contracts for employees working fewer hours than full-time.

Temporary Contracts: Also known as Sahem, these contracts are directly regulated by ministerial decisions. Sahem contracts can only be short-term.

Appointment Decisions: It is a form of employment contract used to hire Omanis for permanent positions.

Key Provisions

For an employment contract to be valid, the following key elements must be included:

  • Job title, duties, salary, working hours, leave entitlements, termination conditions.
  • The probationary period is typically three months, during which either party can terminate the contract with shorter notice.
  • Notice period, usually ranging from one to three months.

Employment Contracts within the Mining and Quarry Industry Sector

Special provisions apply to mining and quarry industry contracts, including safety regulations, specific working hours, and additional health benefits. Due to the unique nature of this industry, employment contracts within the mining and quarry sector have specific requirements and provisions that must be adhered to by employers.

Termination of Employment

  • Lawful termination of employment is possible only if all the clauses and provisions of employment contracts are met.
  • Employers can terminate employment for valid reasons, including redundancy, poor performance, misconduct, or economic conditions.
  • The notice period must be followed as specified in the employment contract, with minimum periods outlined by law.
  • Employees are entitled to severance pay based on their length of service and the reason for termination, as stipulated in the Labour Law.

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By using Truein time and attendance software, employers can ensure compliance with Oman Labour Law, enhance operational efficiency, and improve overall workforce management.

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Conclusion

Oman’s new labour laws open the economy further for a modern workforce. Knowledge of Oman employment law is essential for employers to foster a compliant and productive work environment. Tools like Truein can help employers maintain legal compliance and promote a fair, safe, and efficient workplace.

FAQs

Q: What are the standard working hours in Oman?

The standard working hours are 40 hours per week, typically eight hours per day over six days. During Ramadan, the maximum hours for Muslims are reduced to 6 hours in a day and 30 hours in the week.

Q: What are the rules regarding overtime pay in Oman?

Overtime must be compensated at a rate of 1.25 times the regular pay for ordinary days and 1.5 times on weekends and public holidays and for work between 9 PM and 4 AM. Oman’s law says any hours that exceed the regular 8 hours per day are overtime hours and for daytime overtime, the employees must get base salary + 25% of every overtime hour. And for the night shift overtime, the employees must get base salary + 50% of each overtime hour.

Q: What are the provisions for maternity leave in Oman?

Female employees are entitled to 98 days of paid maternity leave in the new labour law, which can be taken before and after childbirth. The new leave provisions under the Social Protection Law are for Omani as well as non Omani full time women employees. In accordance with article 129, the women employees must get 98 days maternity leave, 14 days of which can be taken before childbirth.

Q: What should the employment contract include?

The contract should include job title, duties, salary, working hours, leave entitlements, termination conditions, and any other terms agreed upon by the employer and employee.

Q: What are the regulations regarding discrimination in the workplace?

Discrimination based on gender, nationality, religion, or other prohibited grounds is strictly forbidden by law. The workers’ employment without any discrimination is applicable to all the employees. The labour law prohibits any type of prejudice or discrimination.

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