The Sultanate of Oman is the second-largest state in the GCC and possesses a wider range of natural resources than most other Gulf nations. Oman plays a leading role in the Arabian peninsula’s external trade, and the private sector is driving the continuing development of the country. Oman has a population of nearly 3 million and about one third of the workforce are expatriates.

The legal framework

Employment in Oman is regulated by the Labour Law, issued in accordance with Sultani Decree 35/2003, and the various ministerial decisions that amend it, and the Civil Transactions Law, issued in accordance with Sultani Decree 29/2013.

The Labour Law regulates the employment of all workers in the private sector, other than domestic servants. It governs employment contracts, wages, overtime pay, leave, work hours, industrial safety, labour disputes, and the employment of Omani and foreign nationals.

Expatriate employees who have completed one year of service are entitled to an end-of-service benefit

The Civil Transactions Law contains 20 articles concerning employment contracts. The areas covered range from formation of the employment contract to its termination. It must be noted, however, that the provisions of the Civil Transactions Law relating to employment contracts apply only to issues that are not regulated by the Labour Law.

The provisions of the Labour Law are mandatory, although employers and employees may provide for more generous entitlements and benefits than those provided for by law.

Expatriate employees are also subject to the Law of Expatriates Residence issued by Sultani Decree 16/1995, and the regulations and decisions made by the Royal Oman Police, dealing with employment visas and residency permits.

Employment contracts

The Labour Law requires that there be a written employment contract between the employer and the employee; if it is in a language other than Arabic, a translation must be attached.

Certain matters must be contained in the employment contract, such as the employee’s qualifications, nationality and position description. It is usual for employers to use a standard-form employment contract issued by the Ministry of Manpower (MOM) for Omani employees, and a more detailed employment contract for expatriate employees covering additional benefits, such as payment of air tickets for annual leave and school fees.

All employees are entitled to 30 calendar days of annual leave with gross salary

While the Labour Law is silent as to the maximum contractual duration of an employment contract, the Civil Transactions Law provides that it may not exceed five years. Both laws agree that a limited duration employment contract will become a contract for an indefinite period if the contracting parties continue the employment relationship past the specified contractual period.

The Civil Transactions Law makes it permissible to oblige an employee not to divulge work secrets even after the termination of the employment contract, and to agree on non-competition clauses. It also addresses ownership and rights relating to inventions and discoveries made by an employee during the course of employment.

Employment of expatriates

Before hiring an employee from overseas, an employer in Oman must obtain a labour clearance from the MOM, allowing the position to be filled by an expatriate. The employer must then obtain an employment visa from the immigration department at the Royal Oman Police. Once the expatriate is in Oman, she/he must obtain a residence permit, also from the Royal Oman Police. Expatriates are only permitted to work for the employer that has obtained these clearances and visas.

Probationary period

An employer is entitled to stipulate that a probationary period applies for up to three months. Any probationary period must be set out in the employment contract, otherwise it will not apply.

Minimum wage

The minimum monthly wage for Omani employees is RO225 ($584.49), plus RO100 in allowances for transport and accommodation. Strictly there is no minimum wage for expatriates, although Ministerial Decision 13/1979 (which was made under the previous, repealed, Labour Law) arguably still stands. Under that decision, the minimum wage is RO60, plus any (unspecified) allowances.

Working hours and overtime

The maximum normal work hours are nine hours a day or 45 hours a week, with a minimum of half an hour’s rest a day and two rest days a week. During Ramadan, the maximum working hours for Muslims are six hours a day.

Employees may agree to work three hours of overtime (so that total work hours for the day are 12 hours). An employee may also consent to work on rest days or public holidays. In certain limited circumstances, an employer can compel an employee to work overtime and a refusal would warrant disciplinary action.

Where an employee is asked to work overtime during the working week or on a public holiday, she/he is either granted time off in lieu or overtime is paid at the rate of basic wage plus 25 per cent for daytime work and 50 per cent for night work (9pm-5am), with double wages if the work is on a weekly rest day or public holiday. In all cases, the employer and employee must agree in writing on whether time in lieu is to be given or overtime rates paid.

Female employees must not work after 9pm or before 6am, unless the establishment has approval from MOM. This is usually reserved for the health, tourism and retail sectors.

Employees must not work on construction sites or in open areas of high temperature from 12.30pm-3.30pm in June, July and August.

Paid annual leave

All employees are entitled to 30 calendar days of annual leave with gross salary (basic salary plus allowances). Holiday leave must be taken at least once every two years for at least two weeks and the remainder may be paid in cash if the employee agrees.

Public holidays

Specific public holidays are not referred to in the Labour Law, but are declared on an ad hoc basis by the MOM. Public holidays are usually granted on the following occasions:

• New Year’s Day (Islamic): one day
• New Year’s Day (Gregorian): one day
• Eid al-Fitr: two to five days
• Eid al-Adha: three to five days
• Prophet Mohammed’s Birthday: one day
• National Day and Renaissance Day: two days (one day for each holiday, always given together)

Sick leave

• Employees are entitled to sick leave as follows:
• First two weeks on full pay
• Third and fourth weeks on 75 per cent pay
• Fifth and sixth weeks on 50 per cent pay
• Seventh up to the 10th week on 25 per cent pay

Maternity leave

Female employees are entitled to maternity leave of 50 calendar days, with gross salary, on up to three occasions during the course of employment.

Special leave

Employees are entitled to special leave as follows:

• Three days for marriage
• Three days in the event of the death of a son, daughter, mother, father, wife, grandparents, brother or sister
• Two days in the event of the death of an aunt or uncle
• 15 days for the Hajj pilgrimage (once in the course of employment)
• 130 days for a Muslim woman whose husband has died

Employees are also entitled to six days of emergency leave each year, but may only take two days on each occasion and may be asked to prove the basis of the leave requirement.

Employee handbooks/human resources manuals

Any employer with 15 or more staff must submit its regulations of work and disciplinary code to the MOM. The regulations of work must contain information on the rights and duties of the employer and employee, the rules regarding internal reporting structures, conditions for promotion and how wages, allowances and bonuses are determined and paid. The Labour Law requires employers with 50 or more employees to have a complaints and grievance policy, which must also be approved by the MOM.

Termination of employment

An employer may terminate an employment contract without notice and without payment of end-of-service gratuity on the grounds of gross misconduct in circumstances specified in Article 40 of the Labour Law, and similar. Otherwise, the minimum notice period for termination of a contract of indefinite duration is one month where the employee receives a monthly salary, and 15 days in all other cases, unless a longer period is agreed upon in the employment contract. An employer may not terminate an employment contract without good cause. If the employer does not have a justifiable reason then the employee may commence a labour claim at the MOM, where mediation takes place. If the matter is not resolved at the ministry, the claim proceeds to court. The minimum amount of compensation payable in cases of wrongful termination is three months’ gross salary.

Employees can be employed on fixed-term contracts that expire on a given date or by reference to the end of a specific project without the need for termination.

Employers must pay for expatriates to be repatriated at the end of employment.

End-of-service gratuity

Other than in cases of dismissal in the circumstances specified in Article 40 of the Labour Law, all expatriate employees who have completed one full year of service are entitled to payment of an end-of-service benefit. This amounts to half a month’s basic salary for each of the first three years of service, and one month’s basic salary for each year thereafter (paid pro rata if an employee leaves part-way through a year).

Employment of Omani nationals and pensions

An employer in Oman must register its Omani employees with both the MOM, which records Omanisation rates, and with the Public Authority for Social Insurance (PASI). Employers must make contributions to PASI on behalf of all Omani employees at the rate of 10.5 per cent of basic salary, and the Omani employee must contribute 6.5 per cent from his/her basic salary. This contribution covers the Omani’s pension scheme, as well as payments in the event of workplace-related illness or injury.

Health and safety

The MOM’s Ministerial Decision 286/2008 gives the ministry’s inspectors the right to enter workplaces without notice being given to the employer and at any time during the day. They may take samples of the materials and tools used at the site or workplace to examine and study their scientific and technical features. They may also carry out medical tests on the workers to ensure their work conditions are not detrimental to their health. The inspectors, however, may not disclose any confidential information that has been revealed to them or that they have become aware of during the inspection.

The employer is obliged to make all employees aware of potential risks they are exposed to in their respective jobs, and give them training on how to avoid such risks. It imposes obligations on workers to use protective equipment. In firms where there are 10 or more workers, the employer is obliged to adopt an occupational health and safety scheme proportionate to the size and nature of the business or project. Any establishment with 50 workers or more has to appoint a qualified supervisor to draw up an occupational health and safety plan, carry out inspections at regular intervals and prepare reports accordingly. The establishment has to notify the department at the MOM of any serious accidents or injuries at the workplace.

Unions

The Labour Law permits unions to be formed with a minimum membership of 25 employees. Omani nationals and expatriates can be members of a union, but positions in the administrative organ are reserved for Omanis. Employers and employees may engage in collective bargaining, make binding collective work agreements and strike and lock out respectively. Strikes are not permitted in essential service sectors such as healthcare, education, police, civil defence, prisons, aviation and essential utility services.