Oman Labour Law 

September 2021

Introduction to Oman Labour Law

Oman, officially the Sultanate of Oman, is a country on the southeastern coast of the Arabian Peninsula in Western Asia and the oldest independent state in the Arab world.

The Oman Labour Law applies to all Omani or expatriate (foreign) employers and employees and was issued by His Majesty’s decree No 35/2003. It is for all public and private establishments and organizations and their subsidiaries or branches, which practice activities in the Sultanate of Oman. The Oman Labour Law does not apply to

  • Individuals of the Armed forces, public security organisations, state administrative organ employees and other government unit employees.
  • Members of the employer’s family who are dependent upon him.
  • Those who work inside or outside homes such as drivers, maids, cooks and the like. The Minister shall issue a decision specifying the rates and conditions of this category.

The Omani Labour Law covers: employment of citizens and regulation of foreigners’ work, contract of work, the wages, leaves and working hours, employment of juveniles and women, industrial safety, employment of workers in mines and quarries, labour disputes, labour unions and the general federation for the workers of the Sultanate of Oman and penalties.

Hiring employees in Oman

For any employer, it is important to understand the labour law of the country they operate in before hiring employees. In the case of hiring employees in Oman, the Labour Law dictates the employer should try to hire an Omani to the greatest possible extent.

So, before an employer may employ a non-Omani worker, they must also comply with the prescribed percentage of Omani workers in their workforce (this will be determined per sector, but you will have to go through the ministry of manpower). The employer has to prove that he didn’t find a skilled Omani, in order to justify hiring a foreign worker – if this is justified, the employer will  be given a permit by ministry of commerce and industry to hire non omani workers.

If you do choose to hire a non- Omani worker and it complies with Labour Law regulations, the desired foreign worker must have professional competence, technical skill or the qualifications needed for the role and by the country, and much also be medically fit and disease free. If the candidate matches all these criteria, you must obtain a work permit, residence visa, and adequate health insurance for the employee.

Hiring of juveniles also carries the following conditions:

  • Min 15y old
  • <18
  • can not work between 6pm-6am, and a maximum of 6 hours per day, and cannot work more than 4 continuous hours without rest. In additional to this, they cannot work any additional hours over 6.
  • They can be in a workplace a maximum of 7 hours.

In addition to this, from 1 Jan 2021, private and public sector employees will pay 1% of their monthly salaries to the Omani Job security fund via payroll deduction, and employers will be required to pay the same amount to the Public Authority for Social Insurance. Employers that hire non-Omani employees will have to pay an additional 5% into the fund when applying for, or renewing, work permits.

Working week and hours

The working week in Oman is typically Sunday to Thursday from 8.30am or 9am to 5.30 pm or 6pm in which a 30 minute break must be included. Hours vary from between 40 hours per week to 48 hours per week depending on the company’s policy. If an employee works over these 9 hours, they are entitled to overtime pay, however, their working day with original working hours plus extra working hours must not exceed 12 hours in 1 day.

As Oman is a Muslim country, Friday is the rest day, making it the only official weekend day. Depending on the industry and company, Saturday is often also a working day, but can also be an additional day off for employees.

During the Holy Month of Ramadan, working hours are reduced by two hours to be a six hour working day, with a 30 minute break on top of this, and this is a legal requirement as per the Omani Labour Law. This usually applies to the entirety of your workforce (both Muslims and Non-Muslims alike), however, some companies will only apply it to Muslims who are fasting during daylight hours.

Probation Period

Employees must go through a mandatory probation period at the beginning of their employment as states the Omani Labour Law. The probation period is to assess the employees performance during their the beginning of their employment, so employers can decide whether to continue with their employment or not.

In the Oman Labour Law, there is a clear distinction between employees that receive their salary on a monthly basis, and those who receive their wage otherwise. The frequency in which employees are paid also dictates their probation period.

For employees that receive their salary on a monthly basis, the maximum probation period is 3 months (90 days). For Employees that receive it otherwise this period is limited to 1 month.

It is important to note that a probation period can only be set once per employer. This means that an employer cannot extend an employee who is paid their salary on a monthly basis more than 90 days, and once this probation period has passed, cannot issue another probation period past this point if still in the same employment. If the employee switches employment, then the probation period of up to 90 days will start again.

Termination

There is a distinction in the Omani Labour Law between unlimited contracts and limited contracts. Limited contracts are for a set period, and have a distinct end date, where as unlimited contracts are ongoing and have no set end date.

At the end of an unlimited period, the employer and employee can decide to continue the contracts after the expiry with the same terms, which can again have an end date and continue as a limited contracts, or switch to an unlimited contract without an end date.

Termination of an employee on a limited contract is technically not allowed, and penalties apply for doing so, except for cases of grave violation or conduct (which is outlined in articles 40 and 41 of the Labour Law) for both employees and employers alike. In these situations a notice period is not required.

Termination of employment for unlimited contracts is specifically detailed in the Oman Labour law. If the employment contract is unlimited, either of the two parties (employee or employer) may terminate the contract after notifying the other in writing at least 30 calendar days before the intended end of the contract if the employee is paid on a monthly basis, and 15 calendar days’ notice must be given if paid otherwise.

If a contract is terminated without this notice period, the party that terminates it (employee or employer) will have to pay the other compensation equal to gross wage for that notice period or remainder or it.

Leaves

The minimum period of service before an employee is entitled to leave is 6 months. Once this period is completed, employees are entitled to the following leaves:

Annual Leave

  • No less than 30 calendar days of annual leave with full salary. An employee MUST take a minimum of 2 weeks annual leave every year.

If agreed upon in writing, the employer can pay the employee his basic salary for leave days which are not used.

If the employee terminates their employment (stops working for the company) before using this leave, he will receive the basic wage for his leave balance as leave encashment.

Emergency leave

An employee is entitled to 6 days emergency leave per year.

Sick Leave

Employees are entitled to the following sick leave per year:

  • 10 working days with full pay (gross salary)
  • Between 11- 20 working days at 75% gross salary
  • Between 21- 30 working days at 50% gross salary
  • Between 31- 50 working days at 25% gross salary

For employees to claim sick leave, they must provide an official certificate. It is up to the companies to decide when this will be required (from day 1 of sick leave for or day 2 ect). This should be detailed in the companies policy.

Marriage leave

An employee is entitled to three days of leave in case of marriage at full pay. This leave can be taken only once during the service period.

Bereavement leave

An employee is entitled to three days with gross wage for the death of a son or a daughter or a mother or a father, or a wife, or a grandfather or a grandmother or a brother or a sister.

Two days with gross wage for a paternal uncle, or an aunt.

130 days with gross wage for married Muslim females in case of the death of their husband.

Haj leave

Fifteen days with gross wage for the performance of Al-Haj [pilgrimage] once throughout the period of his service, provided that the employee has completed one year in the service.

Educational leave

An employee who is enrolled at an educational institution is entitled to 15 days for examination days fully paid if first time and unpaid if repeat exam.

Public holidays

The following allowances are made for national public holidays which apply to both the private and public sectors.

Statutory Public HolidayDate
New Year’s DayJanuary 1st
The Prophet’s AscensionVaries (1 day)
Eid al FitVaries (4 days)
Eid al AdhaVaries (4 days)
Renaissance dayJuly 23rd
Islamic New YearVaries (1 day)
Oman National dayNovember 18th

 

Unpaid leave

Employer usually grants unpaid leave to employees who request to take leave days beyond their annual entitlement. The client is responsible for tracking the unpaid absences and reporting the unpaid deductions when they occur. Unpaid absences has a direct impact on the payroll as it initiates a payroll deduction.

Salary

Salaries in Oman are usually comprised of different elements, comprising of basic salary plus benefits (such as housing allowance, transportation allowance, and in some cases food and drink allowances). These elements come together to be an employees gross wage, or package.

Employers must pay employees salary a minimum of once per month, on the same day each month. Salaries can also be paid to employees weekly, bi-monthly or upon completion of projects.

If the salary is paid by piece and the work requires a period which exceeds at least two weeks, the employee must be given each week an advance equal to the job he has performed and the remaining salary shall be given to him in full within the week following the completion of the work assigned to him.

In other cases, the salaries of the employees shall be paid once every week, however, the salaries may be paid to them once every two weeks or once every month if they agree in writing to such an arrangement and in all cases the salary must be paid within seven days from the end of the period in which it becomes due.

Overtime

If an employee works over their contracted number of hours per day, they are entitled to overtime pay. For employees that work extra during daylight hours, they are entitled to 25% additional pay (on top of their gross salary) per hour of overtime, and for employees that work extra during night time hours, they are entitled to an additional 50% pay (on top of their gross salary) per hour of overtime.

Work completed on rest days or public holidays means the employee is entitled to double their gross salary for that day of work, or a day in lieu as compensation.

WPS

Wages Protection System (WPS) is an electronic salary transfer system that allows companies in Oman to pay workers’ wages through banks or financial institutions approved and authorized to provide the service. WPS allows MOMP to create a database that records wage payments in the private sector to guarantee the timely and full payment of agreed-upon wages. WPS covers all companies registered with MOMP across all sectors and industries and will benefit different categories of Manpower.

Social Security

Social Security in Oman is governed by Public Authority for Social Insurance (PASI) and applies to Omani apply to Omani workers employed in the private sector with permanent employment contracts; provided that the Worker’s age shall not be less than 15 years and not exceed 59 years.

The aim of social security is on hand to provide security against old age, disability, death or occupational injury and disease, and on the second hand to ensure social stability for the insured and their dependents.

The contribution is calculated based on the gross salary of the insured employee – with a limit of 3000 Omani Rials – the gross salary to be used for the yearly contribution should be the workers gross salary in January every year. If the employee gets a salary increase of more than 3% in the middle of the year, the employer has to notify the Authority by updating the insured worker’s salary in PASI within 1 month from implementing the increase.

A share of the contribution is paid by the employer and another part is covered by the employee. It is the employer’s responsibility to calculate, deduct and make the timely payment for the Omani workers they have on the payroll. The employee’s share is 7% of the monthly wage and the employer’s contribution is set to 10.5% of the monthly wage + additional 1% for occupational diseases and injuries. At the end of service of the insured worker, the Authority will pay out his/her end of service benefit in line with the provisions.

The maximum gross salary that is subject to contribution is 3000 Omani Rials per month.

Offense and Violation

In the Oman Labour Law, there is a clear distinction between offenses and violations, and are differentiated as follows:

  1. Offense – which we also call a misdemeanor – incident

Examples: breaking of a company moral rule like drinking alcohol while on duty, or having a discrimination claim against you – offensive comments about looks
More serious than an infraction, but less than a felony , most common are administrative infractions, regulatory offenses – which result in monetary fines. If an employee is accused of this, they can be suspended up to 3 months maximum, in which he will not receive his comprehensive wage in the first month, and half in the second and third month.

  1. Fine – violation – disciplinary penalty

For example excessive absenteeism or tardiness.

A fine or suspension can be given, but it can not be more than the full wage of 5 days/month for a single violation.

Gratuity

A gratuity is required by law, as laid out in the Oman Labour Law for any expatriate employee ending their service.

To be entitled to this, you must not have worked less than 1 year for the same company.

The calculation of the amount of gratuity is as follows:

First 3 years of employment will receive 15 days basic wage for each year or service.

Following years will receive the equivalent of 1 month basic wage for each year of service.

So for example, and employee who has been in employment with the same employer for 2 years is entitled to the equivalent of 30 days basic salary, and an employee who has been with the same employer for 4 years is entitled to the equivalent of 75 day basic salary.

Disclosure: This document is not the official Labour Law document issued by The Ministry of manpower, but it is a replication and does not detail all aspects of the Oman Labour Law

 

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