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Employment in Oman

Oman’s Labor Law is stipulated by the Royal Decree 35/2003, and is issued by the Sultanate of Oman regarding all laws pertaining to Labor and employment-related issues. Employment laws in Oman and any amendments are implemented through royal decrees and ministerial decisions, which reflects the constantly changing nature of laws governing employees and employers in Oman. For most types of workers Omani or non-Omani, the Omani Labor Law applies to all except for civil servants, military or domestic service employees.

Key points on employment in Oman

Oman has implemented a policy of Omanization which regulates the employment of expatriate labor. Many systems and policies for employment in Oman places heavy restrictions on the number of foreign nationals employed, aiming to give priority for Omani workers, in addition to industry-specific quotas which require certain private sectors to have a significant proportion of Omani employees in the industry. Employers should be aware of these measures when employing in Oman.

The private sector is regulated by several sources of power, including the Constitution, Labor Law, Ministry of Manpower (Ministry of Labor) ministerial decisions, and the Social Insurance Law.

  1. Contracts

    The rules governing the Omani employment contract is outlined in the Oman Labor Law issued in accordance with the Sultan’s Decree no.35/2003. The contract of employment must be written in Arabic, or a translation must be formalized and notarized in Arabic. A written contract is not required, although the employee should prove his rights that such an employment relation has been entered into by all means of evidence.

    The employment contract must contain the following:

    • Name of the employer, establishment and address of work
    • Name of the worker, date of birth, qualifications, occupation, place of residence and nationality
    • Nature and type of work
    • Period of contract
    • Basic salary and any allowances or advantages
    • Suitable period of notice to terminate the contract

    An additional legal requirement for a valid employment contract is to respect the Islamic religion, laws of the country, customs and social traditions in Oman. All prejudicial activity against the security of the country is unlawful.

    Types of Employment Contracts

    Fixed Contract

    Fixed contracts are legally valid for a fixed duration and are more applicable for situations where the employee is hired for projects that require a specific period of time to complete. The fixed contract automatically terminates on the date of termination or expiry date, although may be considered as renewed with the same terms of both parties continue the employment arrangement as if it were still in place.

    Indefinite Contract

    Indefinite or unlimited contracts are agreed to be valid for an indefinite amount of time as long as both parties are continuing the employment arrangement. There is no expiration date for the indefinite contract, where termination requires given notice and a “reasonable and fair” cause to be provided if it is termination by the employer.

Employee Entitlements

Information Explanation
Time Off Work ?

An employee is entitled to leave with gross salary for special circumstances, such as three days’ for marriage or a death in the family and fifteen days for religious pilgrimage or examinations.

Medical Leave ?

Sick leave is subject to the provisions of the Social Insurance Law, and must be proven with a valid medical certificate stating the reason for sickness or absence, referable to the Medical Committee. Sick leave may not exceed ten weeks per year.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

 

 

Severance / Redundancy Pay ?

Termination of a fixed contract prior to the expiry date is generally not allowed until the project has been completed, except for the cases of grave violation of conduct outlined in Articles 40 and 41 of the Labor Law for employers and employees respectively. In these situations, a notice period is not required.

The following applies to those who are not under the provisions of the Social Insurance Law, which are typically non-Omani employees. Upon termination of the employment relationship that are not due to a violation of conduct under Articles 40 and 41 of the Labor Code, the employer is obliged to pay the employee an end of service gratuity based on the employee’s basic salary, equivalent to fifteen days’ salary for each year of service for the first three years, and a one month salary for each year for the following years.

For employers registered with the Public Authority of Social Insurance, the Omani employees are entitled to the pension fund if the total contributions made by the employer exceed the gratuity payment.

Termination of Employment ?

Termination of employment and the provision of a notice period are explicitly covered in the Omani Labor Law for unlimited period contracts, which is thirty days’ written notice for employees receiving monthly salaries, and fifteen days for any other arrangements unless specified in the contract. Failure to provide a notice period will require the compensating party to pay the gross salary the notice period.

Termination of a fixed contract prior to the expiry date is generally not allowed until the project has been completed, except for the cases of grave violation of conduct outlined in Articles 40 and 41 of the Labor Law for employers and employees respectively. In these situations, a notice period is not required.

 

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Oman. For companies which intend to employ their staff directly through their incorporated Omani entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Oman.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Oman.

The Shield GEO solution is an attractive alternative where

the company is looking to employ staff quickly

the company doesn’t have an appropriately incorporated entity in Oman

the company wants to work within a defined budget

the company wants to limit its initial commitment in Oman

the company needs help with tax, employment, immigration and payroll compliance in Oman

Shield GEO can contract directly with the company to employ and payroll their staff in Oman. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

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