Charting a future of fairness: Oman’s modernized Labor Laws in action

August 28, 2023 | 7 min read

The Omani New Decree paints a portrait of Oman's commitment to redefining the employer-employee relationship, infusing it with fairness, dynamism, and resilience in the face of evolving work paradigms.

On July 26, 2023, the Labor Law in Oman saw a significant transformation with the implementation of Oman Sultani Decree No. 53/2023, on the Promulgation of the Labour Law (the 'New Decree'). This New Decree brought about substantial revisions to the previous legal framework concerning labor-related affairs. The commencement of the New Decree resulted in the replacement of the earlier Oman Sultani Decree No. 35/2003 on the Promulgation of the Labour Law (the 'Old Decree'). Additionally, the implications of this change extended to Oman Sultani Decree No. 89/2020 establishing the Ministry of Labour, defining its competences, and approving its organizational structure.

The introduction of the New Decree holds immense significance for Oman's labor landscape. The legislation introduces sweeping amendments to the existing labor regulations, with a particular focus on safeguarding the rights of workers, enhancing social welfare measures, and fostering a more stable labor market.

Below, we provide our preliminary analysis of the New Decree's significant changes:

  1. Fixed agreements: Automatic renewal of fixed agreements has been eliminated. Nevertheless, if the job endures for over five years, the contract duration becomes indefinite.
  2. Compensation for wrongful termination: The compensation granted for wrongful termination is now capped at 12 months of salary. In contrast, the Old Decree stipulated a minimum of three months' pay without specifying a maximum limit.
  3. Termination due to inadequate performance: If an employee does not enhance their performance within six months of being notified about the need for improvement, the employer possesses the authority to dismiss them based on unsatisfactory performance.
  4. Reduced daily working hours: The daily working hours have been shortened from 8.5 to 8.
  5. Expat gratuity: In accordance with the new Social Securities Law, a "savings fund" must be established. The Social Securities Law, which was also unveiled this week, specifies that a Ministerial Decision concerning the fund's effective commencement will be issued within a maximum of three years. As a result, the implementation date remains uncertain. This pertains to the New Law's fresh provisions regarding gratuities and end-of-service benefits. While the previous law entitled expat employees to 15 days' pay for each of the initial three years of service and 30 days' pay for each subsequent year when determining end-of-service benefits, expats now have a year-round salary entitlement equivalent to one full month's pay.
  6. Acknowledgment of redundancy: Employers are now permitted to terminate employment contracts for business-related reasons. Applications for redundancy will be evaluated by a committee consisting of representatives from the Ministries of Labour, Commerce, Industry & Investment Promotion, the Oman Chamber of Commerce, and the General Federation of Trade Unions of Oman. The committee will either approve the termination or propose "alternative solutions" to sustain business operations without resorting to employee layoffs, as outlined by the New Law.
  7. Sick leave: Under the New Decree, employees are now entitled to receive up to 182 days of paid sick leave, in contrast to the previous provision of 10 weeks.
  8. Parental leave: Paternity leave has been extended to seven days, and maternity leave has been prolonged to 98 days.
  9. Carryover of unused vacation time: Employees are permitted to carry over up to 30 days of unused vacation time into the following year.

To culminate, the advent of Oman's New Decree on July 26, 2023, ushers in a new era of labor legislation, reshaping the contours of employment practices. This legal overhaul brings forth a constellation of transformative modifications that reverberate across the employment spectrum. It represents a pivotal shift towards promoting fairness, protection, and stability in Oman's labor landscape, reflecting the nation's commitment to evolving with the changing dynamics of the workforce and ensuring a more balanced and inclusive work environment.

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