[Oman] New labour law comes into force

On 24 July, Oman’s long-awaited new Labour Law was issued by Royal Decree 53/2023 (New Law). It repeals Royal Decree 35/2003 (Old Law) and comes into force the day after it is published in the country’s Official Gazette. Over the coming months, related implementing regulations to the New Law are also expected to be issued. Dentons offer an overview of the changes the New Law will bring.

Ten key changes

Here are the key changes employers can expect from Oman’s New Law:

• Termination for poor performance: An employer has the right to terminate an employee for poor performance if the employee has failed to improve their performance within six months of notification by the employer of the areas for improvement.
• Redundancy now recognised: Employers are now expressly permitted to terminate employment contracts for economic reasons. A committee will review requests for redundancy and either approve or suggest "alternative solutions" to keep the business afloat without laying off employees. The New Law provides the following alternative solutions: reducing working hours/days and salaries, and sabbaticals.
• Sick leave: The New Law reportedly increases employees' entitlement to paid sick leave from 10 weeks for up to 182 days.
• Fixed contracts: These no longer automatically become unlimited upon renewal. If the employment continues for more than five years, however, the contract term becomes unlimited.
• Parental leave: Maternity leave is increased to 98 days with paternity leave of seven days introduced.
• Cap on compensation for unfair termination: This is now capped at 12 months' pay. The Old Law provided for a minimum of three months' salary without a cap.
• Reduction of working hours: Daily working hours are reduced from 8.5 to 8.
• Expat gratuity: The new Social Securities Law states that a "savings fund" shall be established. The Social Securities Law - also issued last week - reportedly provides that a Ministerial Decision will be issued regarding the effective date of this fund within no more than three years, so the effective date is not yet known. Dentons says this is linked to new gratuity/end-of-service benefit provisions in the New Law. Under the Old Law, expat employees were entitled to 15 days' salary for each of the first three years of service and then 30 days' salary for each following year when calculating end-of-service benefits. Expats are now entitled to a full month's salary for each year.
• Non-compete clauses: A non-compete clause may be agreed upon if the employee has access to confidential information or the employer's clients. The New Law provides that the clause will only be valid for two years in the area where the employer's activities are conducted.
• Carry forward of leave: Employees are allowed to carry up to 30 days of leave into the next year.

Source: Dentons

On 24 July, Oman’s long-awaited new Labour Law was issued by Royal Decree 53/2023 (New Law). It repeals Royal Decree 35/2003 (Old Law) and comes into force the day after it is published in the country’s Official Gazette. Over the coming months, related implementing regulations to the New Law are also expected to be issued. Dentons offer an overview of the changes the New Law will bring.

Ten key changes

Here are the key changes employers can expect from Oman’s New Law:

• Termination for poor performance: An employer has the right to terminate an employee for poor performance if the employee has failed to improve their performance within six months of notification by the employer of the areas for improvement.
• Redundancy now recognised: Employers are now expressly permitted to terminate employment contracts for economic reasons. A committee will review requests for redundancy and either approve or suggest "alternative solutions" to keep the business afloat without laying off employees. The New Law provides the following alternative solutions: reducing working hours/days and salaries, and sabbaticals.
• Sick leave: The New Law reportedly increases employees' entitlement to paid sick leave from 10 weeks for up to 182 days.
• Fixed contracts: These no longer automatically become unlimited upon renewal. If the employment continues for more than five years, however, the contract term becomes unlimited.
• Parental leave: Maternity leave is increased to 98 days with paternity leave of seven days introduced.
• Cap on compensation for unfair termination: This is now capped at 12 months' pay. The Old Law provided for a minimum of three months' salary without a cap.
• Reduction of working hours: Daily working hours are reduced from 8.5 to 8.
• Expat gratuity: The new Social Securities Law states that a "savings fund" shall be established. The Social Securities Law - also issued last week - reportedly provides that a Ministerial Decision will be issued regarding the effective date of this fund within no more than three years, so the effective date is not yet known. Dentons says this is linked to new gratuity/end-of-service benefit provisions in the New Law. Under the Old Law, expat employees were entitled to 15 days' salary for each of the first three years of service and then 30 days' salary for each following year when calculating end-of-service benefits. Expats are now entitled to a full month's salary for each year.
• Non-compete clauses: A non-compete clause may be agreed upon if the employee has access to confidential information or the employer's clients. The New Law provides that the clause will only be valid for two years in the area where the employer's activities are conducted.
• Carry forward of leave: Employees are allowed to carry up to 30 days of leave into the next year.

Source: Dentons