Labour Law Framework
Oman’s primary labour legislation is Royal Decree 35/2003 (the Labour Law) and its subsequent amendments. The law applies to all employees in Oman except:
- Members of the Sultan’s Armed Forces
- Royal Oman Police employees
- Domestic workers (covered by separate regulation)
- Civil servants (governed by Civil Service Law)
The Labour Law covers: employment contracts, working hours, leave entitlements, occupational health and safety, and termination procedures. It applies equally to Omani national and expatriate workers (though some provisions differ).
Employment Contracts
Written contracts required: Employment contracts must be in writing, in Arabic, with an Arabic translation of any non-Arabic version taking precedence in disputes.
Contract types:
- Fixed-term: Specified duration; upon expiry, employer or employee may decline renewal without notice
- Indefinite: No specified end date; termination requires notice period and justification
Minimum contract contents: Name and address of both parties, position and duties, agreed wage, working hours, accommodation arrangements (if provided), and applicable benefits.
Probationary period: Maximum 3 months (may be extended to 6 months by written agreement). During probation, either party may terminate with 1 week’s notice.
Working Hours and Leave
Standard working hours: 9 hours per day, 45 hours per week (reduced to 30 hours per day during Ramadan for Muslim employees).
Overtime: Overtime work (above normal hours) must be compensated at 125% of the normal hourly rate on weekdays, 150% on weekends and public holidays.
Annual leave: Minimum 30 days per annum after one year of service.
Sick leave: Up to 10 weeks paid sick leave per annum with medical certification, plus additional unpaid sick leave.
Maternity leave: 50 days paid maternity leave for female employees. Nursing time allowance (2 hours per day for up to one year).
Public holidays: 10 official public holidays per annum (National Day, Eid Al Fitr, Eid Al Adha, Islamic New Year, Prophet’s Birthday, Renaissance Day).
Termination and End of Service
Notice periods (indefinite contracts):
- Less than 1 year: 1 month notice
- 1-3 years: 1 month notice
- More than 3 years: 2 months notice (or higher as per contract)
End of service gratuity (EOSG): All employees completing at least one year of service are entitled to EOSG on termination:
- First three years: 15 days’ wage per year of service
- Subsequent years: 30 days’ wage per year of service
- Maximum: No statutory cap (though some employers cap by contract)
EOSG is payable regardless of reason for termination (except termination for cause under specific Article 40 provisions).
Termination without cause: Employers terminating without valid cause must pay EOSG plus compensation equivalent to 3 months’ wages (indefinite contracts).
Omanisation Requirements
The Ministry of Labour sets sector-specific Omanisation percentage requirements — minimum proportions of Omani nationals that private sector employers must maintain:
Selected sector requirements (approximate, subject to periodic revision):
- Banking and finance: 70-90% (varies by role type)
- Insurance: 60-70%
- Retail (large supermarkets): 35%
- Hotels: 30-35%
- General engineering and technical: 10-25% (varies by specialisation)
- Oil services: 50-60% (for certain roles)
- Health and education: Varies by facility type
Enforcement mechanisms:
- Labour inspection visits
- Fines for non-compliance
- Restrictions on new expatriate work permit approvals
Quota exemptions: Some high-skill roles where no qualified Omanis are available may be granted temporary quota exemptions by the Ministry of Labour.
Work Permits for Expatriates
Visa categories for workers:
- Work visa: Requires a job offer from an Omani-licensed employer; employer acts as sponsor
- Labour clearance: Ministry of Labour approval required before employer can recruit from abroad in many cases
Kafala system: Historically, Oman operated a strict kafala (sponsorship) system tying expatriate workers to specific employers. Reforms have progressively allowed greater mobility:
- Workers in certain categories can transfer employer without sponsor’s approval
- Domestic worker protections enhanced
- Exit visa requirement removed (workers can leave Oman without employer approval)
Dispute Resolution
Labour disputes: Disputes between employees and employers are first referred to the Ministry of Labour’s Labour Relations Department for conciliation. If conciliation fails, disputes proceed to the Labour Court (a specialised division of the civil court system).
Investment and Commercial Court (2025): For commercial and investment disputes involving businesses, the newly established court provides faster, expert resolution — reducing the commercial uncertainty that previously affected employer confidence in dispute outcomes.
Arbitration: International arbitration clauses are recognised and enforceable in Oman, making arbitration a viable alternative dispute resolution mechanism for commercial contracts with international counterparties.