Oman Labour Law

Table of Contents

Oman Labour Law (OLL)

A.    Nature

B.    Employment Contract

C.    Types of Contract

D.    Termination

E.    Entitlements

F.    Human Resource Policy

G.    Redressal of Greivance

H.    Important Provisions

I.    Part Time Jobs

J.    Omanisation

Oman Labour Law (OLL)

Stipulated by:

-    Royal Decree 35/2003

-    Royal Decree 113/2011

-    Ministry of Manpower (MOMP)


Nature of Oman Labour Law:

-    125 articles / Role of Judiciary


Applicability (art.2):

-    Omani and Non Omani employees

Employment of Omani/Non Omani employees

Employment of Omani individuals:

    To be employed to maximum extent (art. 11).

    Employees Data to MOMP in January of each year (art. 14). Penalty for violation: fine RO 10 / RO 100 (art. 113).

Employment of Foreign employees:

    Valid Permit (art.18).

    Employer’s not to allow:

-    work for another employer

-    residing illegally

-    in positions reserved for Omani's (art. 18 bis).

    Penalty of imprisonment and Fine (art. 113)

Retain File for one year post termination.

Employment Contract (art. 23)

-    Arabic (art. 21)

Important ingredients (art.23):

-    Details

-    Designation

-    Term – Limited (art. 36) –Unlimited (art. 37)

-    Probation

-    Salary

-    Undertaking

-    Notice Period

-    Termination

LEGAL REVIEW OF CONTRACTS IS A MUST

Termination by Employer – without notice and EOSB

Art. 40 - nine circumstances:

a.    False identity or resorts to forgery;

b.    Heavy financial loss to Company;

c.    Non compliance of instructions re safety of workers / workplace, provided the instructions hanged in a conspicuous place and contravention of which is likely to cause grievous damage to employee/work place;

d.    Absence for without reasonable cause - ten days during one year or for more than seven consecutive days provided dismissal is preceded by a written notice from employer after his absence for five days in first case;

e.    Discloses secret relating to the employer company in which he works;

f.    If a final judgement is entered against him for an offence or felony for breach of trust/honour    or
felony committed in work place or during the course of work;

g.    If found during the work hours in a state of drunkenness or under influence of intoxication drug or mental stimulus;

h.    If he commits an assault of employer/manager / superiors in course of work, or if his hitting any of colleague results in sickness or delay from work for period exceeding ten days;

i.    Grave violation to his duties imposed by the employment contract.

Termination by Employer – with EOSB and Notice

Art. 43 in following cases:

a)    Expiry of limited contract;

b)    Death of worker;

c)    Disability to perform his works;

d)    Resignation / dismissal / abandonment;

e)    Sickness of not less than ten weeks

in one year;

a)    Retirement at Sixty.

Termination by Employee / Compensation for unfair dismissal

Termination by employee - Art. 41: retaining full rights if:
a.    If employer defrauded him in respect of terms of employment at time of entering contract;
b.    If employer does not perform substantial obligations towards employees as per law or contract;
c.    If employer or representative commits immoral act against employee or employee’s family;
d.    If inspite of knowing grave danger threatening the employees, the Employer did not implement any measures prescribed by relevant authorities.
 

Art. (106) fourth para:

“If it becomes evident to the court that the dismissal of the worker or the termination of his services was arbitrary or in violation of the law, the court shall either pass a judgment to reinstate the worker or oblige the employer to pay him a compensation equivalent to not less than three months calculated on the basis of the last gross wage he earned, taking into account the circumstances of the worker and the duration of his service in addition to:

1 - The legally payable end of service gratuity and all other benefits prescribed by the law or the contract of employment whichever is greater.

2 - The basic wage with the other allowances for the notice period provided by the law or the contract of employment whichever is greater.”

Entitlements

Leaves:

a.    Annual Leave (art. 61)

b.    Sick Leave (art. 66)

c.    Emergency Leave (art. 61 + RD 567/2011)

d.    Special Leave (art. 67)

e.    Maternity Leave (art. 83)

f.    Weekly off/Public Holidays (art. 71/65)

End of Service Benefits –

a.    Omani – PASI Fund Contribution (gross pay): Employer : 11.5%;

Employee: 7% Govt - 5.5%

b.    Non Omani (art. 39)

Overtime Provisions (art. 70, 73)

Medical (art. 33)

Experience Certificate (art.46)

Repatriation (art. 56)

Human Resource Policy

Work regulations:

  • 15 or more employees (art. 28)
  • Penalty regulations:
  • Ministerial Decision 129/2005
  • Bilingual
  • Penalties progressive list
  • Pre approved by MOMP
  •  Conspicuous place (art. 29)

Redressal of Greivance:

  • 50 or more employees (art. 105)

Employee can file case to MOMP:

  •  15 days for unfair dismissal
  •   One month for entitlements


Some Important Provisions for Employer

  • SALARY OF EMPLOYEES (art.53):
  • employer’s liability not discharged till -
  • salary not transferred to employee’s local bankaccount.
  • Within 7 days from end of period in which it becomes due (art. 51)

LOAN TO EMPLOYEE/S (art. 58):

  • no interest to be charged on loan / advance amount;
  • deduction not more than 15% of salary.

NATURE OF WORK (art. 25):

-    Can not deviate unless temporary;

-    Shall not differ technically, morally and financially.

COMMERCIAL STATUS CHANGE (art. 47):

  • If dissolution / liquidation /closure /
  • merger or succession by inheritance, will, gift :
  • Employer not discharged of its obligations ;
  • Successor jointly liable for obligations of employee’s rights.

 
Part Time Jobs in Private Sector - MD 102/2015

  • MD 520/2013 cancelled by new MD 102/2015, which now provides:
  • Only Omani nationals – between 16 years and 18 years
  • Work Time: 6:00 AM and 6:00 PM only
  • Work Hours - maximum five hours
  • Payment - minimum three Rials Omani per hour
  • Part timers calculated within Omanisation percentage - NOT to exceed 10% of the determined Omanization rate
  • Must provide work related injuries insurance coverage
  • Termination – by written notice of seven working days

Omanisation Policies

Ministerial Decision 103/2015:

SME’s incorporated post MD application, shall exempt from Omanisation % for two years provided:

-    Employer / Owner - full time manage his entity;

-    Employer registered as employer with Public Authority of Manpower Registry and Public Authority for SME Development;

-    Employer insured at PASI

SME’s existing before MD application shall subject to same conditions shall enjoy:

-    First year from this decision in force –25% of stated Omanisation applies;

-    Second year–50%;    Third year–75%;    Fourth year – 100%

(The Ministerial Decision provides the table of the activities, professions approved for recruiting non Omani in SME’s and the maximum no Omani employees allowed).

Recommendations to MOMP by Majlis Al Shura:

-    Stop renewal for expatriates on retirement age of 60 & create opportunities for job aspirants in the market.

-    Omanisation of the top managerial posts / Omanisation in health sector .

Upcoming steps from MOMP:

Revised labour law.

Guidelines by ROP’s Directorate General of Passports and Residence

Two years Ban re Employment Visa: re-enforced with effect from 1st July 2014

Article 11 of the “Foreigners Residence Law”:

“For two years it is prohibited to grant entrance visa for the foreigners laborers, who have previously worked in Oman. From the date of last leaving, and the general inspector may make an exception for such period in the case of the public interest” .

2/2/2016:    Sponsor to be present before ROP to sign the NOC.

Employment Visa for Women:

-    no blanket ban on ladies visa

Family visa:

  • Employee with minimum gross salary RO 600 pm;
  • Eligible to apply for spouse, child, parents;
  • Not converted to job visas.

Renewal of Resident ID:

-    Procedure for first-timers remains unchanged;

-    Renewal – Employee presence not required;

-    Employer can get the card renewed on behalf of the expatriate.

Merger and Acquisition Scenarios

Scenario 1 - Asset Purchase/Partial Merger

(Partial takeover due to Company A purchasing select assets of Company B)

•    Company A purchases select assets from Company B, instead of purchasing shares.

•    Company A does not assume liability for Company B and makes no claims related to Company B’s future interests or operations.

•    Company B will continue to operate under its own name.

Would the acquisition of Company B’s assets/ownership interests affect the immigration status of Company B's foreign workers?

Secondment

Does it make a difference if the employee is on an international assignment, rather than a local contract?

•    Secondment is not expressly recognized under the Omani Labour Law issued by Royal Decree No. 35/2003 as amended.

•    However, secondment agreements are commonly entered into between foreign companies and local Omani companies whereby a secondee is assigned to work with/for the Omani company for a temporary period.

Scenario 1 - Asset Purchase/Partial Merger

•    Would immigration status expire immediately upon change of employer? How long would the affected employees have to make the needed changes?

Immigration status would not expire immediately, since as mentioned above it is granted for a period of 2 years (valid time span of employment visa in Oman).

•    Can the affected employees remain in country while processing is in progress?

Yes, employees are allowed to remain in the Sultanate during the process of acquiring of the company assets.

Scenario 2 – Change of Ownership

(Company A acquires controlling interest in Company B)

•    Company A buys/acquires controlling interest of Company B and all its employees, via a share purchase.

•    Company B will continue to operate and trade under its own name and will continue to operate as normal without the employees becoming employees of Company A.

•    Company B will become a Subsidiary of its new Parent Company, Company A.

Scenario 3 - Merger

(Company A completely acquires Company B)
•    Company A buys/acquires ownership of Company B and all its employees.

•    Company B will be merged with an existing Company A entity.

•    Company B will cease to trade under its own name or exist as a separate entity.

•    Would the acquisition of Company B’s assets/ownership interests affect the immigration status of Company B's foreign workers?

In case of a merger of companies and acquiring ownership of Company B and changing of a trade name, the visa status of the foreign employees will change.

Scenario 3 - Merger

•    Would an entirely new visa/permit application need to be filed? Or an amendment? Or just a notification?

•    Transfer of sponsorhip procedure.

•    Does it make a difference if the employee is on an international assignment, rather than a local contract?

Scenario 3 - Merger

Would immigration status expire immediately upon change of employer? How long would the affected employees have to make the needed changes?

•    If Company B will be merged with an existing Company A entity, and cease to trade under its own name, the visa status of the employees would be affected.

•    The employees shall continue to reside legally in Oman during the process of transfer of their visas as their previous labour cards (residence permits) must be for a period of 2 years (post expiry of residence permit, the Company has one month grace period to renew the said permit) and upon completion of a sponsorship transfer, the Company shall further be obliged to have its employees to obtain the new resident cards from the Directorate General of Passport and Residences.

AL ALAWI & CO. PROFESSIONAL SERVICES IN EMPLOYMENT SECTOR:

-    Drifting

-    offer letters and employment contracts

-    employee handbooks with penalty regulations

-    disciplinary procedures

-    termination letters

-    settlement agreements

-    confidentiality agreements

Advising:

-    employees transfer

-    regulations of Ministry of Manpower

-    immigration and residencey rules and procedures

Dispute Resolution:

-    Represent / Assist the employer as well as employees in resolving dispute, negotiations, unfair dismissal and regulatory issues

Due diligence
 

 

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