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Omani Labour Law – Recent Changes and Amendments

Guiding Principle

With Royal Decree No. 113/2011 amendments and changes to the Omani Labour Law, Royal Decree No. 35/2003 has been published. The aim to the new changes has been to clear up uncertain areas in the Labour Law. The changes are quite far-reaching, in particular to changes in working hours, overtime, leave, etc.

I. Introductory Note

The Labour Law inOman (Omani Labour Law = OLL) is regulated by Sultan’s Decree No 35/2003 and issued by the Ministry of Manpower (MOM). The Labour Law applies to all employers and employees, public and private establishments, organizations and their subsidiaries, are they Omani or Expatriates, which practice their activities in the Sultanate of Oman, Art.4 OLL.

II. Recent Changes and Amendments to the Omani Labour Law

Already some time rumoured and discussed about, the OLL was recently finally amended in October 2011 by Royal Decree No. 113/2011. The key amendments are hereinafter summarized as follows:

  1.  Payment of Salary and Overtime

    With Royal Decree 113/2011 the definition of gross salary has been amended by including all allowances, such as travel, transport and housing allowance, in addition to the basic salary. Previously travel, transport and housing allowance was not considered to be part of the gross salary.

    Furthermore and with the change, the new Royal Decree has reinforced the payment of salaries to employees within 7 days of the date on which the salary becomes due, whereas the salaries must be paid into a local licensed bank account of the employee. However and as an exemption, this rules does not apply where employers have agreed with their employees to transfer the salary into overseas bank accounts.

    Another amendment was made with regards to the payment of overtime. In cases where the employee is claiming overtime, the payment will be now calculated on the employee’s basic salary. Nevertheless, each employer has still the liberty to pay overtime on the basis of the gross salary.

  2.  Working hours

    The most significant change is introducing the 5-day working week. Consequently, the maximum working hours has been reduced from 48 hours a week to 45 hours per week, Art. 68 OLL. During the month of Ramadan, the maximum working hours per week has been also reduced to 30 hours per week. However, the daily working hours of 9 hours has been maintained, whereas the employer must grant the employee now a 2 day weekend and thus reducing the working week from a six-day week to a five-day week.

    A further change has been passed with respect to overtime. The new Royal Decree has capped the maximum worked hours a day by 12 hours, meaning that an employee cannot make more than 3 hours per day overtime.

  3. Maternity Leave

    Unlike the previous Article in the Omani Labour Law respective maternity leave, with the new amendments by Royal Decree 113/2011 maternity leave has been increased to 50 days (previously maximum 6 weeks as per Art. 83 OLL). This entitlement is limited to a maximum of three separate sets of maternity leave during employment.

  4. Annual Leave

    According to the existing Omani Labour Law, each employee was entitled to receive in the first year of employment 15 calendar days of leave. This entitlement has now been increased to 30 days per year and is payable on the basis of the gross salary.

    Additionally the law stipulates that it is not anymore permissible to waive any leave, meaning that that forwarding and carrying over leave is likely to be held null and void, with the effect that the employer has to compensate the employee for any loss or not taken leave during employment or upon termination of employment.

  5. Emergency Leave

    Emergency leave according to Art. 61 OLL has been now increased from 4 days to 6 days per year. In the past, emergency leave was limited to 2 days at the same time. This rule has been abolished now. A new Ministerial Decision is expected soon to regulate on how emergency leave can be taken.

  6. Transfer of Employees

    With the implementation of the new Royal Decree 113/2011, a new provision to Art. 48 of the OLL concerning the sale, lease or like of a business has been added. Where there is a transfer of an employment contract on a project from one contractor to the other, and the work to be carried out remains the same, then employees will be automatically transferred to the other contractor on the same terms and conditions as held under the old contractor.

  7. Omanisation

    Generally employers must employ Omani workers as far as possible. The Ministry of Manpower (MOM) from time to time has stipulated the percentage of Omanisation required in each sector of economic activity.

    Now with the amended regulation, an employer who does not meet the prescribed Omanisation target may fear to pay a penalty between OMR 250 and OMR 500 for each Omani worker required to be employed. Each employer will have a timeline of 6 month to meet the requirement, otherwise the penalty will be doubled.

  8. Awards for Unfair Dismissal

    Another significant change is the removal of the cap on compensation awards for unfair dismissal, to be decided and ruled by Oman courts. Before the amendment, the court had to award the employee a minimum compensation equal to 3 monts gross salary. Now, the amount the court may award as compensation for unfair dismissal is unlimited, which may result in uncertainty for both employer and employee.

January, 2012 Hanka Jahn
  Meyer-Reumann & Partners, Dubai Office
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