Oman Employment Legislation Changes 2024

Businesses in Oman will need to be ready to implement these new regulations for their employees in 2024

The year 2024 sees significant changes in Oman’s employment policies, with the introduction of new legislation aimed at improving the labour market, ensuring fair treatment of employees, and promoting economic growth. These changes reflect the government’s goal of creating a more sustainable workforce and increasing local job opportunities.

Here are some of the key changes that employers in Oman must be aware of in order to remain compliant and ensure smooth operations.

1. Omanization Policy

The Omanization policy was introduced to increase job opportunities for Omani nationals by setting quotas for the employment of locals in different sectors. This policy aims to reduce the country’s dependency on expatriate workers and to build a sustainable workforce using their own labour force. This policy has been further strengthened in 2024. This policy mandates the hiring of Omani nationals in specific sectors and positions to reduce unemployment among locals and decrease the country’s reliance on expatriate workers.

Disclosure Requirements

Every establishment must now publish an annual workforce localization plan. This plan must be publicly available at the workplace and on the company’s official website. The report must detail the number of Omani workers employed, their salaries, gender distribution, and information on any job vacancies. This level of transparency is crucial for ensuring compliance with Omanization targets and fostering local talent.

Leadership Training for Omanis

Employers are required to devise a concrete plan for appointing and training Omani nationals for leadership roles, ensuring the effective implementation of Omanization across all levels of the organization.

Termination of Non-Omani Workers

The law facilitates the termination of expatriates if an Omani worker is qualified to replace them in the same position. This measure strengthens the transition towards a predominantly local workforce while allowing businesses to maintain operational efficiency.

Prohibited Professions for Non-Omani Workers

The policy also includes a list of professions that are prohibited for non-Omani workers, aimed at ensuring that Omani nationals are prioritized for these roles.

1. Drilling fluid engineer
2. Drilling Officer
3. Electrician / General Maintenance
4. Mechanical Technician / General Maintenance
5. Drilling Measurement Engineer
6. Quality Controller
7. Food and medical supplies (refrigerated) trailer and locomotive driver
8. Water tanker and trailer driver
9. Hotel Reception Manager
10. Lifeguard
11. Travel agent
12. Room Service Supervisor
13. Quality Control Manager
14. Quality Officer
15. Aircraft loading controller
16. Marketing Specialist
17. Ship lashing and fixing worker
18. Labour Supervisor
19. Loading and unloading supervisor
20. Commercial Promoter (Sales Representative)
21. Commercial broker
22. Goods arrangement
23. Flatbed Crane Driver
24. Forklift driver
25. New Vehicle Salesman
26. Used car dealer
27. New parts seller
28. Used parts dealer
29. Systems Analyst / General
30. Information Systems Network Specialist
31. Marine observer
32. Ship traffic controller
33. Computer Maintenance Technician
34. Computer programmer
35. Computer Engineer
36. Computer operator
37. Web Designer
38. Operations Analyst

Companies that fail to meet Omanization quotas could face fines and restrictions on obtaining new visas for expatriates. Employers are encouraged to offer training programs to enhance the skills of Omani employees.

2. Employment of Expatriates

Oman is tightening the rules on hiring expatriates to balance the workforce and prioritize Omani nationals.

• Labour Market Test: Employers must prove that no suitable Omani candidate is available before hiring expatriates, especially in administrative and sales roles.

• Work Visa Limitations: Expatriate work visas are now limited to two years and may only be renewed if the employer meets specific Omanization quotas. Furthermore new rules limit work visas for certain jobs where Omani nationals are available, such as administrative roles and sales positions.

• Mandatory Health Insurance: Health insurance is now required for all expatriate employees, ensuring their well-being and compliance with labour laws

3. Social Insurance Law

The new social insurance law in Oman gives coverage and benefits to employees, ensuring their social protection.

• All employees, including part-time and temporary workers, are now eligible for social insurance benefits such as health, disability, and retirement.

• Employers must now contribute 12% of the employee’s gross salary to social insurance, up from the previous 10.5%.

• Employers must enroll employees in the social insurance system within one month of their job start date.

• A new unemployment insurance scheme will provide financial support to employees who lose their jobs due to economic reasons.

4. Oman’s Wage Protection System

The Wage Protection System is a new requirement for employers to pay salaries electronically, ensuring fair and timely compensation for all employees.

• Salaries must be paid through banks or approved financial institutions.

• The Ministry of Labour will monitor wage payments to ensure compliance.

• Employees can report delays or inconsistencies to the Ministry of Labour for resolution.

5. Labour Unions and Collective Bargaining

The new labour laws in Oman have made it easier for labour unions to support workers. All registered unions are now officially recognized and can negotiate on behalf of employees about important issues like pay, working conditions, and job terms.

The laws also protect employees from being punished by their employers for participating in union activities, ensuring they can join without fear.

Additionally, a clear process is being set up to help resolve any disagreements between employers and unions, promoting open communication and reducing conflicts.

6. Working Hours and Leave

The new labour laws in Oman have changed the standard working hours from 8.5 hours a day to 8 hours a day, or 40 hours a week. During Ramadan, Muslim employees can work even fewer hours, with a maximum of 6 hours a day or 30 hours a week, allowing them to observe their religious practices. These adjustments aim to give employees a better work-life balance.

Updated Leave Entitlements:

• Annual Leave: 30 days per year

• Sick Leave: Extended from 10 weeks to up to 182 days per yearDay 1 to Day 21 on full paymentDay 22 to Day 35 on 75 percent paymentDay 36 to Day 70 on 50 percent paymentDay 71 to Day 182 on 35 percent payment

• Paternity Leave: 7 days

• Maternity Leave: Extended from 50 days to 98 calendar days. Furthermore the limit on the number of times maternity leave can be taken (previously restricted to three times with a single employer has been lifted. New mothers are now entitled to one hour of daily paid time off to care for their child

• Marriage Leave: 3 days

• Bereavement Leave: The paid bereavement leave has been increased from 3 days to 10 days for the death of a child or wife and introduction of a new entitlement of 14 days for the death of a husband for non-Muslim widows.

• Hajj Leave: up to 15 days

• Examination Leave: 15 days

• Unpaid Childcare Leave for Women: Up to 1 year

7. New Rights for Employers

The new laws also introduce rights that give employers more flexibility in managing their workforce.

Employers in Oman can now offer flexible work options, like remote work or different hours, to meet the needs of both the business and its employees. This flexibility helps keep employees happy and encourages them to stay with the company, especially those looking for a better work-life balance.

Additionally, employers can change work schedules or locations based on what the market needs, as long as they follow the agreed rules and respect employees’ rights.

Other key areas of change include termination for poor performance, redundancy, and economic reasons, each with structured guidelines to ensure fairness and compliance with the law.

Termination for Poor Performance

For the first time in Oman, employers now have the legal right to terminate employees for poor performance. This new provision allows businesses to address underperformance more effectively, while also offering employees a clear improvement period:

• Performance Improvement Period: Employees must be given a minimum of six months to improve their performance after being notified of their deficiencies.

• Omanization Compliance: If the terminated employee is Omani, the employer is required to replace them with another Omani national, ensuring compliance with Omanization efforts.

This is a significant development, empowering employers to take action when performance issues persist while providing employees with the opportunity to rectify their performance before termination.

Redundancy

Redundancy has been formally introduced as a valid legal ground for termination. Employers can now restructure or downsize their workforce in response to business needs without facing legal disputes:

• Valid Grounds for Redundancy: Redundancy can occur in cases of full or partial business closures, reductions in commercial activity, or changes in production systems that impact the need for workers.

• Notification Requirement: Employers must notify the Ministry of Labour at least three months in advance before proceeding with redundancies.

• Facilitating Omanization: In cases where an expatriate worker is made redundant, businesses are encouraged to replace them with qualified Omani nationals, reinforcing Oman’s commitment to local employment.

Termination for Economic Reasons

The new labour law also introduces economic reasons as valid grounds for termination under specific circumstances:

• Definition: An economic reason is defined as the accumulation of losses over two consecutive years, which allows employers to terminate employment contracts. However, the cessation of a business or branch due to lack of profitability does not qualify as an economic reason.

• Approval from Ministry of Labour: Employers must seek approval from a committee within the Ministry of Labour before executing terminations on economic grounds. The purpose is to permit layoffs only to the extent necessary for the business to remain viable and avoid bankruptcy.

The introduction of these new rights offers employers more flexibility in managing their workforce while maintaining a balance with employees’ rights. The law emphasizes a fair process for termination, with oversight by the Ministry of Labour to ensure compliance with regulatory standards.

How Beyond Borders HR Can Help You

These 2024 employment legislation changes for Oman can be challenging for employers to process independently. Beyond Borders HR, a global HR consulting firm, stands ready to assist businesses in understanding and implementing these changes effectively. With our extensive expertise in global HR practices, we ensure that your organization stays compliant with the evolving regulatory landscape. Reach out to Beyond Borders HR for tailored solutions, expert guidance, and seamless integration of these legislative updates into your HR policies and practices. Our team is dedicated to empowering your business with the knowledge and support needed to thrive in this dynamic regulatory environment.