All About New Oman Labour Law

The Sultanate of Oman has taken remarkable steps towards modernising its labour framework with the introduction of the new Oman employment law. This marks a significant shift in the country’s approach towards raising employment standards and worker rights.

The new Oman labour laws not only protect employee rights but also bring clarity to employee contracts, working hours, leave entitlements, and termination procedures. Given  this, both employers and employees must understand the new labour laws to ensure compliance and maximise benefits.

In this comprehensive guide, we delve deep into the key provisions of the law, its implications for employers and employees, and the broader impact on the businesses.

Overview of the ‘New’ Oman Labour Law

As part of the new updates, Oman labour law officially known as Royal Decree No. 53/2023, replaces the previous legislation of Royal Decree 35/2003. These reforms are aimed at Oman’s broader efforts to improve the ease of doing business in Oman and attract foreign investment, while ensuring a fair and transparent work environment.

The Oman employment law introduces several changes which focuses on contract structures, leave policies, working hours, and employee benefits, emphasizing employee rights, employer responsibilities, and mechanisms for dispute resolution.

Key Provisions of Oman Labour Law

When planning for company registration in Oman, you must learn all about the new Oman labour law. Knowing the key provisions will help promote fairness, clarity, and flexibility in the workplace. Let us see the provisions in detail:

Changes to Fixed Contracts

The new Oman law for employees has bought reforms in fixed-term contracts. Such contracts will no longer convert to unlimited-term contracts upon renewal. In case, the employment is for more than five years, the contract automatically becomes unlimited. Both employers and employees must carefully manage contract renewals.

Restructured Leave Entitlements

As per the Oman new labour rules, the leave entitlements have been restructured and revised to benefit employees. New types of leaves have been introduced and existing ones have been extended. Let us see what are the new leave provisions:

• Omani employees can now take 15 calendar days per year to accompany a patient. The patient must be a spouse or a relative up to the second degree.
• Male employees are entitled to 7 calendar days of paternity leave.
• Employees can request unpaid special leaves, during which they have to bear all the social security contributions for themselves, the employer, and the government.
• Paid sick leaves are increased from 10 weeks to 182 calendar days (subject to meeting certain conditions) as - 100 percent for the first 21 days, 75 percent from days 22–35, 50 percent from days 36–70, and 35 percent from day 71 to 182.
• Maternity leave has been extended from 58 days to 98 days, and unpaid childcare leave is now available for up to one year.

Temporary Assignment

Employers can temporarily assign employees to work for another employer. This flexibility helps reduce foreign recruitment costs and supports operational efficiency.

Termination of Employment

The new Oman labour law provides clear guidelines for terminating employment such as:

• Poor performance: Employers may terminate employees for poor performance after providing a six-month improvement period following formal notification.
• Unfair termination: Compensation for unfair termination is now capped at 12 months pay, replacing the previous uncapped minimum of three months salary.
• Anti-discrimination: Termination based on gender, ethnicity, race, language, religion, creed, social status, disability, pregnancy, having a child, or breastfeeding is explicitly prohibited.

Working Hours

Daily working hours have been reduced from 8.5 hours to 8 hours per day (40 hours per week), excluding breaks. It helps in promoting a better work-life balance.

Omanisation

The Oman new labour rules strengthens workforce localisation policies such as:

• Employers must submit annual strategies for Omanisation, including details about Omani employees, wages, gender diversity, and available positions.
• Termination of non-Omani employees to hire Omani nationals is permitted.
• Companies are required to implement training and leadership development plans for Omani employees.

End-of-service Gratuity  

Under the old law, employees were eligible for end-of-service gratuity only after completing a minimum of one year of service. The new labour law in Oman eliminates this requirement, allowing pro-rata payment of gratuities for partial years of service, even if the employee has worked for less than one year.

Non-Compete Clauses

If the employee has access to confidential information or employer’s clients, a non-compete clause is necessary. As per the new labour law in Oman, the clause shall be valid for two years and restricted to the geographic area of the employer’s operations.

These reforms not only strengthen the rights of the workers but also streamline compliance. The new Oman labour law brings greater legal clarity and stability to the workforce, making  mainland company formation in Oman a more attractive and sustainable option for entrepreneurs.

New Regulations for Domestic Workers

In a landmark move, Oman has introduced comprehensive regulations for domestic workers under Ministerial Resolution No. 574/2025. These regulations aim to provide full protection for domestic workers while outlining clear rights and responsibilities for employers. Key provisions include:

• Minimum Age Requirement: Employers are prohibited from employing individuals under the age of 21 as domestic workers.
• Working Hours and Rest Periods: Domestic workers are limited to a maximum of 12 working hours per day, with at least 8 hours of rest. Overtime is permitted only with the worker's written consent.
• Employer Obligations: Employers are now legally required to provide adequate housing, food, healthcare, and transportation for domestic workers. Employers should also ensure recruitment ads do not discriminate based on creed or colour. Employers must also arrange for the worker's return to their home country within 30 days of contract termination unless services are transferred to another employer.
• Employment Contracts: All contracts must be written in Arabic or include an Arabic version, ensuring clarity and mutual understanding.
• Prohibition of Exploitative Practices: The law bans exploitative practices such as forced labour, harassment, confiscation of passports/personal documents without the written consent of the worker.

What is the Impact of New Oman Labour Law on Businesses?

The reforms under the new law aim to create a more transparent and equitable labour market, attracting both local and international businesses.

By providing a clear legal framework, the Sultanate ensures that foreign investors have confidence in the employment landscape. It is particularly beneficial for businesses seeking to establish operations through mainland business setup or Oman free zone company formation, as they can operate in compliance with the law while protecting their workforce.

A fair and transparent labour system makes Oman a more attractive destination for skilled professionals. This is particularly beneficial for businesses as they can leverage visa services in Oman to streamline employee onboarding and residency permits, making it easier to attract skilled talent from abroad.

Why Choose Commitbiz?

The new Oman labour law balances the needs of employers and employees, promotes foreign investment, and enhances Oman’s reputation as a business-friendly destination. Adapting to the new law is not just a legal necessity but also a strategic advantage.

Businesses that understand these changes will be better positioned to attract skilled professionals, maintain compliance, and benefit from the Sultanate’s pro-business policies.

Commitbiz can help you navigate these changes seamlessly. From ensuring compliance with the new labour regulations to assisting with company formation, visas, and business setup in Oman, our professionals can provide a hassle-free experience. Contact us today!