An employment contract in Oman must comply with the Labour Law. This is particularly relevant for new employers and foreign companies entering the Omani market, where international or group templates may not reflect Omani requirements.
Problems can also arise when the offer letter, Ministry of Labour contract, and internal terms do not match, or where the parties later disagree over who the employer is, what forms part of the employee's pay, or whether the employee's role or workplace has changed.
This article explains the main requirements for employment contracts in Oman and focuses on the terms that most often matter in practice or give rise to employment disputes.
What Must an Employment Contract in Oman Include?
Under the Oman Labour Law, an employment contract must be in writing in Arabic, with a copy for each party, and approved by the competent authority. A contract may also be prepared in another language, provided an Arabic version approved by both parties is attached.
Article 36 requires the contract to record key information about the employer and employee, the work and workplace, contract duration where applicable, salary and other entitlements, and the required notice concerning non-renewal. It also requires certain statutory obligations to be included in the contract.
For employers, the more difficult questions often concern how these terms are recorded and applied in practice. The sections below look at the contract terms that commonly become relevant in employment disputes.
Offer Letter, Ministry Contract, and Internal Contract: What If the Terms Differ?
Employers may use several documents when recruiting: an offer letter, the Ministry of Labour contract, and sometimes a more detailed internal contract. Problems arise when their terms differ.
In Supreme Court Labour Cassation 1496/2020, decided on 18 October 2021, the job offer linked the employment to a particular project, but the later employment contract did not. The Oman Supreme Court treated the later contract as the parties' final agreement and did not allow the employer to rely on the earlier restriction.
Supreme Court Labour Cassation 341/2021 involved a different inconsistency between the employee's recorded job title and pay, and the work actually performed.
There is no single rule for every inconsistency. The documents, their sequence, the disputed term, the actual working arrangements, and mandatory provisions of the Labour Law may all be relevant.
Employee, Contractor, or Secondee: Who Is the Employer in Oman?
Not everyone working within a business is necessarily its employee. The position can be less straightforward for consultants, independent contractors, personnel working through another company, or secondees.
The Labour Law defines an employment contract by reference to the substance of the relationship: work for the employer, under its management and supervision, in return for a wage.
In Supreme Court Labour Cassation 145/2005, the Oman Supreme Court treated subordination as the feature distinguishing employment from other arrangements for the performance of work. Although decided under the previous Labour Law, the principle remains consistent with the current definition.
The issue also arises in practice. One dispute concerned a person working at a bank through another company and whether the arrangement was employment or independent services. In another, a foreign employee seconded to an Omani company claimed employment entitlements from that company. The claim was dismissed on the basis that the employment relationship remained with the foreign employer.
Both the contractual structure and how the relationship works in practice may therefore matter. Labels such as consultant, contractor, or secondee do not, by themselves, determine who the employer is.
Fixed-Term or Indefinite: Why the Contract Type Matters
An employment contract in Oman may be fixed-term or indefinite.
Under Article 34, a fixed-term contract may not exceed five years and may be renewed by agreement, with renewal periods counting towards the employee's service.
Article 35 sets out when a contract is treated as indefinite, including where no duration is specified and certain cases where the parties continue the employment after the contract expires.
Basic Salary, Gross Wage, and Allowances
The Labour Law distinguishes between basic salary and gross wage. Article 36 requires the contract to state the basic salary, allowances, benefits, and other entitlements.
Disputes may concern what forms part of the employee's remuneration, whether housing or transport is paid as an allowance or provided as a benefit, and how particular payments are treated when calculating employment entitlements.
In Labour Case 663/2012, the dispute included the employee's basic salary and the treatment of housing and car benefits, including amounts paid by the employer directly to third parties.
Clearly separating basic salary, cash allowances, and employer-provided benefits can reduce uncertainty over the agreed remuneration package.
Job Title, Duties, and Place of Work
Article 36 requires the contract to state the type and conditions of work and the workplace address. These terms can become important when the employee's role or workplace changes.
In one dispute filed in 2017, two departments were merged and the employee took responsibility for both. The issue was whether this was an organisational change or a different role carrying a new title and additional benefits. The first-instance court awarded additional benefits, and the employer appealed.
In another case, an employee who had accepted a new position and grade later sought a higher title and grade, salary differences, and compensation. A separate restructuring dispute concerned an employee who objected to moving from Muscat to another workplace.
These disputes show why material changes to a role, grade, or workplace should be clearly documented.
Probation Period
If the parties agree a probation period, it must be stated in the employment contract.
Article 37 allows up to three months for employees paid monthly and two months for other employees. Probation cannot be repeated with the same employer, and either party may terminate during probation with at least seven days' notice.
In Supreme Court Labour Cassations 55/2011 and 221/2011, the Court treated probation as a period for the parties to assess whether the employment relationship should continue. Although decided under the previous Labour Law, that principle remains consistent with the current law.
The current Article 37 should, however, be followed for the applicable probation periods.
Working Hours, Overtime, and Rotational Work
Shifts, overtime, and rotational work can give rise to disputes, particularly at remote or project sites.
Issues may include whether additional hours amount to overtime, what an overtime allowance covers, and how work-and-rest rotations affect statutory entitlements.
In Supreme Court Labour Cassation 436/2013, the Court considered a dispute involving the effect of an agreed work-and-rest rotation on statutory annual leave. The case arose under the previous Labour Law and should therefore be read in that context.
Employers using shifts, rotations, or overtime allowances should clearly record the arrangement and ensure it complies with the current Labour Law.
Notice and Termination Terms
For indefinite contracts, Article 38 provides for 30 days' written notice for employees paid monthly and 15 days for other employees, unless the contract provides for a longer period.
This is separate from the Article 36 requirement concerning notice of non-renewal. Dismissal without notice under Article 40, wrongful dismissal, and termination for economic reasons are governed by separate provisions.
What If There Is No Written Employment Contract?
Article 33 requires employment contracts to be in writing. However, the absence of a written contract does not necessarily mean there is no employment relationship.
Where there is no written contract, Article 33 allows the employee to prove their rights by other means of evidence.
What Should Employers Check Before Issuing an Employment Contract?
Before issuing an employment contract, particularly when hiring in Oman for the first time or adapting an international or group template, employers should check that:
- the contract complies with the Oman Labour Law;
- the contract type and duration are clear;
- salary, allowances, and benefits match the agreed package;
- the job, duties, and workplace are accurately described;
- probation and notice provisions reflect the current law; and
- the offer letter, Ministry of Labour contract, and any internal contract are consistent on the main terms.
International or group templates may need to be adapted for Oman. The aim is not a longer contract, but one that accurately records the employment arrangement and complies with Omani law.
Related Insights
- Oman's New Labour Law on Wrongful Dismissal
- Redundancy Termination in Oman: A Guide for Employers
- Compensation for Wrongful Termination under Omani Labor Law
- Employer-Expert Relationships in Oman: Navigating Legal Risks
- Under What Circumstances Can an Employee Be Terminated
Bait Al Qanoon advises employers on employment contracts and related employment issues under Omani law.