Oman Employment Guide 2026 — Labour Law
Oman's Vision 2040 is transforming the country's economy with investment in tourism, logistics, manufacturing, and technology. This guide covers Oman's labor framework, Omanization requirements, and key employer obligations under Oman Labour Law No. 53 of 2023.
Why Hire in Oman
Oman offers a stable, strategic business location at the crossroads of the Arabian Sea and Gulf of Oman. The country is actively diversifying its economy under Vision 2040, with growing sectors including tourism, logistics (Duqm Special Economic Zone), manufacturing, and renewable energy. Oman has a relatively straightforward business environment and strong legal protections for both employers and employees.
Oman Labour Law No. 53/2023: A comprehensive update to the previous 2003 Labour Law, this legislation introduced flexible working arrangements, enhanced maternity/paternity protections, clearer non-compete rules, and updated Omanization enforcement mechanisms. It came into force in January 2024.
Business Setup
Oman allows 100% foreign ownership in most commercial sectors following the 2019 Foreign Capital Investment Law. The Ministry of Commerce, Industry and Investment Promotion (MoCIIP) manages company registration.
Common options: Limited Liability Company (LLC), Branch of Foreign Company, or establishment in Duqm SEZ or Salalah Free Zone for export-oriented operations.
All commercial registrations are processed through the Invest Easy online portal (investeasy.gov.om). Most registrations complete within 3–5 business days.
Required from the local municipality for the business premises before commencing operations.
All employers must register with MoL before hiring. This establishes the company's Omanization classification and work permit quota.
The Public Authority for Social Insurance (PASI) manages social security for Omani nationals. Mandatory before first Omani hire.
Hiring & Omanization
Omanization requires private sector companies to hire minimum percentages of Omani nationals. Requirements are set by the Ministry of Labour and vary significantly by sector and company size.
| Sector | Omanization Minimum |
|---|---|
| Banking & Finance | 85% |
| Insurance | 45% |
| Hotels (4–5 star) | 40% |
| Retail | 35% |
| Construction & Engineering | 20% |
| Oil & Gas services | 35%+ |
| IT & Technology | 20% |
Expat work permits: Expatriate employees require work visas (sponsored by employer) and residence cards. The number of expat permits is directly tied to meeting Omanization targets — companies below their Omanization quota cannot obtain new expat permits until the shortfall is addressed.
Employment Contracts
Oman Labour Law No. 53/2023 requires all employment relationships to be governed by written contracts. Key provisions:
- Probation period: Maximum 3 months; extendable to 6 months by mutual written agreement
- Both fixed-term and indefinite contracts are permitted
- Contracts must be in Arabic; bilingual contracts accepted but Arabic version prevails
- Non-compete clauses: Valid for up to 2 years post-employment; must be geographically and functionally specific
- Remote work provisions now explicitly addressed under the 2023 law
Leave & Benefits
| Leave Type | Entitlement | Notes |
|---|---|---|
| Annual Leave | 30 days/year | Full pay; 2 days accrued/month after 6 months |
| Sick Leave | Up to 10 weeks/year | First 3 weeks: full pay; next 4: half pay; remaining: unpaid |
| Maternity Leave | 98 days (14 weeks) | Full pay; increased from 50 days in 2023 law |
| Paternity Leave | 7 days | Full pay; within 3 months of birth; new in 2023 law |
| Parental Leave | 2 hours/day for 1 year post-birth | For nursing mothers |
| Hajj Leave | 15 days (once per career) | Paid for Muslim employees |
| Public Holidays | ~14 days/year | National Day, Renaissance Day, Eid Al-Fitr, Eid Al-Adha etc. |
Working Hours
Standard hours are 9 hours/day including 1 hour break, 45 hours/week. During Ramadan, hours are reduced to 6 hours/day for Muslim employees. Friday is the weekly rest day; many private sector companies use Friday–Saturday weekends.
Overtime: Overtime is capped at 12 hours/week. Overtime is paid at 125% of the basic hourly wage. Night work (9 PM–6 AM) and holiday work attract 150%. Employees may also request compensatory rest days in lieu of overtime pay.
Payroll & PASI Contributions
Salaries must be paid on time according to the contract — monthly payment is standard. Oman does not currently have a formal WPS equivalent for all private sector companies, though electronic salary transfers are the norm for reputable employers.
PASI Contributions (Omani nationals)
| Category | Employee | Employer | Government |
|---|---|---|---|
| Omani nationals — Pension | 7% | 10.5% | — |
| Occupational Hazard (all) | 0% | 1% | — |
| Expatriates — Work injury only | 0% | 1% | — |
PASI contributions are calculated on basic salary plus housing allowance. Monthly contribution reports and payments must be submitted by the 15th of the following month. Late payments attract 1% monthly penalty interest.
Termination & End-of-Service Gratuity
End-of-service gratuity is payable to expatriate employees (Omani nationals receive PASI pension benefits instead). The gratuity is calculated as:
| Service Duration | EOSB Rate |
|---|---|
| Less than 1 year | None |
| 1–3 years | 15 days' basic pay per year |
| 3+ years | 1 month's basic pay per year of service |
Notice Periods
- Indefinite contracts: 1 month's written notice (30 days) by either party
- Fixed-term contracts: Compensation equal to 3 months' salary or remaining contract value (whichever is less) for early termination without cause
- During probation: 1 week's notice by either party
- Immediate dismissal (no gratuity): Gross misconduct including assault, intoxication, theft, serious breach of duty — must be documented
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- All employment contracts comply with Oman Labour Law No. 53/2023
- PASI contributions filed and paid by 15th of each month for Omani nationals
- Omanization targets met per sector requirements
- Maternity leave updated to 98 days (14 weeks) under new law
- Paternity leave of 7 days implemented per 2023 law requirements
- Work permit and residence card renewals tracked before expiry
- EOSB calculated and paid on final working day
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