In Oman's labor market, several types of employment agreements cater to different work arrangements. Understanding these variations is crucial for both employers and employees. Here's a breakdown of the key types of employment agreements recognized under Omani law:

Permanent Employment Contracts (for Omanis and Non-Omanis)

Permanent employment contracts in Oman are based on the Labour Law (issued by Royal Decree 35/2003). These contracts are intended for indefinite periods. Termination can occur by mutual agreement or with proper notice periods as mandated by law. Permanent employment contracts are commonly used for both Omani and non-Omani employees filling full-time positions.

Fixed-Term Employment Contracts

Fixed-term contracts are also governed by the Labour Law. The Civil Transactions Law (issued by Royal Decree 29/2013) provides additional regulations regarding maximum contract duration. These agreements specify a predetermined end date for the employment relationship. The maximum duration for a fixed-term contract is five years as per the Civil Transactions Law. If the employer and employee continue the working relationship beyond the stipulated end date without a new contract, the fixed-term contract automatically transforms into a permanent employment contract.

Part-Time Work Contracts

Part-time work contracts are explicitly addressed in the Labour Law. These agreements define a work schedule with fewer hours compared to a standard full-time position. Specific working hours per week or month should be clearly outlined in the contract. Part-time employees are generally entitled to most benefits offered to full-time employees on a pro-rated basis, including annual leave and social security contributions.

Temporary Work Contract (Sahem)

The Ministry of Labour regulates Sahem contracts through ministerial decisions. Sahem contracts are designed for short-term, project-based work or specific tasks with a well-defined scope. The duration of a Sahem contract cannot exceed one year and cannot be renewed.

Appointment Decision (for Omanis in Permanent Positions)

The Labour Law acknowledges appointment decisions as a form of establishing an employment relationship for Omanis in permanent positions. While not a formal contract, appointment decisions still hold legal weight and outline the employee's position, rights, and obligations similar to a permanent employment contract.

Omani law requires certain information to be included in employment agreements, while other clauses are highly recommended for a comprehensive and legally sound contract.

Mandatory Clauses (as per Oman's Labour Law)

• Parties to the Agreement: The employer (company name and address) and the employee (full name, nationality, and date of birth) should be clearly identified.
• Job Description: The employee's job title, duties, and responsibilities should be outlined.
• Start Date: The official commencement date of employment should be indicated.
• Employment Type: The contract should specify if it is permanent, fixed-term, part-time, or a Sahem contract (temporary project-based). Fixed-term contracts require mentioning the duration and justification for a temporary nature (if applicable).
• Working Hours: The standard working hours per week, including breaks, for full-time and part-time employees should be detailed.
• Wages and Salary: The employee's wage or salary amount, including payment frequency and any additional benefits or allowances (e.g., housing allowance) should be clearly stated.
• Annual Leave: The total number of annual leave days and the leave pay rate should be specified.
• Notice Period: The required notice period for termination by both the employer and the employee, as mandated by law (varies based on employment duration), should be outlined.

Recommended Clauses

While not mandatory, including these clauses in your employment contracts adds clarity and protects both parties' interests:

• Probationary Period: If applicable, details on the probation period duration, termination procedures during this time, and any specific expectations for the employee should be included.
• Confidentiality: If the role requires handling sensitive information, confidentiality expectations and restrictions on employee disclosure should be outlined to protect the employer's interests.
• Termination Clause: The grounds for termination by either party, following legal guidelines outlined in the Labour Law, should be clearly defined to avoid potential disputes.
• Dispute Resolution: A mechanism for resolving workplace disagreements within the company or through the Ministry of Labour before resorting to legal action should be established.
• Governing Law: Omani Labour Law should be specified as the governing law in case of any contractual disagreements.

Additional Considerations

• Language: The Labour Law recommends that contracts be written in Arabic, the official language. However, a certified translation in English or another language is often included for expatriate employees.
• Ministry of Manpower Approval: Standard form employment contracts issued by the Ministry of Manpower are commonly used for Omani employees, while expatriate contracts might be more detailed.

The probationary period is a trial phase in Omani employment contracts that allows both employers and employees to assess suitability for the role. The Omani Labour Law (Royal Decree 35/2003) acknowledges probationary periods, but specific details are left to be determined within the employment contract.

Key Points on Probation Periods

• Mandatory Inclusion (Not Mandatory Details): The Labour Law doesn't mandate including a probationary period in every contract. However, if a probationary period is included, the specific terms must be clearly outlined in the employment agreement.
• Maximum Duration: Omani law doesn't specify a maximum duration for probation periods. This means it's negotiable between the employer and the employee, but fairness and reasonableness are crucial factors.
• Differences Based on Pay Frequency: While a maximum duration isn't mandated, common practice observes a differentiation based on employee pay frequency:
  • Monthly Salary: Probation periods typically don't exceed three months for employees receiving a monthly salary.
  • Other Pay Frequencies: For employees paid bi-weekly or weekly, the probation period is generally shorter, often around one month.

Termination During Probation

• Simplified Dismissal: During the probation period, termination by either party requires a shorter notice period compared to regular employment. This allows for more flexibility during the assessment phase.
• Reason Not Mandatory: Employers are not obligated to provide a specific reason for dismissal during probation. However, general principles of fairness and good practice still apply.
• Rights During Probation: Even though on probation, employees still enjoy fundamental rights like protection against discrimination and unfair treatment as outlined in the Labour Law.

Considerations for Employers

• Transparency and Fairness: Clearly outlining the probation period duration, expectations, and potential outcomes is essential to ensure a fair and transparent process for both parties.
• Reasonable Duration: The probation period should be reasonable and proportionate to the job requirements. An excessively long probation could be deemed unfair by Omani courts.
• Performance Management: The probation period is an ideal time to implement a performance management plan to provide feedback, guidance, and assess the employee's progress towards meeting job expectations.

Omani employment contracts often include confidentiality and non-compete clauses to safeguard the employer's business interests. However, Omani law places certain restrictions on these clauses to balance the interests of the employer and the rights of the employee.

Confidentiality Clauses

Confidentiality clauses are designed to protect the employer's sensitive or proprietary information. This can include trade secrets, customer information, and business plans or strategies. While there is no specific law in Oman that deals exclusively with confidentiality clauses in employment contracts, the general principles of contract law can be applied. An employee has an obligation of loyalty to the employer, which includes maintaining confidentiality of such information during and after employment.

Key points to remember for confidentiality clauses:

• Clarity: The clause should clearly define the type of confidential information protected.
• Reasonable Scope: The restrictions should be reasonable in terms of time and scope of information covered. Public knowledge cannot be restricted by a confidentiality clause.

Non-Compete Clauses

Non-compete clauses limit an employee's ability to take up similar employment with a competitor after termination. Unlike confidentiality clauses, non-compete clauses are subject to stricter regulations in Oman:

• Justification Required: Employers must demonstrate a legitimate business need for a non-compete clause to be enforceable. This justification typically involves safeguarding highly specialized knowledge or confidential information.
• Limited Duration: Even with justification, a non-compete clause cannot exceed one year following termination.

In Oman, there is a stronger emphasis on an employee's right to work, making non-compete clauses less common compared to confidentiality clauses.

Additional points to consider:

• Written Agreement: Non-compete clauses must be included in a written employment contract to be enforceable.
• Compensation Not Mandatory: Unlike some jurisdictions, Oman doesn't mandate compensation for employees subject to non-compete clauses.