Muscat – In the ongoing transformative era of Oman under His Majesty Sultan Haitham bin Tarik, two landmark legislations were introduced this year reshaping the country’s labour and social protection landscape.
Unveiled in July 2023, the Labour Law sets a comprehensive framework aimed at enhancing workplace efficiency, Omanisation and safeguarding workers’ rights, while aligning with Oman Vision 2040.
Concurrently, the groundbreaking Social Protection Law, commended by the International Labour Organization (ILO), revolutionises the social security domain, offering universal benefits, strengthening protection for migrant workers and centralising pension schemes. Together, the two laws underscore Oman’s commitment to fostering a balanced, resilient and inclusive socio-economic environment.
Strategic blueprint for workforce
The Royal Decree on the Labour Law not only fortifies the employment rights of Omani nationals but also establishes a future-ready, robust labour market in line with Oman Vision 2040. Central to this vision is the empowerment of Omani citizens to lead institutional growth in the private sector.
The law stipulates businesses must disclose their annual plan for localisation and workforce replacement, detailing the number of Omani workers, their salaries, gender and potential job vacancies. Additionally, it mandates businesses to create and implement plans for the appointment and training of Omanis for leadership roles, as well as strategies to retain them.
Formulated through a nationwide initiative involving various stakeholders and specialised entities, the Labour Law paves the way for a Joint Dialogue Committee. This body will assess proposals to regulate the labour market, promote relationships between stakeholders and ensure harmony between the interests of workers and employers.
The legislation, divided into ten sections, comprehensively covers employment regulations, and contracts and mutual obligations between employers and workers. It outlines specifics relating to working hours, leave allowance, remuneration, employment of young individuals, occupational health and safety, and labour unions. It also delves into the settlement of labour disputes and corresponding punitive measures.
Benefits for working women
The law extends several benefits to working women, including an hour each day for childcare, 98-day maternity leave and the provision to take up to a year of unpaid leave for childcare. Establishments with more than 25 female workers are required to provide a designated rest area.
For employers, the law allows sector-specific work regulations, temporary employment of workers of another employer with the Ministry of Labour’s approval, and termination of contracts if workers fail to meet productivity standards.
This is permitted after notifying workers about the areas of deficiency and providing them with an adequate period of no less than six months to rectify it. This clause, when implemented, can boost productivity within the establishment and promote competition among workers.
It also simplifies the Omanisation process by enabling termination of non-Omani employees when an Omani worker can replace them.
To maintain operational continuity and prevent work stoppage due to strikes, the law requires workers to inform the settlement committee to initiate dispute resolution swiftly.
The new Labour Law includes fresh leave provisions aimed at enhancing worker productivity and performance, such as a seven-day paternity leave and a 15-day caregiver leave. Sick leave days have been increased to 182 (with conditions) and duration of maternity leave extended.
The law underwent several stages of consultation and revision, involving 125 participants from various sectors, before being enacted by a Royal Decree.
New Labour Law hailed
Dr Mahad Said Ba’owain, Minister of Labour, emphasised the law’s timely enactment during a period of market changes, lauding His Majesty the Sultan’s dedication to improving organisational efficiency and safeguarding the rights of workers and employers alike.
Dr Nasser bin Rashid al Maawali, Undersecretary in the Ministry of Economy, stated that the revamped Labour Law promises to usher in a plethora of opportunities for Omani jobseekers. Additionally, it aims to position Oman as a sought-after destination for global investors.
According to Maawali, this law is not merely a policy change but a strategic move designed to enhance the business landscape and invigorate market competitiveness. Aligned seamlessly with the aspirations of the 10th Five-Year Plan, the enhancements are expected to attract investments.
“This Labour Law will improve Oman’s stature on global indices, maintaining the nation’s economic growth trajectory,” Maawali said. “By bolstering employment avenues for our youth and accelerating Omanisation, we reaffirm our trust in the Omani workforce. Their enhanced role is pivotal to fortifying the private sector’s future prospects.”
New gold standard for the region
The new Social Protection Law, the result of a collaboration between Oman’s Tawazun programme and International Labour Organization (ILO), sets the gold standard for nations in the region. It is a seismic shift in Oman’s approach to social welfare.
With the pioneering introduction of a government-funded universal social protection benefit, all children under 18, senior citizens above 60 and those with disabilities are now entitled to cash benefits.
A milestone in regional labour rights, the law also extends protection to migrant workers, who comprise a significant portion of Oman’s working populace.
Nasser bin Khamis al Jashmi, Secretary General of Ministry of Finance and supervisor of the National Programme for Fiscal Balance, said this legislative breakthrough aligns with the goals of Oman Vision 2040, placing individual well-being and rights-based protection at the heart of the nation’s economic diversification strategy.
Echoing these sentiments, Ruba Jaradat, ILO Regional Director for the Arab States, heralded Oman as a regional beacon, demonstrating the transformative power of inclusivity, sustainability and international labour standards. “The new legislation sets a new vision for social protection in Oman and paves the way towards universal social protection in the sultanate. It establishes Oman as a reference for other countries in the region. Inclusive, comprehensive, equitable and sustainable social protection systems are critical for countries in the region to further ongoing social and economic transformations. Oman is showing that ambitious change in the region is possible, when it is rooted in international labour standards, careful analysis and social dialogue,” she added.
“It is difficult to overstate the magnitude of the series of reforms Oman has set out to tackle: from fully revamping the tax and subsidy system, to completely restructuring its pension and contributory social protection system, to an ambitious re-think of its approach to reaching the most vulnerable in society, and providing migrant workers with key workplace protections,” said Mia Seppo, ILO Assistant Director General for Jobs and Social Protection.
The law responds to past challenges Oman faced in ensuring sustainability and adequacy in its social protection mechanisms. As Mohammed Salim Rashid al Qalhati, head of the pension and social protection reforms project at Tawazun, pointed out, these reforms embody a harmonious marriage between Oman’s national priorities and global standards.
Key provisions of Social Protection Law
All Omani children aged 0-17 will benefit from a universal child benefit equal to RO10 per month per child.
All Omanis assessed with a permanent disability that requires care or support will receive RO130 per month.
All Omanis older than 60 years will receive an old-age pension equal to RO115 per month.
All Omani orphans younger than 18 years and widows younger than 60 years will receive RO80 per month, regardless of the deceased’s participation in the contributory system.
Family income support
All Omani households – and non-Omani widows of Omani citizens – with income below a defined threshold will have their income topped up to match this threshold.
Sickness and unusual family leave benefits
All Omani and non-Omani workers will be able to take paid sick leave of up to 182 days in a year, starting at 100% of pay and declining after the 21st day according to a scale. In addition, they will be entitled to take limited paid leave in cases of marriage, bereavement and family medical reasons.
All employed Omani and non-Omani mothers of newborns will have job-protected maternity leave of 14 weeks at full pay, financed based on a 1% contribution from the employer.
All employed Omani and non-Omani fathers of newborns will have job-protected paternity leave of seven days at full pay, financed from the same fund as maternity benefits.
Work injury benefits
Uniform employment injury insurance for all employed workers in Oman, including non-Omanis, financed based on a 1% contribution from employers.
Employment security benefits
A cash benefit equivalent to 60% of the last two-year average wage for a maximum period of six months for Omani workers who have involuntarily lost their employment, financed based on a 1% contribution split equally between workers and employers.
Expat workers benefits
The new law establishes a national provident fund, which will collect employers’ contributions and administer benefits to non-Omani workers in case of retirement, death and disability and upon return to countries of origin.