Employee Contract Non-Renewal Update: What It Means for Business Owners and Investors in Oman
Muscat: The Ministry of Labour has announced a new regulation stipulating that employees whose work permits are renewed without registering active employment contracts will automatically gain the right to transfer their services 30 days after the renewal date.
This decision mandates employers to electronically register the work contracts of all employees.
The recently issued Labour Law, enacted in July, highlights the necessity of formal employment contracts, outlining the responsibilities of both employers and workers, as well as the conditions for contract termination.
According to Article 33, work contracts must be written in Arabic, prepared in duplicate—one copy for each party—and approved by the relevant authority. Workers’ rights can be substantiated through various forms of evidence.
Article 34 specifies that contracts may be fixed-term or indefinite. Fixed-term contracts must not exceed five years but can be renewed by mutual agreement, with renewals counting toward the total length of service.
Each contract is required to include:
- Employer and workplace details.
- Worker’s personal information and nationality.
- Job type, conditions, and duration (if applicable).
- Basic wage, bonuses, allowances, and payment schedule.
- A notice period for non-renewal, set at a minimum of one month if initiated by the employer.
- A commitment to abide by Oman’s laws, customs, and security.
Per Article 37, the probationary period must be specified in the contract, up to three months for monthly-paid employees and two months for others. A worker may not be placed on probation more than once by the same employer. Either party may terminate the contract during the probation period with at least seven days’ notice.
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The Ministry of Labour’s mandate for mandatory e-registration of work contracts and automatic transfer rights after 30 days creates greater transparency and protection for employees, compelling employers to formalize contracts rigorously. For businesses, this represents both an opportunity to build trust and a risk of increased compliance costs and scrutiny. Smart investors and entrepreneurs should now prioritize robust HR systems to ensure contract compliance and employee rights management to avoid penalties and leverage smoother workforce mobility.
