The Labour Law by Royal Decree 53/2023 serves as the primary law governing private sector employment relationships throughout Oman. It sets out different routes that can cause an employment contract to come to an end, with each route having its own consequences (end-of-service gratuity, notice pay, and exposure to a claim for arbitrary dismissal). This piece outlines some of the grounds by which employment can be terminated.
Before turning to those routes, it’s helpful to understand the two types of contracts recognised by law. A definite (fixed-term) contract runs on an agreed period of time and simply comes to an end when either the period has expired or the agreed work is complete, the employer does not need to state a reason; the contract can be allowed to lapse by not renewing it. An indefinite contract, by contrast, has no set end date, so it can only be brought to an end by invoking one of the grounds the law provides.The employer can’t simply end it without falling under one of these grounds.
Dismissal without notice or gratuity
Article 40 gives employers a limited and serious set of grounds for dismissing a worker immediately, without notice or gratuity. This includes earning a job via a false identity or forged documents, causing serious material loss through a mistake (provided the ministry is informed within 30 working days), disregarding written safety instructions after a prior written warning, unauthorised absence exceeding seven consecutive or ten intermittent days in a year, disclosing the employer’s confidential information, a final conviction for a felony or a crime against honour or trust, being intoxicated or under the influence of narcotics during working hours, assaulting the employer, a superior, or a colleague at the worksite, and any serious breach of the worker’s contractual obligations.
Immediate termination initiated by worker without losing entitlements
According to article 41, the worker can end the employment relationship without abiding by the usual notice period, or prior to the expiration of the fixed-term contract, while maintaining rights and end-of-service gratuity, if the employer induced the contract through fraud, failed to pay wages for more than two consecutive months or otherwise failed to meet its fundamental obligations, committed an act contrary to public morals towards the worker, assaulted the worker, or exposed the worker to a serious safety or health danger that the employer knew about and failed to address.
Employer termination with notice
Article 43 permits the employer to end an indefinite contract unilaterally, after notice, in certain situations like the worker reaching the age of retirement under the Social Protection Law; ending a non-Omani worker’s service to replace them with an Omani in the same role; failure to reach required competency after a written warning and a grace period of at least six months, in which case an Omani worker’s replacement must also be Omani; and closure or partial closure, bankruptcy, reduced activity, or a change in production methods that affects workforce size. For grounds of competency and restructuring, the employer should inform the ministry of the reason three months prior to the date of termination, and should avoid terminating an Omani worker whose competency and experience match those of a non-Omani colleague retained in the same establishment.
Articles 44 to 46 set out a formal procedure where a genuine economic cause exists with a financial loss sustained for at least two consecutive years, not merely a failure to profit. The employer applies to a dedicated committee chaired by the ministry, with the Ministry of Commerce, Industry, and Investment Promotion, the Oman Chamber of Commerce and Industry, and the General Federation for Workers of the Sultanate of Oman as members. The committee can approve the reduction, reject it, or impose alternatives such as shorter hours, unpaid leave, or reduced wages across the workforce. If a reduction is approved, the employer must select workers by a fair standard such as performance, give at least three months’ notice, and give those affected priority in re-employment if a suitable vacancy later arises.
Conclusion
This blog post highlighted some cases by which an employment contract can be terminated by the employer or the employee. The law also provides for other cases through which an employment relationship can come to an end, such as the death of the worker or his incapacity to work.
It is highly recommended for everyone to make themselves familiar with the Labour Law. You can read it in English on the link below:
