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As part of our launch, we are providing unrestricted mobile access to all Decree members for one month, regardless of your current plan.

After this introductory month, mobile app access will be exclusive to users who have the web-based version of Lex AI included in their subscription bundle.

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Minimum Annual Leave Entitlement

Article 78 of the Labour Law states that after completing at least 6 months of employment, a worker is entitled to paid annual leave for no less than 30 (thirty) days. Taking into consideration the interest of work, this annual leave may be divided, combined, or deferred for a later date.

It is important to note that the annual leave balance is distinct from weekly rest days, official holidays, special leave, and sick leave, which are separately regulated under article 79 to 83 of the Labour Law.

The employment contract may grant more annual leave days than the statutory minimum but cannot provide fewer than the law requires, as any agreement reducing this entitlement would be void under article 3 of the Labour Law.

The timing of the annual leave is generally agreed upon between the employer and the employee, taking into account operational requirement. While employers may organise leave schedules to ensure the continuity of business operation, they cannot unreasonably prevent employees from taking their entitled leave.

Carry-over and Postponement

As a general principle under Labour Law, annual leave should be taken within the year in which it accrues. However, article 78 of the Labour Law stipulates that a worker who does not utilise his annual leave has the right to retain the leave for a balance not exceeding 30 days.

Article 81 of the Labour Law also stipulates that the employer may postpone the annual leave of the worker if the interest of the work so requires for a period not exceeding six months.

Compensation Principles for Annual Leave

According to article 81 of the law, the employer may pay the worker the basic wage for the days of annual leave that he does not take, if the worker agrees to this in writing. The worker is also entitled to the gross wage for his annual leave balance if his service ends before exhausting it.

Practical Tips for Managing Annual Leave

Proper management of annual leave is essential to avoid disputes and ensure smooth workplace operations. In practice, many issues arise not from the law itself, but from poor planning or unclear processes. The following practical steps can help employers manage annual leave effectively and prevent common problems:

• Plan leave in advance: Employers should establish a clear leave policy and maintain a system to track leave balances, ensuring entitlements are properly monitored and recorded.
• Balance business needs with fairness: While operational requirements may influence leave timing, employees should not be unreasonably prevented from taking their annual leave.
• Monitor carry-over and postponement: Annual leave should generally be taken in the year it accrues, any postponement or carry-over should be limited and clearly documented.
• Communicate decisions clearly: Leave approvals, postponements, or recalls should be confirmed in writing to avoid misunderstandings.

These practices minimise disruptions, uphold employee satisfaction, and reduce legal risks.

It is highly recommended for all employers and employees to make themselves familiar with the leave related provisions of the Labour Law, which is available in full in English on the link below:

Written by:

Yasmeen Al-Habsi

Yasmeen is a legal intern at Decree. She has previously interned in the Government of the Sultanate of Oman as well as in a local law firm. She is interested in corporate law. She holds an LLB from Leeds Beckett University.

UBO Regulations in Oman

UBO requirements in Oman are predominantly sub-regulations of the Commercial Companies Law and accordingly fall under the mandate of the Ministry of Commerce, Industry, and Investment Promotion. The first UBO regulation in Oman was issued in 2022, and was quickly replaced by the second UBO regulation of 2023.

Identifying the Ultimate Beneficial Owner

The key objective of the UBO regulation is to identify the person who owns or exercises ultimate effective control over the entity in question or on whose behalf the transaction is made. The technical definition for this concept in the Regulation Governing the Procedures for Identifying the Beneficial Owner of 2023 is “A person who owns or exercises ultimate effective control over a client, directly or indirectly, including the natural person on whose behalf the transaction is conducted, as well as the natural person who exercises ultimate effective control over the legal person or legal arrangement.”

Registration Requirements

The key obligation for companies in Oman under this regulation is that they are required to keep a register providing detailed information of each UBO who holds 25% or more of the shares of the company. This obligation applies to all types of companies other than SAOGs, which are governed by special rules for publicly traded companies.

This must be kept at the company’s main headquarters and maintained for a minimum period of ten years from either the date of registration or from the date of dissolution or liquidation of the company.

When no individual can be identified as a UBO, the most senior management officer of the company is deemed the UBO for the purposes of the provisions of this regulation.

Focal Point Obligations

To facilitate regulatory coordination, companies must appoint a natural person resident in the Sultanate of Oman to serve as the designated liaison for coordinating on matters relating to all beneficial ownership data with the Ministry of Commerce, Industry, and Investment Promotion.

Compliance and Penalties

Failure to comply with these requirements may lead to administrative penalties, including warnings, fines up to 1,000 Rial Omani, suspension of commercial registration for up to three months, or cancellation of registration.

Conclusion

Identifying the UBO of a company and maintaining the UBO register is now considered an essential transparency measure that all companies need to comply with. We highly recommend that all companies familiarise themselves with the full details of the Regulation Governing the Procedures for Identifying the Beneficial Owner of 2023, which is available in full in English on the link below:

Written by:

Arwa Al-Zadjali

Arwa is a legal intern at Decree. She has previously interned in international and local law firms in Muscat. She is interested in corporate law and intellectual property. She holds an LLB from Cardiff University.

While Oman has had free zones (such as Sohar Free Zone) and special economic zones (such as the Special Economic Zone in Duqm) for decades, these free zones were primarily designated to facilitate trading in physical goods, and as such focused on providing customs and tax exemptions and remained subject to standard Omani laws such as the Labour Law, the Commercial Companies Law, and all other laws that govern the way a business operates in Oman. IFCO is similar to free zones in that it is a zone within certain boundaries that has its own legal framework, but unlike industrial free zones that facilitate trading in goods, as a financial free zone, IFCO is intended to facilitate trading in capital. This goal is achieved by creating a financial regulatory framework that meets the requirements of international financial regulatory bodies in a way that makes it attractive for international financial institutions to operate from within the zone. To enable IFCO to achieve the required standard for its financial regulatory framework, IFCO will operate independently from the rules of the Central Bank of Oman, the Financial Services Authority, and all other regulatory bodies in Oman. In fact, IFCO will not be subject to any Omani laws other than the Penal Law, the Law of Anti-money Laundering and Counter-terrorist Financing, and certain aspects of Omani tax laws.

Financial free zones are not a new concept in the GCC as the DIFC in Dubai, QFC in Qatar, and ADGM in Abu Dhabi operate under this same exact model.

According to last week’s royal decree, IFCO will report directly to the new Office of Deputy Prime Minister for Economic Affairs, i.e. Sayyid Theyazin. It will have a board of directors appointed by royal order, and will primarily operate under three sub-authorities, an executive authority to manage the centre and create the infrastructure, a regulatory body to set the regulatory framework, and a dispute resolution tribunal to oversee the court system of IFCO. The royal decree gave IFCO the power to create its own legal framework without being bound by Omani law. DIFC, QFC, and ADGM have chosen to operate under a common law legal framework that operates entirely in English. It is likely that IFCO will operate under a similar approach.

This means that if a company is registered in IFCO, this company will not be subject to the Omani company law or the Omani labour law, but instead by new IFCO laws inspired by common law legislation. If there is a dispute between this company and third parties, the dispute will not be resolved by Omani courts, but by IFCO courts that operate using a common law legal framework, most likely by judges and lawyers trained in common law jurisdictions. In DIFC, QFC, and ADGM, all the presidents of their courts are international jurists from common law jurisdictions rather than nationals.

Last week’s royal decree merely set the very high-level structure and legal framework for IFCO, and it will be up to IFCO to create its own rules for what companies will be able to register in the zone. However, the royal decree states that companies can be registered under two categories: companies providing financial services (that is the key target of the zone—such as banking services, insurance, investment management, etc) and companies providing ancillary services (these are companies that provide support to financial service providers—such as legal services, accounting services, etc). The royal decree provides a non-exhaustive list of financial services that are permitted, and it is up to IFCO to determine the actual activities and the requirements for registration.

For a company to register in IFCO, the company must have physical presence in IFCO. The law also states that registration in IFCO allows you to operate in IFCO itself, but if you wish to operate outside IFCO in Oman, you will be bound by Omani law. The most obvious example of this is that if you are licensed to provide financial services in IFCO, this doesn’t mean that you can open an outlet outside IFCO and provide services to the Omani public without FSA’s approval. There is a small exemption that allows IFCO companies to promote their services or provide advice regarding IFCO legislation outside the zone and on the Omani mainland.

While the key objective of IFCO is to attract international financial institutions to Oman, registering in IFCO can provide significant advantages for Omani and non-Omani businesses that do not wish to be bound by Omani law and fall within the categories of financial services providers or ancillary service providers. For example, if IFCO permits the creation of holding companies created to own shares in other companies, a common law legal framework similar to that of England and Wales is likely to grant a higher level of autonomy for the shareholders in a way that Omani law currently does not provide. The mainland Omani legal system is known to being open to disregarding the concept of separate legal personality of LLCs and holding shareholders liable for the conduct of companies they own shares in. Creating a holding company in IFCO that owns the local Omani subsidiary can be extremely advantageous to Omani shareholders, even if the subsidiary is still subject to Omani law.

In addition to the benefits of not being bound by Omani law, companies established in IFCO will enjoy an exemption from corporate tax until 2076, non-Omanis working in IFCO will not be subject to personal income tax, and the zone is declared a zero-rated special zone for VAT purposes.

The creation of IFCO is a major and unprecedented development for the Omani legal system as a whole, not only for the way financial business is conducted in the country.

The royal decree came out only a few days ago, and it will take IFCO months, if not years, to start its actual operations, as it needs to develop its entire legal framework in a manner that complies with the international requirements of regulatory bodies and provide physical office space for the companies wishing to register in IFCO.

The Law of the International Financial Centre of Oman has already entered into force. You can read it in full in English on the link below:

Laws & Amendments

17 Royal Decrees

The year 2025 was a landmark year for Omani legislation, introducing several major new laws that reshape the economic and social landscape. Most notably, the Personal Income Tax Law was issued, marking a significant shift in the nation’s fiscal policy. Other critical pieces of legislation included the new Banking Law, the Public Health Law, the Electronic Transactions Law, and the Law Regulating Real Estate. Significant attention was also given to social and human rights issues with the issuance of the Law Combating Human Trafficking, the Law of the Rights of Persons with Disabilities, and the Law Regulating the Transfer and Transplantation of Human Organs and Tissues.

Systems & Amendments

2 Royal Decrees

In Oman, the term “system” refers to a legal instrument that governs the operation of a government entity or the operation of a government legal process. The most significant new system that came out in 2025 was the System of the Central Bank of Oman, which accompanied the new Banking Law. Additionally, amendments were made to the System of the Social Protection Fund to align it with ongoing social protection reforms.

Gov Restructuring

10 Royal Decrees

The government continued its restructuring efforts to enhance efficiency and investment appeal. The most significant development was the establishment of the Court of Investment and Commerce and the issuance of its law. Another major restructuring involved the Secretariat General of the Tender Board, which was renamed and expanded into the Projects, Tenders, and Local Content Authority. The Alternative Investment Market was established this year.

Treaties

36 Royal Decrees

Oman ratified a substantial number of treaties this year, reflecting its active diplomatic and economic engagement. A historic milestone was the approval of Oman’s accession to the International Covenant on Civil and Political Rights. The year featured a flurry of visa exemption agreements with countries such as Russia, Iran, Indonesia, Belarus, and the Maldives, alongside double taxation agreements with nations including Bahrain, Iraq, and Tanzania.

Concessions

12 Royal Decrees

Concession agreements for exploration and mining were approved for multiple blocks, including agreements with Al Tamman Indsil Mining, Oman Chromite Company, and Wusta Mining Company. In the energy sector, the Marsa Protocol relating to the concession for Block 10 was also approved.

Nationality

7 Royal Decrees

Omani nationality is granted, revoked, and re-instated by royal decree and this category had 6 royal decrees in this area, including decrees granting Omani nationality and explicitly authorizing dual nationality with British and Russian citizenships.

Appointments

14 Royal Decrees

The most significant appointments made by royal decree this year were the appointment of a new Governor for the Central Bank of Oman along with confirmation of the appointment of a President for the Projects, Tenders, and Local Content Authority.

Misc

12 Royal Decrees

In addition to the categories detailed above, there were 9 royal decrees regarding miscellaneous, yet important, topics such as approving the General Budget of the State for 2025 and establishing the Special Economic Zone in Rawdah and the Special Economic Zone in the Governorate of Dhahirah, as well as licensing Space Communication Technologies.

2025 Wrapped

This post outlined the royal decrees issued this year, but this is merely a portion of the Omani legislation that was issued this year which includes ministerial decisions and regulations, all of which are available on Decree.

The year 2026 is expected to have even bigger legal developments. To stay up to date with new laws as they come out, make sure that you follow Decree on LinkedIn, Instagram, and Bluesky.

Maximum Overtime Working Hours

Under articles 70 and 71 of the Labour Law, the maximum regular working hours are capped at 8 hours per day and 40 hours per week. The law also caps the number of regular hours plus overtime to 12 hours.

It is important to note that these hours are “actual” working hours hence, they do not include the mandatory daily rest and lunch break. The law stipulates that a continuous working period must not exceed 6 hours without a break, which is generally one hour.

This distinction that rest periods are not working hours has been reinforced by the Omani judiciary. A notable principle from Supreme Court Contestation 766/2017 confirms that rest time is excluded from overtime calculations, ensuring that compensation is based strictly on time spent working.

Consent is Required for Overtime Work

A primary requirement is that employers must obtain the worker’s written consent before assigning overtime, ensuring the employee agrees to the extra work.

Despite the general requirement for consent, there are specific exceptions under article 72 of the Labour Law. For example, article 72(1) permits the employer to require the employee to work overtime in cases such as annual inventory work, budget preparation, liquidation, and the closing of accounts. Article 72(2) also permits the employer to require the employee to work overtime if it is required to prevent the occurrence of an accident or other similar emergencies. However, in this case the employer is required to inform the Ministry of Labour of this.

Calculating Overtime Compensation

When employees agree to overtime, they are entitled to their basic wage plus a surcharge that scales based on when the work is performed. For instance, daytime overtime commands a minimum 25% increase, while night work which is defined as 9pm to 5am that requires at least a 50% surcharge. Work on weekends and official holidays is compensated with a 100% surcharge or a compensatory rest day. However, in mandatory emergency situations where consent is waived, these rates are 50% for daytime hours, 75% for night hours, and 200% for work performed on rest days or holidays.

Conclusion

We highly recommend that both employers and employees make themselves familiar with the legal provisions relating to overtime by reading the full text of the Labour Law on the link below:

Written by:

Nadine Al-Barwani

Nadine is a legal intern at Decree. She has previously interned in several international law firms in Muscat. She is interested in corporate law and energy law. She holds an LLB from Leeds Beckett University.

This blog post will highlight the key provisions relating to probation periods under the Labour Law.

Probation is defined under article 1(21) of the Labour Law as the initial phase of the employment contract during which the employee’s suitability for the job is assessed. The Labour Law sets out the maximum duration of this period: up to three months for workers paid on a monthly basis and up to two months for workers paid by any other method.

The law also makes it clear that a worker may only be placed on probation once with the same employer. Not only does this mean that employers cannot impose a new probation period upon contract renewal or when an employee is promoted internally, but an employee who quits working for an employer after completing their probation period, moves to another employer, and then returns to a new job for the first-mentioned employer does not have a probation period.

The law also provides that the employer may terminate the employment contract during the probation period if the employee is deemed unsuitable to continue without the need to provide any justification, by giving a seven-day written notice. In Supreme Court Contestation 802/2020, the Supreme Court ordered an employer to compensate an employee for terminating his employment during the probation period without giving the seven-day notice. However, the compensation was limited to the equivalent of seven days pay.

We highly recommend that both employers and employees make themselves familiar with the legal provisions relating to probation periods by reading the full text of the Labour Law on the link below:

Written by:

Abdulrahman Al-Farsi

Abdulrahman Al-Farsi is Legal Associate at Decree. He holds an LLB from the University of Liverpool and had previously worked in an Omani law firm.

Oman routinely signs BITs with other countries as part of its strategy for foreign investment and has 30+ agreements with countries such as the UK, Germany, and Japan.

Here are some key investors rights commonly found in BITs:

The Right to “Fair and Equitable” Treatment

To avoid any arbitrary or discriminatory actions that could harm the investors or their investments, the host government must maintain full transparency and uphold a minimum standard of treatment, that is established in the treaty, to be given to the investors and their investments. This right extends beyond simple “fairness”, it obliges the host government to act transparently, consistently, and in good faith towards foreign investors.

Examples of cases brought forward include claims of unfair treatment, abuse of power or bad faith, fundamental changes in the law that contradict expectations, and inconsistent application of legal procedures and regulations that violate the right to fair treatment.

The Right to Compensation for Expropriation

It is important to note that the host government is entitled to expropriate the property of the investors; however, it must be for legitimate public use, non-discriminatory, done in accordance with due process, and followed by an adequate market value compensation paid without delay and freely transferable. The right covers both direct (where the property is physically transferred to the government or it’s entities) and indirect expropriation (where the property isn’t physically transferred but the goverement deprives the investors of the property’s full economic use and enjoyment). For example, implementing excessive regulations and stripping control from the investors.

The Right to Allow Free Transfer of Funds

Another common right under BITs is related to cross-border fund transfer, which allows investors to make transfers in and out of the host country with ease and without delays. This obligation prohibits any hinderance from the host government that might trap profits within the host country. It ensures liquidity and financial stability, which are crucial for international business, as well as reinforcing investor confidence by guaranteeing free flow of funds and smoother economic operations. The guarantee of free transfer typically covers the following types of flows; profits, interest, dividends, proceeds from sales or liquidations (total or partial), capital funds, and loan payments, etc.

This right also prevents the implementation of currency controls by guaranteeing market exchange rates at the time of the transfer. However, the government may also exercise its right to delay or halt transfers, while still acting good faith, in the events of bankruptcy, enforcement of creditor rights, criminal investigations, financial regulatory requirements, or compliance with court orders and judgments.

The Right to Resolve Disputes with the Government

One of the most powerful rights given to investors under BITs is the right of the investor to resolve disputes the investor has with the host state using a variety of dispute resolution venues such as domestic courts and international arbitration. The actual venues that the investor has access to and the process for resolving disputes depends on the actual text of the treaty, however, most treaties require a cooling-off period for negotiations before resorting to a formal dispute resolution mechanism. If no settlement is reached, the investors may then bring a claim before the domestic court, ad hoc arbitration, or the ICSID, which Oman is a member of, insuring independency from domestic courts.

Conlcusion

In summary, Bilateral Investment Treaties, or BITs, are a fundamental tool that protects foreign investors by ensuring fair treatment, compensation for expropriation, and free fund transfers, while allowing direct dispute resolution against host governments. They create a stable legal framework that balances investor rights with legal government actions, developing confidence and promoting cross-border investment.

The Oman-Iran BIT is the most recent BIT that Oman entered into and was singed in Muscat on May 2025.

Written by:

Shiyam Al-Harrasi

Shiyam is a Legal Intern at Decree. She has previously interned in international and Omani law firms. She is interested in commercial and corporate law. She holds an LLB from the Leeds Beckett University.

Defining the Zones

It is worth noting from the start that the new law does not explicitly define special economic zones or free zones. However, it can be understood from the law that a special economic zone is a wider concept than a free zone as special economic zones can include within them free zones, while free zones cannot include within them special economic zones. Furthermore, special economic zones are direclty managed by OPAZ, while free zones are managed by an operating company that is designed through a concession agreement.

Both special economic zones and free zones offer incentives like tax exemptions, 100% foreign ownership, and simplified administrative processes, making them attractive for industrial, commercial, and recreational projects that contribute to long-term national growth.

Key Functions and Exemptions

Special economic zones and free zones in Oman serve as dynamic investment hubs designed to simplify business operations and increase economic growth. Through a one-stop-shop system, investors benefit from simplified administrative procedures, fast-track permits for non-Omani workers, and an exemption from the minimum capital requirement set under the Commercial Companies Law, etc. Moreover, investors enjoy full protection from nationalisation, seizures, or asset freezing, and have the freedom to transfer profits and capital abroad. Special Economic Zones and Free Zone companies are also exempt from the Commercial Agencies Law, meaning they can engage in trade without requiring a local agent. However, some sectors such as, banks and financial institutions, insurance and reinsurance companies, and telecom service providers, and the like are excluded from income exemptions.

Effects of Legal Shifts

Prior to the issuing of this law, Oman’s special economic zones and free zones operated under separate decrees, and this new law created a unified legal framework that consolidates the regulation of Oman’s special economic zones and free zones.

Overall, this reform transforms Oman’s zoning landscape from a fragmented system into a coordinated national framework. It creates a more predictable environment for investors, improves administrative efficiency, and ensures that both special economic zones and free zones contribute cohesively to Oman’s long-term diversification goals under Oman Vision 2040.

Written by:

Shiyam Al-Harrasi

Shiyam is a Legal Intern at Decree. She has previously interned in international and Omani law firms. She is interested in commercial and corporate law. She holds an LLB from the Leeds Beckett University.

Domestic workers are excluded from the scope of the Labour Law as they are considered to be one of the categories that are governed by special laws or systems. The new regulation has expanded the scope of those excluded categories from just domestic workers to 12 distinct categories including nannies, drivers, and others as listed in article 12 of the regulation. The new regulation introduces rules that are at times more restrictive and at other times less restrictive than the Labour Law. For example, the regulation requires the worker to be at least 21 years of age, whereas the Labour Law requires the worker to be at least 18 years of age and has provisions that allows hiring juvenile workers who are at least 15 years of age. The regulation also has some rules that are less restrictive than the Labour Law. For example, the working hours for domestic workers and their equivalent can be up to 12 hours per day, while the Labour Law caps this to 8 hours per day.

A significant new provision is introduced under article 31, which establishes an end-of-service gratuity for domestic workers upon the end of their employment contracts. This benefit was absent in the previous decision and is no longer found in the Labour Law.

This decision also amends pre-existing requirements regarding healthcare coverage. The previous decision only required employers to provide free local medical treatment throughout the contract period, the new decision mandates health insurance coverage for domestic workers.

The new regulation has already entered into force and employer have three months to comply with the law. You can read the decision in English in full on the link below: