A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd.

VOL 14, Issue 1 January 2012

Oman Update

Significant Amendments To Labour Law

The Royal Decree 113 of 2011 has made significant amendments to the Labour Law with effect from 30 October 2011. The Ministry of Manpower values the important role played by the Private Sector in establishing a conducive work environment for manpower, providing employment stability and increasing the productivity of manpower. Some of the important amendments to the Law are briefly given below:

  • Work RegulationsAll companies hiring 15 employees or more must display at a prominent place the work regulations duly approved by the Ministry of Manpower. The work regulations must specify all work procedures, rights and duties of the employer and employees, rules for promotion, timings employees’ grades and related remuneration, etc.
  • LeaveWeekly holidays are two days after five working days, and annual leave is 30 days with comprehensive salary (basic salary plus all allowances). The employee does not have right to get the first annual leave before completing at least six months of work, commencing from the date of joining.
  • Payment of salaries
    • The employee must be paid salary either one time every week or one time over two weeks or once a month as per the written employment agreement. In all cases, the salaries must be paid within seven days from the period for which salaries are paid for.
    • It is mandatory for all the companies to transfer salaries to the employees’ bank account at one of the locally registered banks, unless exempted by the Ministry.
  • Office hoursThe office hours cannot exceed nine hours each day with maximum of 45 hours over a week. Office hours must include at least a half hour break for food and rest. During Ramadan, the office hours cannot be more than six hours a day or 30 hours a week for all Muslim employees. Female employees are not allowed to work from 9 pm to 6 am except for special works/occasions approved by the Ministry.
  • OvertimeIf the work demand requires it, an employee is allowed to work overtime, over the normal office hours provided the total of the overtime hours and the normal working hours does not exceed 12 hours a day. The overtime is to be paid at basic salary plus 25% extra for day time work and basic salary plus 50% extra for night time work, or the employees should be allowed compensatory leave for the overtime hours in accordance with the written employment agreement.
    Employers engaged in activities carried out at ports, airports, or on board ships and planes have the right to negotiate with the employees a specific allowance instead of overtime payment with the approval of the Ministry. In case of certain type of work, specified in Article 72 of the Law, that is required to be done on weekly off-day or on public holidays, the employees are entitled to overtime at double the basic salary or compensatory off as per the agreement with the employer.
  • Unlawful termination

In case the employee’s services are terminated arbitrarily or against the law, then the court would issue a ruling either to rehire the employee or require the employer to pay compensation of not less than three months’ salary calculated according to the last comprehensive salary and considering the employee’s status and length of service, in addition to the following:

  • End-of-service payment and other benefits as per the Law or employment contract, whichever is higher;
  • Basic salary plus allowances for the notice period as per the law or the employment contract, whichever is higher

Minimum Capital Requirement For Exchange Companies

The Central Bank of Oman (CBO) has raised the minimum capital requirement for exchange companies conducting the activities of both currency exchange and remittances from OMR 500,000 to OMR 1,000,000. Further, the capital deposit has also been raised from OMR 50,000 to OMR 100,000. The aforesaid stipulation would apply to the new exchange companies from the date of establishment itself, whereas the existing exchange companies have been given time of five years to comply. The CBO’s licensing policy is reviewed periodically in the larger interests of the market, balancing the requirements of competition and at the same time avoiding undue excess capacity. The aforesaid stipulation would ensure that only strong exchange companies, having long- term commitments, operate in the market.

(This write-up is contributed by the Oman member firm of PKF International Ltd.)