How to Draft Employment Contracts in Oman

Drafting a legally sound employment contract in Oman is a critical step for any business hiring staff, whether local or expatriate. In 2025, with evolving workplace regulations and growing emphasis on compliance, employers must ensure that their contracts reflect current legal standards while also protecting their operational interests.

An employment contract serves as the foundation of the employer-employee relationship. It outlines key terms such as job duties, compensation, leave policies, and termination conditions, helping both parties understand their rights and obligations. In Oman, employment agreements are governed by the Labour Law issued under Royal Decree No. 35/2003 and its amendments, which set clear parameters for working hours, leave entitlements, termination clauses, and more.

This guide will walk you through the most important aspects of creating an effective employment contract in Oman. Whether you are hiring your first employee or reviewing existing agreements, understanding the key components and legal requirements will help you avoid common pitfalls and stay compliant with Omani law.

Importance of a Compliant Employment Contract in Oman

An employment contract is more than just a formal agreement—it's a legal safeguard for both the employer and the employee. In Oman, having a well-structured contract is essential not only to define the working relationship but also to ensure compliance with national labour regulations.

A compliant contract protects employers by clearly outlining job expectations, working hours, compensation terms, and conditions for termination. This reduces the risk of disputes and provides a legal basis for addressing any misunderstandings that may arise. For employees, the contract offers transparency and legal assurance regarding their rights, benefits, and working conditions.

Moreover, Omani authorities may review employment contracts during inspections or in the event of labour disputes. Failure to include mandatory provisions or using outdated templates could lead to penalties or legal complications. By drafting a compliant and customized agreement, businesses demonstrate professionalism and avoid unnecessary legal exposure.

Protecting Employer and Employee Interests

A well-drafted employment contract serves as a mutual protection tool. For employers, it helps establish clear performance standards, confidentiality obligations, and disciplinary procedures. This minimizes the likelihood of internal conflicts and provides a structured way to manage employees fairly and legally.

For employees, the contract guarantees job security and clarity. It sets out salary, working hours, leave entitlements, and termination procedures, giving workers confidence in their rights. This transparency not only boosts morale but also reduces turnover and fosters a more productive working relationship.

In essence, the contract builds trust by aligning expectations and reducing the potential for legal disputes, which benefits both parties in the long run.

Ensuring Legal Compliance and Reducing Risks

Compliance with Oman’s labour regulations is not optional—it’s a legal necessity. An employment contract that aligns with national laws helps employers avoid costly penalties, reputational damage, and litigation. This is particularly important given the country’s emphasis on protecting workers’ rights through strict regulatory oversight.

A compliant contract includes all mandatory clauses required under Omani labour law, such as provisions on working hours, paid leave, termination notice, and end-of-service benefits. It also accounts for sector-specific rules and Omanization targets when applicable. For businesses hiring expatriates, contracts must meet additional criteria, including visa and permit requirements.

By ensuring every contract reflects current legal standards, employers reduce operational risks, remain audit-ready, and foster a legally secure workplace environment.

Essential Elements of Employment Contracts in Oman

Employment contracts in Oman must be clear, comprehensive, and legally compliant. Whether hiring Omani nationals or expatriate workers, employers are expected to include specific elements that define the nature of the job and set clear expectations for both parties. A well-structured contract not only aligns with local labour laws but also minimizes the risk of disputes and misunderstandings.

The key components typically include job title and responsibilities, compensation structure, working hours, leave entitlements, termination clauses, and any confidentiality or non-compete agreements. It’s also essential to ensure the language of the contract is easily understood by the employee—Arabic is the official language of employment contracts in Oman, although a bilingual version (Arabic and English) is commonly used for clarity in international workplaces.

Omitting any critical detail or using vague language can lead to enforcement issues or leave room for legal ambiguity. Each contract should be tailored to the role and industry, while still adhering to the mandatory standards outlined in Oman’s labour legislation.

Clearly Defining Job Role and Responsibilities

Every employment contract in Oman should begin by clearly stating the employee’s job title and the scope of their responsibilities. This section sets the foundation for performance expectations and accountability.

A well-defined job description helps avoid misunderstandings about duties and ensures that both the employer and employee are aligned on what the role entails. It should include the department, reporting structure, and any specific tasks or objectives relevant to the position.

In the event of a dispute, a clearly written role description can serve as evidence to assess whether an employee has fulfilled their obligations or if an employer has made unreasonable demands beyond the agreed scope. Including this information in the contract adds clarity and legal protection for both sides.

Salary, Allowances, and Benefits

Compensation is one of the most critical parts of any employment contract in Oman. The contract must clearly state the employee’s monthly salary, along with a breakdown of any allowances such as housing, transportation, or utilities, if applicable. This ensures transparency and helps prevent payment disputes.

All compensation details should be listed in Omani Rial (OMR), and the contract should specify the payment method and frequency—typically on a monthly basis. If performance bonuses or commission structures are part of the package, they should be defined in measurable terms.

In addition to salary, employers may offer non-cash benefits like health insurance, company-provided accommodation, or education allowances. While not always mandatory, these perks often play a key role in attracting and retaining talent—especially among expatriates.

Clearly outlining all financial entitlements reinforces trust and helps employers stay compliant with wage protection requirements under Omani labour regulations.

Working Hours, Overtime, and Leave Entitlements

Omani labour law sets specific guidelines for working hours, overtime pay, and various types of leave—all of which must be accurately reflected in the employment contract.

The standard working week in Oman is 45 hours, typically spread over five or six days. Daily working hours should be clearly stated, along with any variations during Ramadan for Muslim employees. If the nature of the job requires shift work or irregular hours, this should also be specified in the contract.

Overtime must be compensated in accordance with the law—generally at a higher rate than the regular wage. The contract should explain how overtime is calculated and under what circumstances it will be required.

Leave entitlements such as annual leave (minimum 30 calendar days after one year of service), sick leave, maternity/paternity leave, and public holidays must be clearly outlined. Detailing how leave is accrued and how requests are processed adds clarity and prevents future disagreements.

By setting out these terms from the outset, employers promote transparency and ensure compliance with national labour standards.

Probation Period and Termination Conditions

A probation period allows both employer and employee to assess suitability before committing to a long-term working relationship. In Oman, the probation period must be clearly stated in the employment contract and cannot exceed three months. During this time, either party may terminate the contract with a minimum of seven days’ notice, unless otherwise agreed in writing.

Beyond probation, the contract should detail the conditions under which the employment can be terminated. This includes notice periods—typically 30 days for both parties—as well as the procedures for resignation, dismissal, or redundancy.

It’s also important to mention any severance pay or end-of-service benefits that apply, as required by Omani labour regulations. Employers should ensure termination clauses are fair, unambiguous, and legally compliant, to avoid wrongful dismissal claims and ensure smooth exit processes.

Clearly defined probation and termination terms help protect the interests of both parties and provide legal clarity in case the working relationship ends.

Confidentiality, Intellectual Property, and Non-compete Clauses

To protect sensitive business information and maintain a competitive edge, many employers in Oman include confidentiality, intellectual property, and non-compete clauses in their employment contracts.

A confidentiality clause ensures that employees are legally bound to keep proprietary information—such as client data, business strategies, and technical processes—private during and after their employment. This clause should clearly define what constitutes confidential information and how long the obligation lasts.

If employees will be creating original content, designs, or inventions, an intellectual property clause is essential. It typically states that any work produced in the course of employment belongs to the employer, not the individual.

Non-compete clauses are also commonly used to prevent employees from joining or starting a competing business for a defined period and within a specific geographic area after leaving the company. However, to be enforceable in Oman, these clauses must be reasonable in scope and duration, and must not unduly restrict the employee’s right to work.

Including these clauses in the contract helps protect business interests while ensuring compliance with local legal standards.

Dispute Resolution and Governing Law

Every employment contract in Oman should include a clear clause on how disputes between the employer and employee will be handled. This not only helps avoid costly misunderstandings but also ensures both parties know the appropriate legal steps if disagreements arise.

Typically, the contract should specify that any disputes will be resolved according to the Labour Law of Oman and fall under the jurisdiction of the Omani courts. In some cases, internal grievance procedures or mediation may be mentioned as the first step before formal legal action is taken.

For multinational companies or joint ventures, it is particularly important to clarify that Omani law prevails over any foreign provisions, especially when employing expatriates. This reinforces the legal enforceability of the contract within Oman’s legal system.

By including a dispute resolution mechanism, employers can handle conflicts more efficiently, maintain regulatory compliance, and reduce the risk of prolonged legal battles.

Common Mistakes to Avoid in Employment Contracts

Even well-intentioned employers can make critical errors when drafting employment contracts—mistakes that can lead to legal disputes, employee dissatisfaction, or penalties from authorities. Understanding the most common pitfalls can help businesses in Oman create strong, compliant agreements from the start.

Some of the most frequent mistakes include using vague language, omitting mandatory clauses required under Omani labour law, or relying on outdated contract templates that don’t reflect current legal standards. Others may fail to tailor the contract to the specific role, using a “one-size-fits-all” approach that overlooks key job responsibilities or entitlements.

Inconsistencies between what is written in the contract and what is practiced on the job can also create major problems. For example, stating a 45-hour workweek but routinely expecting 60 hours can open the door to legal claims or disputes with the Ministry of Labour.

Additionally, contracts that don’t account for Omanization requirements or expatriate work permit rules may be rejected during government audits or visa processing.

Avoiding these mistakes ensures a smoother onboarding process, greater legal protection, and stronger relationships between employers and employees.

Vague or Ambiguous Terms

One of the most common and costly mistakes in employment contracts is the use of vague or unclear language. Ambiguity around job duties, salary structure, working hours, or termination procedures can create confusion and open the door to disputes.

For instance, stating that an employee will receive a "competitive bonus" without specifying how it's calculated or when it's paid can lead to unmet expectations. Similarly, using broad terms like “as needed” for working hours may not comply with Omani labour standards and could be considered unenforceable.

Contracts should use precise, straightforward language and avoid assumptions. Every clause—whether about compensation, benefits, or responsibilities—should be written in a way that leaves no room for misinterpretation.

Clarity not only protects both parties legally but also builds trust and ensures the employment relationship begins on a solid foundation.

Omitting Mandatory Legal Requirements

Failure to include legally required terms in an employment contract can result in serious consequences for employers in Oman, including fines, contract invalidation, or disputes with employees.

Key provisions such as working hours, leave entitlements, termination notice periods, and end-of-service benefits are mandated under Omani labour law and must be explicitly stated. Contracts that skip these obligations—intentionally or by oversight—may be deemed non-compliant during inspections or legal proceedings.

Employers must also ensure the contract is written in Arabic or has an official Arabic version, as this is the language recognized by Omani authorities in case of legal disputes.

To remain compliant, businesses should regularly review their contract templates to reflect any updates in the labour law and ensure all required elements are present. This helps protect the company legally while ensuring fair treatment of employees.

Ignoring Omanization and Expatriate Employment Rules

In Oman, employment contracts must align not only with general labour laws but also with national workforce policies—especially the Omanization initiative. Ignoring these rules can lead to visa denials, permit rejections, or penalties from the Ministry of Labour.

Omanization requires employers in certain sectors to prioritize the hiring of Omani nationals. Failing to comply with these quotas, or not including clear justifications for expatriate hires in the contract, may hinder a company’s ability to secure work permits or licenses.

When employing expatriates, contracts must include specific terms related to visa sponsorship, housing, travel allowances, and repatriation. Employers are also responsible for ensuring the expatriate’s job title matches what is approved in the labour clearance and work visa.

By understanding and incorporating these rules into employment contracts, businesses not only stay compliant but also support Oman’s broader national employment goals.

Recent Updates and Key Changes in Oman’s Labour Regulations

Oman’s labour landscape continues to evolve, with several updates introduced in recent years to improve worker protection and streamline employment practices. Employers drafting or revising contracts in 2025 must stay informed about these changes to ensure full compliance.

Key amendments have addressed issues such as termination rights, probation rules, and recognition of non-compete clauses. For example, updates now allow employers to terminate underperforming employees or restructure staff due to economic reasons—provided clear procedures are followed and proper documentation is maintained.

There is also increasing regulatory attention on fair wage practices, timely payment of salaries, and proper registration with the social insurance system. New guidelines have clarified the enforceability of fixed-term contracts and introduced additional protections for workers in sectors such as construction, hospitality, and oil & gas.

Additionally, digitalization has played a growing role in employment management. The government has promoted the use of electronic contracts and online portals for labour clearance, making the hiring process more efficient and transparent.

Staying updated on these regulatory shifts is essential for any employer operating in Oman. Incorporating the latest legal standards into employment contracts helps mitigate risks, protect the business, and maintain a positive standing with local authorities.

Practical Tips for Employers Drafting Contracts

Drafting an effective employment contract in Oman requires attention to detail and adherence to local labour laws. Here are some practical tips for employers:​

• Use Clear and Precise Language: Avoid ambiguity by clearly defining terms and conditions. This minimizes misunderstandings and potential disputes.​
• Ensure Compliance with Omani Labour Law: Familiarize yourself with the latest labour regulations to ensure all contract provisions meet legal requirements.​
• Include All Mandatory Clauses: Ensure the contract contains all elements required by law, such as job description, salary details, working hours, leave entitlements, and termination conditions.​
• Specify Probation Period Terms: Clearly outline the duration and conditions of any probation period, in line with legal limits.​
• Address Confidentiality and Non-Compete Clauses: If applicable, include clauses that protect your business interests, ensuring they are reasonable and enforceable under Omani law.​
• Review and Update Regularly: Periodically review and update employment contracts to reflect any changes in labour laws or company policies.​
• Seek Legal Advice: Consult with legal professionals experienced in Omani employment law to ensure contracts are comprehensive and compliant.​

By following these guidelines, employers can create robust employment contracts that protect both their interests and those of their employees, fostering a clear and positive working relationship.​

FAQs about Employment Contracts in Oman

Understanding employment contract requirements in Oman can be challenging, especially for new businesses or foreign employers. Below are answers to some of the most frequently asked questions to help clarify key points and ensure compliance with local labour laws.

What Must Be Included in an Employment Contract in Oman?

At a minimum, the contract should include the employee’s job title, description of duties, salary details, working hours, probation period (if any), leave entitlements, termination procedures, and any applicable benefits. It should also comply with the standards outlined in Omani labour law.

Can Employment Contracts Be Digitally Signed in Oman?

Yes, digital or electronic employment contracts are increasingly accepted in Oman, especially when processed through official government portals. However, the Arabic version of the contract remains the legally binding document in case of any dispute.

How Long Can Probation Periods Last?

The probation period in Oman may not exceed three months. During this time, either party can terminate the contract with at least seven days’ written notice, unless otherwise specified.

What Are the Legal Working Hours and Overtime Rules?

The standard workweek is 45 hours, typically spread over five or six days. Overtime must be compensated in accordance with labour law—usually at 125% of the normal wage for extra hours and 150% for work on weekends or public holidays.

What Are the Notice Period Requirements for Termination?

After the probation period, both employer and employee are generally required to give 30 days’ written notice before termination. Failing to observe this notice period may result in payment in lieu of notice or legal penalties.