Covid-19: Employment update – Issues to consider in Oman
These are exceptional and uncertain times and in the past couple of weeks, the Omani Supreme Committee issued a number of orders to try and tackle the spread of Covid-19.
Among these are banning all travel to and from Oman, shutting down schools, malls, shops and cinemas and ordering the private sector to reduce its workforce to the minimum required and put in place IT systems allowing staff to work from home. These are indeed difficult times for everyone, and in particular businesses who have been forced to close or reduce their operations.
Given the restrictions on operations, some businesses have looked at their work force and are asking us questions on what they can or cannot do under the current circumstances.
In this Article, we will address some of your key employment related questions. The government of Oman has yet to release any specific employment related legislative changes to deal with the effects of the pandemic and so this article will therefore address this subject based on the regulations in place and guidance issued by the Omani government.
Can employers reduce or withhold pay?
Any closure of a business or reduction in staff in light of the Omani Supreme Committee's orders will be treated as the employer's decision and so, in accordance with the usual legal position, all wages must be paid in full. Oman's Ministry of Manpower has also recently issued guidelines to employers confirming that during these unprecedented times, employers are required to pay its staff their wages in full. While we can confirm that this is the stance taken in respect of national employees, we are yet to see the position the Ministry will take towards expatriate employees. To date however, these guidelines apply to both.
Can employers force employees to take annual leave with or without pay?
The Supreme Committee recently ordered private business to reduce its staff to the bare minimum and put in place systems that allow for its staff to work from home. Many business, for example in the construction industry, cannot put in place any work from home systems as the nature of the business means its staff (many of whom are blue collar workers), cannot conduct their work at home. And so, any forced reduction in staff will mean that staff will be at home, with no work and yet still get paid.
Oman's Labour Law (RD 35/2003 as amended) provides that all employees are entitled to 30 days annual leave with full pay each year. The wording in the Labour Law indicates that while employers can dictate when an employee can take annual leave, in accordance with the requirements of the work, it does not expressly make any allowances for employers to place employees on annual leave without the employee's consent. We are aware of some businesses that have placed employees on annual leave with full pay, with the support of the Ministry of Manpower, during this period.
It is very likely that a business's ability to enforce any annual leave will depend on a number of different factors, including the terms of any leave policies in place. This will include any attempt to impose salary reductions during leave. It is important that any change in an annual leave policy is discussed with the Ministry beforehand. Justifications for changing the policy and how this will help support the business and the staff will need to be provided to the Ministry with supporting documents or evidence if available. The current reduced staffing levels at all government offices is likely to increase the time taken for any such approvals.
As it currently stands, pursuant to Oman's labour laws, employers cannot force employees to take leave without pay.
Can employers make people redundant or terminate?
The Ministry of Manpower recently issued guidelines to all private sector companies to refrain from mass termination of national employees, even where projects have been terminated or in the event of closure or bankruptcy. The Ministry has also stated that business must communicate, three months in advance, with the Ministry if there is impeding bankruptcy or closure due to the spread of Covid-19, in order for the Ministry to take measures to relocate the national employees to alternative employers. Aside from that, the Ministry has not issued any further guidelines and we are yet to see whether any guidelines will be issued in relation to expatriate employees. Accordingly, the status quo remains in place.
Further, Oman does not recognise the concept of redundancy, and so any reduction in staff or redundancy of jobs will be treated as individual terminations. Any termination due to the Supreme Committee's decision, may not be deemed a justifiable ground for any termination. Termination under Oman's Labour Law can only be made under specific exclusive grounds., such as grave violations of the terms of the employment contract, unauthorised absence for ten (10) consecutive day or health conditions which prevent the employee from doing his work.
Force Majeure does not apply as a principle to employment contracts and employers are not permitted to unilaterally terminate an employment contract unless for the reasons and grounds provided in the Labour Law. The spread of Covid-19 does not fall under any of the grounds provided in the Labour Law. There are certain exceptions, for instance, where an employee is engaged for a specific project, and that project ends or is cancelled due to Covid-19, termination in this instance would potentially be valid. Although the Ministry has also issued directives to the private sector to refrain from terminating national employees, the same may not be applicable to expatriate employees.
Historically, economic difficulty has not been accepted as a reasonable ground for termination by the Omani authorities. In some rare instances however, the courts have accepted some businesses' decisions to reduce staff as a management decision to avoid collapse of the business. In these rare instances, the authorities require paper trail evidence on the decision process, including proof of efforts to mitigate the reduction/termination of staff. The courts in general will want to see that any decision to terminate due to economic and financial difficulty was a last resort to prevent the business from collapsing. However, in light of the Ministry of Manpower's recent decisions, businesses must communicate with the Ministry in the event of economic difficulty, as mass terminations or terminations of any kind due of national employees to economic difficulty is currently not permitted. It remains to be seen whether the same will be applied to expatriate employees.
The current legal position with regards to employment in Oman has not changed from the standard position as the authorities have not yet made any changes to employment law to allow employers more flexibility in their approach to battling the Covid-19 crisis.
It extremely important that records are kept of discussions and decisions which are taken as a result of the Supreme Committee's decisions. Being able to demonstrate the steps that were taken, and their justifications, will be essential in any subsequent courts cases which are brought by employees.
It is also important during this time to keep communication open with staff and with the Ministry where possible. And before taking any steps in terms of staffing, it may be best to seek guidance from legal experts as well as the Ministry.