The introduction of union rights will undoubtedly change the landscape of labour relations in the country

On January 19, 2006, the Sultanate of Oman and the US signed a free trade agreement (FTA), containing commitments from both countries to open markets to one another across services. The FTA also required Oman to provide a secure, predictable legal framework for the US investors operating in Oman and for the effective enforcement of labour laws.

In light of its commitments under FTA, Oman introduced radical labour law reform by way of union rights for the first time. Royal Decree 74/2006, which was promulgated and became effective on July 8, 2006 (as amended by Royal Decree 112/2006), introduced to all private sector employees the right to strike, the right to establish labour unions and a General Federation of Workers and the right to engage in collective bargaining for the purpose of reaching a collective agreement in relation to issues which affect the employees. Importantly, employees who are union representatives may not be dismissed for practising union activities and union members may not be penalised in any way by employers on the basis of their membership. The accompanying regulations are Ministerial Decisions 294/2006, 17/2007 and 24/2007 which prescribe the rules as to the formation and functions of unions, the procedural timetable for calling a strike, for an employer to close a workplace, and the process for mediation in an industrial dispute.

Union tiers

Three tiers of unions have been introduced. At the bottom tier is the labour union, which must comprise a minimum of 25 employees in a company, sector or specific profession. At the mid tier is the sector union, which is a collective group of labour unions, which will typically be from the same sector of activity or industry to represent the interests of that sector. At the top tier is the General Federation of Workers which will comprise all the labour and sector unions in Oman and will be responsible for overseeing the lower tiers. Unlike some other jurisdictions in the Middle East, there are no restrictions under Oman Labour Law as to who may join a union. Nor are there any qualifying requirements regarding residency, nationality or length of employment before becoming a union member. As of the date of this article, the Ministry of Manpower, which is responsible for union registration, has received approximately 30 applications for registration.

We have seen a mixed reaction from employers in response to the union legislation. Some employers have decided to take the lead by facilitating union formation and putting in place awareness literature for its workforce and providing administrative assistance to those who wish to form a union. Others have been less enthusiastic and are naturally concerned about the economic effect that a strike will have on their business. Some employers are hopeful that they will fall within the exemption provided under Article 20 of Ministerial Decision 294/2006, that they be declared an establishment which provides general or essential services to the public, so that their employees are excluded from the right to strike. General or essential services are defined as education, healthcare, electricity, water and telephone or services offered to defence, the police, fire fighters, emergency, prisons or air navigation.

Collective negotiations

Ministerial Decision 294/2006 (as amended by Ministerial Decision 17/2007), which regulates collective negotiations, states the purpose of collective negotiations as promoting dialogue and discussions between the employer and the employees or unions to improve work conditions, improve productivity and settle work-related disputes. Where no union is established, negotiations can be conducted with a group of no fewer than five employees and the employer. The employer will have no right to object to any of the employee representatives.

The new legislation also introduces disclosure requirements on parties to collective negotiations. Pursuant to Article 4 of Ministerial Decision 17/2007, a party is obliged to provide information to the other which is considered necessary for carrying out the negotiations. Whether or not the employer is required to disclose such information will depend on the issue in dispute and how necessary it is to give such information. Employers should consider taking legal advice before refusing such requests.

Once a collective agreement is reached, it shall be binding for a term of three years although it is possible to renegotiate the terms if both parties agree. Interestingly, the legislation does not make any provision as to what will happen in the event of a breakdown in negotiations or if one party does not want to renew/enter into a new collective agreement.

If there is a collective work dispute, the matter may be referred to the Ministry of Manpower for mediation and if necessary, to the courts. In the case of a strike, the ministry is required to form a committee (including a representative each from both employer and employee) to mediate the dispute, but the strike can only be halted once both parties agree to mediation.