Terminating An Employment Contract For Gross Misconduct: An Employer's Practical Guide

Whilst Omani Courts are generally inclined to be highly protective of employees, a recent Appeal Court decision has re-affirmed the long-recognized position that an employer can terminate the employment of an employee who has committed acts considered by the Omani Labor Law to be acts of gross misconduct without having to pay damages (indeed, the Omani Labor Law provides that in the specified cases the company need not provide notice or pay end-of-service gratuity either). An act of gross misconduct can include, for example, using a false identity, intoxication or assault at the workplace, or continued absenteeism.

Pursuant to Article 40(9) of Royal Decree 35/2003 (as amended) (the “Labour Law”), an Employer is authorized to dismiss an Employee without prior notice should that Employee “commit a major violation of his duty agreed upon in his employment contract.” The law does not define what constitutes a “major violation” and Omani Courts have interpreted the definition in a wide manner.

For example, in the Appeal Court Judgment mentioned in the opening paragraph, the employee was asked to sign and acknowledge receipt of an Employee Appraisal Review Form. The Employee signed the document and was asked to make a copy so that the original could be placed on the Employee’s Human Resources file. Instead, in an act of defiance, the employee ripped up the original document in front of her line manager. Both the Primary Court and the Appeal Court held that the termination was appropriate under Article 40(9) of the Omani Labour Law, as the Employee had committed an act of gross misconduct by tearing up original company records and threatening an Omani line manager.

Whilst the law remains silent on procedural matters, in practice, the Courts are more inclined to agree with an Employer if the Employer can show that a procedure was followed in relation to the Article 40(9) dismissal. Accordingly, we would advise Employers to take the following steps:

1. The Employer should serve a letter of accusation (“Letter of Accusation”) upon the Employee within 15 calendar days of the act, or of discovery of the act, so as to ensure compliance with the Labour Law. Additionally, the letter should be served in the presence of two Omani male witnesses (neither of whom can be a signatory to the letter). The Letter of Accusation must refer to Article 40(9) and should set out the allegations against the employee in a simple and clear manner. The employee should be invited to attend an investigative meeting and notice of such a meeting should be given to the employee.
2. Pursuant to the serving of the Letter of Accusation, a meeting should be held where the employee is offered the opportunity to respond to the allegations set out within the Letter of Accusation.
3. In the event that the employer is unsatisfied with the response (or non-attendance by the employee), a termination letter can then be served upon the employee within the time frame stipulated by the law.

Increasingly, employees who are terminated, regardless of the reason, are petitioning the Courts for unfair dismissal compensation and/or re-instatement. Whilst there is no statutory cap on the amount of compensation that can technically be awarded to an employee whose termination is held to be unfair by the local courts, Omani Courts have recently been awarding them compensation equivalent to between twelve to fourteen months’ gross salary. However, an employee would have to prove that the termination was unfair as a prerequisite, and the Court could, of course, utilize its discretion and make the compensation far closer to the statutory minimum of three months’ gross salary.

If the termination was pursuant to an act of gross misconduct under Article 40(9) and the employer follows the above procedure, then it will be exceptionally difficult for the employee to convince the Court that a termination was unfair, as a clear and impartial process was used.