Employer of Record (EOR) Oman
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In Oman, being the designated Employer of Record Oman, we play a crucial role as the legal employer for workers. Functioning as a Global Professional Employer Organization (Global PEO), this key position involves overseeing various aspects of employment, ensuring strict compliance with Oman’s labor laws and regulations. We skillfully manage critical tasks, including payroll, taxes, mandated benefits, and the creation of employment agreements.
As your trusted Employer of Record in Oman, our responsibilities include:
- Ensuring stringent compliance with Oman’s employment laws.
- Expertly managing the intricacies of local payroll.
- Handling the filing of employment-related taxes and essential documentation.
- Providing transparent payslips to the worker.
- Facilitating the timely distribution of the worker’s salary payments.
For businesses seeking to streamline global expansion without the need for entity setup, our Global PEO services, featuring our Employer of Record Oman services, offer a hassle-free solution.
Our dedicated EOR in Oman ensures legal presence, compliance, and Intellectual Property protection, allowing your business to focus on core functions. One can experience seamless global mobility, efficient work visas, and the cultivation of a diverse global workforce with Mercans, your trusted Employer of Record in Oman and the GCC.
EOR Solutions in Oman
Employment Contracts in Oman
In accordance with Oman’s Labour Law, a written employment contract is a legal requirement, outlining key details and qualifications. Translation, if in a language other than Arabic, is essential. Standard forms provided by the Ministry of Manpower are commonly used for Omani employees, while expatriates often have more detailed contracts covering additional benefits.
Explore Mercans’ solutions for streamlined global employment tasks, ensuring compliance and efficiency worldwide.
Termination, Resignation or Retirement
- Contract Renewal: Limited period contracts, if executed after expiry, are deemed renewed for an unlimited period.
- Notice Period for Unlimited Contracts:
- 0 days for monthly salaried employees.
- 15 days for other employees, unless a longer period is agreed upon.
- Compensation for No Notice: If terminated without notice, the terminating party pays compensation equal to the gross salary for the notice period.
- Validity of Termination Notice: Notices during employee leave or public holidays become valid the day following the end of leave or holiday.
- Termination Without Notice or Gratuity: Employers may dismiss without notice or gratuity in specified cases, including false identity, mistakes causing grave material loss, safety non-compliance, absenteeism, disclosure of secrets, criminal convictions, assaults, and grave breaches of obligations
- Age Limit: Contract cannot be terminated by the employer before the employee reaches the age of sixty.
- End of Service Gratuity: Upon retirement or termination for specified reasons, the employer pays end of service gratuity according to the specified formula.
- Employee’s Right to Abandon Work: An employee may abandon work with notice for reasons such as fraud, employer non-compliance, immoral acts, assault, or severe danger.
- End of Service Gratuity on Abandonment: If an employee abandons work, the employer is obligated to pay the end of service gratuity.
- Certificate of Service: Upon resignation, the employer provides a free certificate of service outlining employment details, including dates, role, salary, allowances, and benefits. The employer must also return any deposited documents or certificates to the employee.
- Contract Renewal: Limited period contracts, if executed after expiry, are deemed renewed for an unlimited period.
- Notice Period for Unlimited Contracts:
- 0 days for monthly salaried employees.
- 15 days for other employees, unless a longer period is agreed upon.
- Compensation for No Notice: If terminated without notice, the terminating party pays compensation equal to the gross salary for the notice period.
- Validity of Termination Notice: Notices during employee leave or public holidays become valid the day following the end of leave or holiday.
- Termination Without Notice or Gratuity: Employers may dismiss without notice or gratuity in specified cases, including false identity, mistakes causing grave material loss, safety non-compliance, absenteeism, disclosure of secrets, criminal convictions, assaults, and grave breaches of obligations
- Age Limit: Contract cannot be terminated by the employer before the employee reaches the age of sixty.
- End of Service Gratuity: Upon retirement or termination for specified reasons, the employer pays end of service gratuity according to the specified formula.
- Employee’s Right to Abandon Work: An employee may abandon work with notice for reasons such as fraud, employer non-compliance, immoral acts, assault, or severe danger.
- End of Service Gratuity on Abandonment: If an employee abandons work, the employer is obligated to pay the end of service gratuity.
- Certificate of Service: Upon resignation, the employer provides a free certificate of service outlining employment details, including dates, role, salary, allowances, and benefits. The employer must also return any deposited documents or certificates to the employee.
Social Security in Oman
Following the inclusion of the employment security system contribution, the overall monthly contribution constitutes 20.5% of the employee’s gross salary. Within this, 12.5% (comprising 1% for occupational injuries and disease and an additional 1% for the newly introduced Employment Security System) is the responsibility of the employer, while 8% (including 1% for the newly introduced Employment Security System) is deducted from the employee’s monthly wages. The employee’s pension contribution is withheld from their wages, and the employer is required to remit this amount, along with their own contribution, to the Pension Authority.
Social Security for Omani Nationals
Insured Person’s Salary
325 Omani rials
Contributions
- Employer: 325 * 11.5% = 37.375 Omani rials
- Insured Person: 325 * 7% = 22.750 Omani rials
Payment Period
First 15 days of the month following the month for which payment is due.
Example
January contributions paid from 1 February to 15 February.
Notice Issuance
By the end of each month, PASI’s automated systems calculate monthly contributions, sending notices via mail or through the PASI electronic portal.
Payment Channels
Contributions can be paid via available e-payment channels.
Installment Basis
Employers with arrears may request installment-based payments following PASI regulations and systems’ rules, governed by the Board’s decision.
Transfer to Other Schemes
PASI facilitates transferring contributions to other pension schemes upon an employee’s termination from the private sector and joining covered entities.
From Social Insurance Scheme to
- Diwan of Royal Court Pension Fund
- Civil Service Employees Pension Fund
- Ministry of Defense Pension Fund
From Other Schemes to Social Insurance Fund
Contributions must be transferred upon employee movement from other pension schemes to PASI.
Social Security for Omani Nationals in GCC Countries
| Contributors | Contribution Rate (%) | Calculation from Gross Salary |
|---|---|---|
| Employer | 11.5% | 10.5% for old age, disability, and death + 1% for occupational diseases and work injuries |
| Insured Person (Employee) | 7% | |
| Government | 5.5% |
Citizens Working in GCC – Social Insurance Contributions
Contributory Wage Definition
- The contributory wage is the total basic salary plus regular allowances, not exceeding 3000 Omani rials or equivalent.
- The employee must be insured according to the salary and elements defined in the social insurance law of their home state.
- The employer’s liability is capped based on the contributory wage or salary elements applicable in the state of the place of business.
- If the employer’s contribution is restricted, the employee pays the difference unless the state covers it on behalf of its citizen employee.
Percentage of Deducted Contributions
- Monthly contribution: 17.5% of the total basic salary.
- Applicable to insured Omani workers and GCC employers with Omani employees.
Scheme for Omanis Working Abroad and Persons of Equivalent Status
Monthly Contributions Details
Employment Security Scheme
The Employment Security Scheme in Oman stands as a national initiative grounded in principles of social solidarity. The primary objective is to extend social protection to Omanis who face mass terminations beyond their control. The scheme acts as a bridge, easing the transition period between the loss of previous employment and the pursuit of new job opportunities. It achieves this by providing a source of income to affected citizens, ensuring a decent standard of living for them and their families. The benefit, equivalent to a portion of the previous salary, not only serves as financial support but also aids individuals in exploring new employment options.
Contributors of the Scheme
The Employment Security Scheme encompasses the entire Omani labor force, spanning various sectors such as civil, military, security, and the private sector. The scheme’s resources are derived from:
- Employer’s Contribution: The employer is obligated to contribute 1% of the monthly wage of the insured employee.
- Insured Person’s Contribution: The insured person is required to contribute 1% of their monthly wage.
- Additional Fee: A 5% fee is added to each permit or permit renewal for employing non-Omani workers in commercial work.
Contributions Procedure
Employers, both in the public and private sectors, have specific obligations regarding contributions:
- Public Sector: Employers in the administrative apparatus of the state and other legal public entities must pay the scheme’s contributions at the end of each month.
- Private Sector: Employers in the private sector are mandated to make contributions within the first 15 days of the month following the entitlement month. Regardless of the sector, employers are responsible for both their contributions and those of the insured individuals. The employer has the option to deduct the contributions from the insured person’s salary or wage during payment cycles.
Procedures for Service Termination by Employers
In the private sector, employers planning collective service terminations must adhere to specific procedures:
- Notice Requirement: Employers are obligated to provide the Ministry of Labor with a notice of no less than three months before the intended date of collective termination. This ensures transparency and allows for adequate preparation for affected employees.
Public Authority for Social Insurance (PASI)
The Public Authority for Social Insurance (PASI) is a cornerstone of Oman’s social security landscape, functioning as the government’s administrative body for social security law. Established in 1992, PASI plays a pivotal role in safeguarding the interests of Omani citizens in Oman and Gulf Cooperation Council (GCC) countries.
Key Objectives and Coverage
PASI’s mission revolves around providing social protection for Omani employees, addressing risks associated with retirement, disability, death, occupational diseases, and injuries. Notably, the scope of the social security law expanded in November 2020 to incorporate employment security insurance.
Contributors and Contributions
Contributions to PASI come from both employers and employees. Private companies operating in Oman and GCC countries with Omani employees are mandated to register with PASI. Contributions are calculated based on the aggregate basic gross salary, capped at OMR 3,000. The breakdown includes:
- Employer Contributions: 10.5% of the employee’s monthly salary, allocating 10.5% to insurance against old age, disability, and death, and 1% for occupational disease and injury.
- Employee Contributions: 7% of the gross salary.
- Government Contributions: 5.5% of the gross salary.
Registration Process
Omani citizens between 15 and 59 years old can register with PASI, receiving a unique Permanent Insurance Number (PIN) for their entire working life. The process involves submitting essential documents to one of PASI’s nine branches.
New Job Security Insurance
The introduction of Royal Decree No. 82 of 2020 brought forth a new dimension to social security, focusing on unemployment protection. Employers are required to inform the Ministry of Labour three months in advance of planned terminations. Contributions for this insurance include:
- Employer Contributions: 1% of the employee’s monthly salary.
- Employee Contributions: 1% of the employee’s monthly wage.
Additional payments include a 5% fee for each new license or license renewal when recruiting foreign nationals instead of Omanis.
Future Prospects and Reforms
Under the leadership of Sultan Haitham bin Tariq al-Said, who assumed power in January 2020, significant reforms are underway to enhance PASI and the broader social security system. A newly-formed cabinet committee has been tasked with restructuring existing pension and social security systems, drafting a new social protection law, and extending optional pension pay to those with at least 30 years of work experience. These initiatives aim to make social security more inclusive, particularly for lower-income Omani citizens.
In summary, PASI stands as a crucial entity in Oman’s commitment to ensuring the well-being of its citizens, and ongoing reforms suggest a promising future for the country’s social security landscape.
Wage Protection System
The Wage Protection System (WPS) was instituted by the Ministry of Manpower and Central Bank of Oman in January 2014. As stipulated in Article 53 of the Omani Labor Law, it is mandatory for employers to remunerate their employees in the local currency through Omani banks. These banks are obliged to furnish the Ministry of Manpower with comprehensive reports on all salary disbursements, allowing for a meticulous comparison with the employees’ contractual salaries. Any instances of delayed or inadequate payments necessitate valid justifications from the employer.
A pivotal requirement imposed by the WPS is the payment of employees’ wages in the local currency, facilitated through bank transfers into their respective local bank accounts. Failure to comply with WPS regulations may subject employers to financial penalties and pose challenges in the renewal or processing of new visas for their workforce.
To mitigate potential risks associated with non-compliance with WPS regulations in Oman, employers are advised to undertake the following measures:
- Encourage employees to open local bank accounts.
- Verify that their Omani corporate banking partner can facilitate salary payments in strict adherence to WPS regulations.
- Ensure that all employees receive their complete contractual salary in the local currency.
Payroll in Oman
As of December 2023, the minimum wage in Oman remains applicable since July 1, 2013. The amounts are denominated in Omani Rial and vary based on the sector, particularly for Omani Nationals in the private sector:
Minimum Wages (Omani Nationals)
- Basic per month: OMR 225.000
- Allowance per month: OMR 100.000
- Total per month: OMR 325.000
Payroll Cycle
Employees in Oman are paid on a monthly basis. It is mandatory for all private sector employers to ensure timely salary payments, with salaries for the month of April 2023 needing to be disbursed no later than April 18, 2023.
Employee Benefits in Oman
Statutory Leaves
| Leave Type | Eligibility | Compensation | Leave Duration |
|---|---|---|---|
| Annual Leave | • Completion of probationary period (6 months) | Paid | 30 calendar days per year |
| • Employer approval required – 30 days advance notice | |||
| • No carry-forward by employee; max grace period for the employer 60 days | |||
| Sick Leave | • Doctor’s notice | First 2 weeks – fully paid | Up to 10th week - Unpaid |
| 3rd & 4th weeks – 75% paid | |||
| 5th & 6th weeks – 50% paid | |||
| 7th up to the 10th week – 25% paid | |||
| Bereavement Leave | • Death of direct family member | Paid | 6 days in addition to the 30 days annual leave period |
| Marriage Leave | • Marriage | Paid | 3 days (true copy of Marriage certificate) |
| Childbirth Leave | • Birth of a child | Paid | 3 - 7 days |
| Haji Leave | • Once during service period | Paid | 15 days |
| Maternity Leave | • Completion of the probation period | Paid | 50 days includes before and after the delivery |
| Examination Leave | • During the year (Omani employee’s only) | Paid | 15 days |
| Special Leave | • During service | Paid | 130 days for a Muslim woman whose husband has died |
| Unpaid Leave | • Employer prior approval | Unpaid | Max duration is defined by the employer. |
End of Service Benefits
The End-of-Service Gratuity is a monetary payout granted to an employee as a lump sum upon resignation, termination, or the end of a contract. Employees who have served continuously for one year or more are eligible for this gratuity.
The calculation of the gratuity is based on the last received basic salary and follows the following criteria:
- 15 days’ worth of salary per year for the initial three years.
- 30 days’ worth of salary per year starting from the fourth year onward.
Omanisation
The Ministry of Manpower in Oman has introduced an initiative aimed at boosting Omanisation rates in key sectors such as tourism, logistics, and industry. The goal is to enhance employment opportunities for local citizens. In the coming year, the travel and tourism sector is required to achieve a 44.1% Omanisation rate, the logistics sector 20%, and the industrial sector 35%. These sectors, prioritized for development under the Tanfeedh economic diversification plan, will receive training facilities and employment incentives for specialized companies. Temporary work licenses will be provided for expatriate and part-time local workers, with their presence contributing to the Omanisation rate, as long as part-time workers do not exceed 20% of the required rate. Companies meeting or surpassing the assigned Omanisation rate may qualify for the government’s green card scheme, receiving expedited treatment for facilities and clearances. Failure to meet conditions within a 30-day grace period may result in fines, as outlined in Article 114 of the Labour Law. The tourism sector aims for a 44.1% Omanisation rate in 2020, while the logistics and industrial sectors target 20% and 35%, respectively.
Foreign Employment and Immigration
Expatriate Employment Procedures
Prior to engaging a foreign employee, employers in Oman are required to secure labor clearance from the Ministry of Manpower (MOM), authorizing the hiring of an expatriate for the specified position. Subsequently, the employer must procure an employment visa through the immigration department at the Royal Oman Police. Upon the expatriate’s arrival in Oman, the individual must acquire a residence permit, also issued by the Royal Oman Police. It is essential to note that expatriates are exclusively allowed to work for the employer who has obtained the requisite clearances and visas.
Immigration
All international visitors to Oman, excluding Gulf Cooperation Council Nationals, are required to obtain visas for the duration of their stay. These visas can be acquired through an Omani sponsor from the Immigration Department of the Royal Oman Police. Travelers are advised to verify visa requirements with their nearest Omani embassy or airline. To secure a visa, passengers must possess a passport valid for more than six months. Various entry visas are issued for visits to the Sultanate, including residence visas (investor, joining, family joining), visit visas (trade mission, job contracting, family and friends visit, official visit, artiste groups, express business), tourist visas, transit visas (via airports, via sea, and truck drivers visa), and work visas (with companies and servant visas). Additionally, road permits are issued for travel to neighboring Gulf States by road.
Conclusion
Enter the Omani market confidently with Mercans’ efficient EOR solution, ensuring full adherence to the country’s labor laws. Seamlessly manage the intricacies of business expansion, fostering a profitable global presence. Consult Mercans’ in-country experts in Oman to gain comprehensive insights into every facet of expanding your business in the Sultanate.