Oman Payroll Outsourcing Alert
Oman – New Fund to Support Omani Terminated Employees and Job Seekers.
Oman’s Ministry of Justice and Legal Affairs has published Royal Decree 82/2020 of 17 August 2020, which provides for the introduction of a new Employment Security System that is essentially an unemployment insurance system for Omani nationals whose jobs have been terminated.
As part of the funding for the system, both employers and employees are required to make contributions equal to 1% of the monthly salary, with the employee contribution withheld by the employer. Payments for the contribution are due by the end of the month by public sector employers and by the 15th of the following month by private sector employers.
The fund has been bolstered by a 10 million Omani Rial contribution from the Government. The scheme aims to provide social protection for Omani nationals whose services are terminated for reasons beyond their control, by providing a temporary source of income and financial aid as they seek new roles.
From January 2021, a monthly salary contribution will be applied to all Omani employees, at the rate of 1 rial per 100 rials of monthly salary (or 1% of payment). Contributions of equivalent value (i.e., 1 rial per 100 rial of monthly salary) will also be due from the employer, meaning that both employer and employee will make equal contributions to the fund.
Upon implementation, employers who are terminating the contract of Omani nationals must give the Public Authority for Social Insurance (PASI) 3 months’ notice of the termination, after which the employee will be eligible for a payment of 60% of their average salary (based on the prior 24 months of employment) whilst they search for a new role. This will be paid for a maximum period of 6 months, during which the National Employment Centre will support the individual in finding an alternative job (support with finding a replacement role will begin upon notice of the termination).
This scheme will likely affect Omani national employees across both government and private sectors.
Eligibility to receive the benefit will be determined by the Committee established by the PASI. The eligibility criteria for an Omani employee to be paid the benefit includes if the Insured:
- has completed certain eligibility periods with the Employer stipulated in Article 11 of the RD.
- does not receive a retirement benefit.
- has not willfully left his or her employment.
- has not been dismissed from employment for disciplinary reasons.
- can work and is looking for employment (in accordance with regulations and rules set by the Board of the PASI); and
- is not enrolled as a student in any educational institutions.
Subject to satisfying the eligibility criteria, the Insured may start to apply for benefits one year after establishment of the Fund. Supporting regulations will be issued by the PASI.
The Insured’s benefit eligibility will be limited to monthly payments for a maximum of six months. The benefit will be 60% of the average contributions made during the 24 months preceding the termination or, if the period is less than 24 months, the average contributions for that lesser period. In any event, the benefit will not be less than the minimum wage for Omanis, which is currently OMR 225 basic salary and OMR 100 allowances.
The job seekers benefit will be available for three years after the effective date of this RD (1 November 2023).
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While Mercans’ Oman Payroll Outsourcing alerts will allow you to stay on top of the latest development in Oman’s payroll regulations, you should still get in touch with Mercans’ Oman payroll outsourcing, compliance, PEO/GEO, and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in Oman to Mercans and our Oman payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the Oman regulations.
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