Oman Payroll Outsourcing Alert
Omani companies must follow WPS regulations – payroll outsourcing ensures full compliance.
Wages Protection System (WPS) was introduced by the Ministry of Manpower and Central Bank of Oman in January 2014. In accordance with the Article 53 of the Omani Labor Law, employers are required to pay their employees in the local currency through Omani banks. The local banks are required to report all salary payments to the Ministry of Manpower for the comparison with the employees’ contractual salaries. Any late or short payments require valid justifications from the employer.
However, due to various issues faced by Omani companies when trying to comply with the WPS regulations, the Omani government has not forcefully enforced the compliance with the WPS procedures. This is expected to change in the beginning of 2016 and the companies that do not pay their salaries in accordance with the requirements of WPS will be fined or potentially shut down.
In order to facilitate the compliance with the WPS rules, the Central Bank of Oman is implementing an automated clearing house (ACH) payment process, which will significantly improve the process of crediting the payroll funds to the employees’ bank accounts and will provide for continuous reporting of payroll transactions to the Ministry of Manpower.
In order to avoid any potential risks related to the non-compliance with the WPS regulations in Oman, the employers should take the following steps:
- Request all the employees to open local bank accounts;
- Confirm that their Omani corporate banking partner is able to facilitate salary payments in accordance with the WPS regulations;
- Ensure that all employees are paid in the local currency their full contractual salary.
Outsource your payroll function in Oman in order to stay compliant.
Compliance with Omani WPS rules requires specialized or customized software, which can be very expensive to implement and support. Your payroll outsourcing provider will complete all payroll calculations and filings on your behalf following the laws of Oman. Your payroll provider can also generate and upload all WPS files in the format prescribed for your bank and the Ministry of Manpower. This will allow you to reduce the burden on your HR and payroll staff and minimize the investment into expensive HR/Payroll software solutions.