Oman Payroll Process

A brief overview

For a non-specialized, payroll is about getting your wages/salary paid on a specific date of every month. For a professional, many factors need to be considered such as payroll policy, labor law and they must also ensure that every employee gets paid the actual amount after any deductions/ additional earnings.

Every country has different processes and policies with regard to payroll and also laws and regulations for the safety of Human resources. Here we have covered some important points about the Payroll Process in Oman.

1. What is the frequency of salary payment in Oman?

   Article 51 of Oman Labour Law states as follows,

   • Employees working on a monthly wage should receive their salaries at least once a month,
   • If the employee works by piecemeal, or if the work period exceeds at least two weeks the employee should be paid for the work done in the first week, and the balance should be settled one week after completion of the job.
   • In other cases, the employee should be paid once every week or fortnightly. If the employee agrees in writing with his employer, he can receive his salary once every month.

2. Are there any statutory pay components in Oman?

   Oman labor law does not specify any fixed pay components that should make up an employee’s salary.

3. Which are the common pay components that are normally payable to employees?

   Fixed components may include Basic salary, House rent allowance and Conveyance Allowance. The variable components may include Overtime, Sales commission, Bonus, Incentives, Relocation allowances, Leave passage etc.

4. What is the minimum Salary in Oman?

   Oman’s minimum wage is 325 Omani riyals per month for Omani nationals. There is no specified minimum wage for expatriate workers. Please refer to the following article on the ministerial decree

5. What are the maximum working hours in Oman?

   The maximum number of working hours in Oman is nine hours per day which includes at least half an hour of rest. During the holy month of Ramadhan, the maximum number of working hours for Muslim employees is six a day.

6. How is Overtime Calculated?

   As per Article 70, the employee must get paid extra for the additional hours worked, and the employee is entitled for overtime work plus at least 25% against their basic salary. 50% overtime is provided when an employee works on his day of rest and 100% overtime is provided when an employee works during a national holiday.

7. How is gratuity accrued?

   As per Article 39 of Oman Labor Law, Gratuity calculation is accrued against the last drawn basic salary on the following basis.

   • A service period below 3 years at 15 Days per year.
   • Three Years and above at one month (30 Days) salary per year.

   Please refer to our detailed article on strong Oman gratuity policy here 

8. When is gratuity paid to an employee?

   Employees are eligible for gratuity pay at the end of their service period, at termination, death or at resignation. According to Article 39, the worker shall be entitled to a fraction of the year worked provided he has completed more than one year of continuous service

9. What are the statutory deductions that are made to employees in the Oman?

   In Oman, payroll is not subject to income tax, and hence there are no mandated tax deductions. Whereas Omani nationals are subject to mandatory national pensions plans contributions.

10. Which employees qualify for Oman pension contribution?

    Pension contribution in Oman is provided for Omani nationals only.

11. How is Oman pension calculated?

    The contribution is fixed at 18.5% of the employee’s Gross Salary, of which 11.5% (includes 1% for occupational injuries and disease) is payable by the employer and 7% is payable by the employee. The maximum deduction base amount is OMR 3000. The employee Pension contribution is deducted from the monthly wages and the employer needs to pay this amount along with the employer contribution to the Pension Authority.

12. What is WPS in Oman?

    The Wage Protection System (WPS) is mandatory in Oman. Companies in Oman need to adopt the Ministry of Manpower’s wages protection system to ensure that the employees are paid on timeUnder the WPS, companies are required to submit wage information to the Ministry of Labor via the e-service program. The WPS ensures that employee rights are protected and that salaries are paid according to agreed terms of employment contracts.

13. Are Employees eligible for Air Ticket Benefits in Oman?

    There is no specific statute in the labour Law to provide return air tickets to the worker’s home country. However, many companies provide air tickets to employees annually and some of the companies extend this payout to employees’ dependents as well.

14. What is the leave policy defined under the labor law?

    Annual Leave According to Article 61 of the Oman Labour Law, upon completion of six months of service with the employer, an employee is entitled to a paid annual leave for a period of thirty days for every calendar year.

    Sick leave

    As per Article 66, an employee whose sickness is proved shall have the right to a sick leave not exceeding in total ten weeks in one year whether such weeks are continuous or separate and the sick leave shall be granted as follows:

    • The first fourteen days, with full gross salary. (1^st and 2^nd week)
    • Day 15 to Day 28, with three-quarters of the gross salary. (3^rd and 4^th week)
    • Day 29 to Day 42, with half the gross salary. (5^th and 6^th week)
    • Day 43 to Day 70, with a quarter of the gross salary. (7^th to 10^th week)

    A medical certificate must be provided as Proof of sickness. However, in case there is a dispute, the matter shall be referred to the Medical Committee, provided for in Article (43) of this Law.

    Maternity leave

    According to Article 83, A female employee shall have the right to a special fifty-day maternity leave covering the periods before and after delivery with full salary for not more than three times during her service with the employer.

    Hajj Leave

    Muslim Employees get a special leave to perform Hajj once and only after one year of continuous employment. The leave may be up to 15 days which shall be once throughout the period of service. This is a paid leave.

    Paternity Leave

    The Labor law of Oman is silent about paternity leave.

    Marriage leave

    Employees are granted a three-day paid marriage leave with gross salary. This type of leave can only be grated once throughout the entire service period.

    Compassionate Leave

    Compassionate leave is granted for three days in the case of the death of a first-degree relative, and for two days in the case of a second-degree relative.

    Examinations leave

    Omani nationals employees who are studying in schools, colleges or universities in the country are granted fifteen days per year for the purposes of taking their examinations.

    Iddah Leave

    In the case of a married Muslim female employee is widowed, she is granted 130 days paid leave to mourn the death of her husband.

    Please read our article on Oman leave policy here for a comprehensive understanding.

15. Is employee Medical Insurance mandatory in Oman?

    It is mandatory that an employer provide medical insurance to the employee during the duration of employment.

16. Is bonus or incentives payment mandatory in Oman?

    Bonus and incentives payments are not mandatory according to Oman compensation laws. Companies provide these benefits to employee to attract top talent.

17. Is the employment of foreigners regulated in Oman?

    Yes, an employer is not allowed to bring in foreign workers into the Sultanate of Oman unless he obtains approval from the ministry. Grant of such approvals depends upon the following.

    • There must be insufficient qualified Omanis for the job.
    • The employer meets the required percentages for Omanisation.
    • The required fees are paid.

18. What are the items included in the End of Service Benefits calculation in Oman? The employee is entitled to the following end-of-service benefits?

    1. End of service Gratuity
    2. Repatriation ticket if applicable
    3. Notice period pay if applicable
    4. Any unutilized leave (Vacation) pay
    5. Any other outstanding payment or deduction

    Employee Benefits in summary:

    1. Salary
    2. Gratuity
    3. Annual Leave
    4. Sick leave
    5. Maternity Leave
    6. Examination leave
    7. Marriage Leave
    8. Compassionate Leave
    9. Iddah leave
    10. Medical Insurance
    11. Overtime pay if applicable

    It is mandatory for businesses to process payroll in a timely and accurate manner, be it in Oman or anywhere across the world. The law and procedures related to payroll system might vary for different countries, but the mandatory requirement remains the same. An accurate and streamlined system for payroll processing will mitigate risk and improve business operations vastly.

Payroll Process in Oman

The process of payroll is a little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.

One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.

As a leading payroll outsourcing company in Oman, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours on every project, ensuring our clients get refined consulting services to take your business forward.

Disclaimer:

Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Get Free Consultation

Did you find the blog informative?      Yes    No

HLB HAMT - Audit, Tax, Accounting and Business Advisory

4.8

Based on 176 reviews

review us on

Varun R Chandra

07:38 25 Apr 21

HLB Hamt is highly recommended! They have the quality of services that would satisfy your needs. I'm glad I found them.

Giuseppe Assi

06:20 31 Jan 21

I HAD A GOOD EXPERIENCE WITH HLB HAMT DUBAI. THEY HAVE A VERY PROFESSIONAL TEAM, GOOD QUALITY OF SERVICES, GOOD VALUE FOR PRICE.I RECOMMEND THIS COMPANY.

Mohamed Sheriff

16:16 28 Jun 20

Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits. And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.

218141 JOSEPH THOMAS

16:20 23 Jun 20

Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.

PMI

07:14 23 Jun 20

In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.

RAVI CHOKSI

08:28 21 Jun 20

Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.

Maharajan Subramaniam

18:17 06 Jun 20

High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.

Mohammed L

08:07 05 Jun 20

We have been working closely with them on payroll services for quite sometime.They provide very professional services,experts in domain and excellent support. Would recommend them.Cheers.

ROY ROSHAN VIVIAN

06:32 04 Jun 20

Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We are very Extremely satisfied working with him and his team. Wishing them success.

Basil Daniells

05:55 03 Jun 20

I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.

Amar Kashyap

19:28 02 Jun 20

Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand their client and their business. They are highly recommended and trust worthy.

Radz de Jesus

16:03 02 Jun 20

We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.

More reviews