Payroll Process in Oman

Every organization must have a reliable, prompt payroll process. However, it is challenging, particularly when you must adhere to local laws. Business owners or entrepreneurs find it difficult to comply with the evolving laws and guidelines because the payroll process in Oman is not as concise as you may believe, and it needs the assistance of professional advisors to make the process seamless.

For more than 24 years, HLB HAMT has served clients throughout the GCC, the Middle East, and Africa. HLB HAMT has a long history of servicing clients in a variety of sectors. We combine our extensive experience with cutting-edge technology to offer you payroll services that are both reasonable and simple to understand. Our experts are based regionally and are familiar with all aspects of payroll processing for clients all around the world.

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    The vibrant economic environment in the Sultanate of Oman makes it a desirable location for businesses looking to establish a presence in the Middle East. Oman has always possessed the essential components of a market-based economy. To attract international investment and expertise into the Sultanate, demand increased marketization. According to Oman’s vision of the future, a suitable setting will be created to entice talents to the employment market, collaborations will flourish in a cutthroat economic environment, and complete regional growth will be attained.

    Payroll Process in Oman: Our Features

    To be compliant in Oman, you must take into account a number of payroll parameters. The following parameters given below include some of the most important Oman payroll rules, procedures, and practices.

    Minimum Salary

    Minimum salary of Omani national employee is 325 Omani Riyals, irrespective of their educational qualification.  There is no specified minimum wage for expatriate workers.

    Social Contribution (PASI)

    Public Authority for Social Insurance (PASI) is handling the social contribution for Oman. PASI is applicable only for the Omani nationals and the rate of contribution is fixed at 20.5% of the employee’s Gross Salary, of which 12.5% is payable by the employer and 8% 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

    Oman Wage Protection System (WPS)

    The Wage Protection System (WPS) is mandatory in Oman. The WPS is an electronic wage transfer system facilitating payment of wages through a direct credit module system which has been developed by the Central Bank of Oman and where wage payments (including date and amount of payment) are recorded on the Ministry of Manpower’s database. Companies in Oman need to adopt the Ministry of Manpower’s wages protection system to ensure that the employees are paid on time.

    • Each organization must register with the WPS payment program provided by its bank in Oman.
    • The organization will use the standard template provided by the bank to process WPS salary through the bank.
    • Specific template provided by the bank includes the details of employees Oman Civil ID, Name of Employee, Account Number, Salary details with break up, PASI Deduction, payroll month, etc.
    • Upload WPS template to bank’s online portal

    Types of statutory leaves in Oman

    A. Annual Leave

    • 30 calendar days per year

    B. Sick Leave

    • 10 Weeks of Sick leave in a year
      1. For Fist 2 Weeks – Full Pay
      2. Next 2 Weeks – 3/4th pay
      3. Next 2 Weeks – Half pay
      4. Next 4 Weeks – 1/4th pay

    C. Maternity Leave – 50 Days

    D. Hajj Leave – 15 Days

    E. Marriage Leave – 3 days

    F. Examination Leave – 15 Days for Omani national

    G. Iddah Leave – 130 Days for married Muslim women

    H. Compassionate Leave 

    • 3 Days – First Degree Relative
    • 2 Days – Second Degree Relative

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

    End of Service Gratuity

    The end-of-service Gratuity is a monetary payment eligible to an employee as a lump sum at the time of resignation/termination/end of contract. The employee who has completed one year or more in the continuous service, is entitled to an end-of-service Gratuity.

    Gratuity calculation is accrued against the last drawn basic salary on the following basis.

    • 15 days per year for the first three years
    • 30 days per year from fourth year onwards.

    For a comprehensive understanding of Oman gratuity accrual and settlement, please refer to our article

    Tax and other statutory deductions

    Payroll is not subject to income tax, and hence there are no mandated tax deductions.

    Working Hours and Overtime

    The maximum number of working hours is nine hours a day. During the month of Ramadan, it is six hours per day for Muslim employees.

    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

     End of Service Benefits

    The employee is eligible for the following post-employment perks.

    • Un processed Salary
    • End of service Gratuity
    • Air ticket for repatriation
    • If applicable, pay for the notice period.
    • Any unused leave (Vacation).
    • Any other unpaid payments or deductions
    • Any other benefits or compensation mentioned in Employment Contract

    In order to get a detailed understanding about Payroll process in Oman, please refer to our article

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