Ministry of Labour updates to the Wage Protection System in Oman

On 15 December 2024, the Ministry of Labour (MOL) issued Ministerial Decision No. 729/2024 (the Decision), introducing updates to the Wage Protection System (WPS) in accordance with the labour law issued by Royal Decree No. 53/2023. The Decision further safeguards employee wages and promotes financial transparency within the private sector. Key updates include implementing a reduced timeline for wage payments to employees, a stipulation for payment to be made to a bank or financial institution regulated by the Central Bank of Oman, additional exemptions to the WPS, and increased scrutiny from the MOL.

Key provisions of the Decision are detailed below and came into force on 16 December 2024, the day after publication in the Official Gazette.

The Decision revokes Ministerial Decision No. 299/2023 and any conflicting provisions.

Employers in Oman should consider the possible implications of the updates and ensure they are compliant with the new regulations to avoid any penalties or fines.

The key provisions of the Decision are as follows:

1. Monitoring wage payments: the WPS aims to monitor the payment of wages to workers in the private sector electronically, ensuring that employers transfer wages to their workers accounts at banks or financial institutions regulated by the Central Bank of Oman, as agreed in the employment contract within the legally prescribed period.
2. Employment contract updates: employers must update the employment contracts in the event of any changes to workers’ wages. The updated contract must reflect the worker’s actual wage.
3. Transfer of wages: employers are required to transfer workers wages via the WPS to a bank or financial institution regulated by the Central Bank of Oman within no more than three days from the end of the wage entitlement period.
4. MOL to oversee implementation: A designated division within the MOL will monitor the WPS’s implementation and create a database.
5. Exemptions: Some employers are exempt from using the WPS in specific cases such as:
   - Labour disputes resulting in work cessation for over 30 days.
   - Suspension of work due to reasons unrelated to the employer for over 30 days.
   - Absconding reports filed with over 30 days’ approval lapse.
   - Newly hired workers who have not completed 30 days of employment.
   - Workers on unpaid leave.
6. Applications for other exemptions: applications for exemptions not specified in point 5 above may be reviewed by a committee formed by the MOL.
7. Violations and penalties: to ensure compliance, the MOL is empowered to issue penalties for violations of the Decision. Employers may receive a warning, suspending the service of issuing preliminary work permits until violations are resolved, and fines of OMR 50 per worker may be applied with the penalty doubling if the violation is repeated.

KPMG has a dedicated team of experienced global mobility specialists who can help companies navigate these changes. For a detailed discussion, additional information or assistance, please reach out to one of the team members below or your advisors at KPMG Oman.

Partner, Head of Tax
Oman
KPMG Lower Gulf
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Director
Indirect Tax, Oman
KPMG Lower Gulf
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Director
Corporate Tax, Oman
KPMG Lower Gulf
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Director
People Services, UAE
KPMG Lower Gulf
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Associate Director
Tax, Oman
KPMG Lower Gulf
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Manager
People Services, UAE
KPMG Lower Gulf
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