An Employer of Record (EOR) in Oman is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before hiring in Oman through an employer of record (EOR).
Oman Overview
| Continent | Asia |
| Country | Oman |
| Capital | Muscat |
| Time zone | UTC+04:00 |
| Total Time zones | 1 |
| Working hours per week | 40 (30 during Ramadan) |
| Working week | Sunday–Thursday |
| Typical hours worked | 8 (6 during Ramadan) |
| Personal Tax filing deadline | no personal income tax (PIT) law enacted in Oman. |
| Financial Year | 1st January to 31st December |
Employment Contracts in Oman
All employment contracts in Oman must be in writing and in Arabic. Both the employer and employee should have a copy of the work contract. The translated version of all non-Arabic contracts must be attached to the actual contract.
Employment contracts can be either fixed-term or indefinite contracts. Fixed-term contracts cannot exceed five years. A contract will be considered as an indefinite contract if the contract duration is over five years. Contracts can be extended upon mutual agreement and fixed-term contracts will be considered as indefinite contracts if the duration in the original and the extended contract exceeds a total of five years.
Employment Contracts for Expats
Starting July 1st 2023, it is mandatory to register employment contracts for expats with the Ministry of Labour.
Working Hours
The standard working hours in Oman is 48 per week and 8 hours per day. During Ramadan, the working hours cannot exceed 36 hours per week for Muslims.
Probation Period and Notice Period
The probation period cannot exceed 3 months. The employee cannot be placed under probation by the same employer twice. The contract will be considered as an indefinite contract if the service duration exceeds three months.
The standard notice period for indefinite contracts is 30 days. In case the employee is on leave, the start date of the notice period counts once the employee is back to work. The standard notice period during the probation period is 7 days.
Termination Policy
The employer can dismiss the worker without notice or end-of-service gratuity in the following situations:- Impersonating or using forgery to obtain a job.
- Making a mistake causing significant material loss to the employer, reported within 30 days.
- Ignoring safety instructions despite warnings, risking harm to the workplace or workers.
- Unexcused absence for more than seven consecutive days or ten separate days in a year, with prior written warning.
- Unauthorized disclosure of establishment secrets.
- Final conviction for a felony, crime, or misdemeanor involving breach of honor or trust.
- Being found drunk, under the influence, or committing an act against public morals during working hours.
- Assaulting the employer, representative, superiors, or co-workers resulting in illness or unemployment.
- Serious breach of the obligation to perform agreed-upon work.
Employees are entitled to receive an amount equal to their daily pay for each day of the notice period, in case the notice period is not provided as per the employment contract.
Payroll in Oman
Minimum Wages
The minimum wage in Oman is OMR 325, comprising a basic wage of OMR 225 and a bonus of OMR 100.
Payroll Cycle
In Qatar, payroll is usually processed monthly and the salaries are paid in local currency Oman Riyals.
Paying Employees in Oman
Employers must pay their employees through Wage Protection System into an Oman registered bank in Omani Riyals. Employers who fail to pay wages on time may be subject to penalties. All banks need to submit salary records to the Ministry of Manpower to verify if the payments are made as per the employment contracts.
Overtime Pay
Employees are entitled to receive overtime pay, which is 125% of their regular pay for day-time work, 150% for night work, and 200% for the work performed weekly offs or public holidays.
13th Month Salary
It is not mandatory to pay a 13th month salary as per the Omani labor laws.
Social Security in Oman
In Oman, social security is managed by PASI (Public Authority of Social Insurance). PASI protects the individuals against old age, disability, death, work injury and occupational diseases.
PASI Registration
It is mandatory to register the employees in PASI to become eligible for the social insurance benefits. PASI issues a subscription number as well as permanent insurance number once the registration process is completed. These numbers include all social insurance transactions of the employee. Employers are required to provide a copy of work contract as well as a medical certificate to the PASI.
Employee registration is to be initiated once the work contract is approved by the Ministry of Labour. Employers are also required to fill a termination form at the Ministry of Labour once the contract is terminated.
Social Security Contributions for Workers in Oman
For the citizens working in Oman, employers contribute 12.5% of the gross salary, and the government contributes 5.5% of the gross salary.
- Employer Contributions: 10.5% of employer contributions is funded towards old age, disability and death programs and 1% towards occupational diseases and work injuries programs. 1% towards the unemployment insurance program.
- Employee Contributions: Employees contribute 7% of the gross salary and 1% towards the unemployment insurance.
| Description | Employee Contribution | Employer Contribution |
|---|---|---|
| Social Security Contribution (Omani Nationals) | 7% | 10.50% |
| Insurance for Work-Related Injuries | 1% | |
| Job Security Scheme Contribution (from January 2021) | 1% | 1% |
| Total Contributions | 8% | 12.5% |
PASI calculates the social security contributions and sends an email notification to all employers. The individuals working in only Oman are covered under this scheme. Omani nationals working abroad or GCC countries are not covered under this scheme.
It is optional for self-employed individuals in Oman to participate in the social insurance scheme. Social security contributions are calculated based on the income.
Employment Security Scheme
This scheme protects employees who lost their job due to reasons beyond their control. Employees will be paid a decent unemployment allowance until they get a job based on the recent drawn salary.
Social Security Contributions for Omani Nationals in GCC Countries
Omani nationals living in GCC countries will continue to contribute to the country's social security and are covered by Oman social insurance program. Employers of Omani nationals are responsible for deducting the contributions.
| State of Employer | Contributory Wage | Contribution of employees | Contribution of Employer |
|---|---|---|---|
| UAE | Total Salary | 7% | 10.5% |
| Bahrain | Total Salary | 7% | 10.5% |
| Saudi Arabia | Basic + Housing Allowance | 8.5% | 9% |
| Kuwait | Total Salary | 7% | 10.5% |
| Qatar | Basic + Social Allowance + Housing Allowance | 7% | 10.5% |
Personal Income Tax in Oman
There is no personal income tax in Oman.
Employee Benefits
| Leave Type | Duration | Payment | Additional Information |
|---|---|---|---|
| Annual Leave | 30 days per calendar year | Paid | Article 61 of Oman Labour Law |
| Sick Leave | Up to 10 weeks per year | Varies (full to quarter of gross salary) | Article 66 of Oman Labour Law |
| Maternity Leave | 50 days | Full salary | Article 83 of Oman Labour Law |
| Hajj Leave | Up to 15 days | Paid | Once after one year of continuous employment |
| Paternity Leave | Not specified in Oman Labour Law | Not applicable | Not covered by Oman Labour Law |
| Marriage Leave | 3 days | Paid | Once throughout the entire service period |
| Compassionate Leave | 3 days for first-degree relative, 2 days for second-degree relative | Paid | |
| Examinations Leave | 15 days per year | Varies (as per individual's employment status) | For Omani nationals studying in schools, colleges, or universities |
| Iddah Leave | 130 days | Paid | For a widowed Muslim female employee |
End of Service Gratuity
Employees are eligible for end of service benefits if the length of employment is more than one year. End of Service gratuity varies as per the length of employment and last drawn basic salary.
The gratuity calculation is based on the last drawn basic salary and follows the following accrual rates:
- 15 days per year for the first three years of service.
- 30 days per year from the fourth year onwards.
Conclusion
Engaging an Employer of Record (EOR) in Oman emerges as a strategic decision for companies navigating the intricacies of global expansion. By partnering with an EOR, businesses efficiently overcome the challenges posed by local employment regulations, intricate payroll systems, and compliance requirements. This collaborative alliance allows enterprises to seamlessly establish a foothold in Oman without the complexities associated with setting up a legal entity. While the EOR expertly handles the nuances of international employment procedures, companies can channel their focus towards core objectives and growth strategies.