Oman: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Oman.

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Overview

When looking for a new country to call home, many choose to make the move to Oman. Oman ranks as one of the top countries for expats to move to. With a non-existent crime rate and a "silence builds character" motto, Oman also happens to be one of the most peaceful Arab countries.

Do your organization’s expansion plans require you to hire employees in Oman? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo – Global Payroll Providers assists organizations worldwide with onboarding and managing employees in Oman - processing payroll in Oman, payroll accounting, managing local compliance requirements, benefits, and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Muscat

Currency

Omani Rial (OMR)

Official Language

Arabic

Fiscal Year

1 January - 31 December

Date Format

DD/MM/YYYY

Country Calling Code

968

Other languages

South Baluchi, Malayali, Bengali

Time Zone

UTC + 04:00

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.  The solution to this is using outsourced payroll providers, such as Neeyamo – Payroll Management Services.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll. Neeyamo becomes your payroll and benefits administrator and handles all the complexities that come with it.

Payroll Association

The Global Payroll Association (GPA) is instrumental in supporting individuals and organizations engaged in payroll and its related functions. These associations offer many advantages that foster professional growth, facilitate networking prospects, encourage knowledge exchange, and promote industry advocacy.

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

Employees in Oman are exempt from personal income tax.

However, they make the following payroll tax contribution:

  • Social Security: 7.00%
  • Job Security Fund: 1.00%

Employer Taxes

The employer taxes in Oman are computed as follows:

  • Social Security: 10.50%
  • Occupational Injury and Disease: 1.00%
  • Job Security Fund: 1.00%

Payroll Cycle

Overview

An Employer of Record service provider helps you get rid of the hassle of handling the complexities that come with setting up a new employee in remote locations. They act as the legal employer, facilitate salary payments, and handle everything from health insurance. Payroll taxes and employee benefits to comply with local tax laws and regulations.   

This ensures that the client company can focus on the employee’s everyday tasks safely in the knowledge that they have a cost-effective solution as they continue their global expansion.

Frequency

Employees in Oman are paid monthly.

All private sector employees in Oman must pay their employees' salaries for the month of April no later than April 18, 2023.

13th Month Cycle

There is no legal requirement for employers to pay a 13th-month payment in Oman.

Global Work

Overview

An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account prior to making a job offer to an international hire.

An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with the employees in Oman for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll & HR requirements as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

The minimum wage in Oman is 325 OMR/month.

Overtime

Overtime is limited to 12 hours per day. Employees are paid 125% of their regular wage for daytime extra hours, and for night overtime hours, they are paid 150% of their regular wage.

The worker may be asked to work on an official holiday and be paid an additional amount of not less than 25% of his gross income for that day or have a rest day as a substitute.

Data Retention Policy

In Oman, the following records can be found in terms of data retention policy:

  • A payroll record stating for all employees the date employment started and ended, the days worked, the amount of daily, weekly, or monthly wages paid, fringe benefits, and any piecework or commission payments
  • A record of all occupational injuries and diseases sustained
  • “Basic work regulations,” approved by the public labor authorities, stating the daily working hours, the weekly rest period, public holidays, and the measures and precautions taken for the prevention of occupational injuries and fire hazards

Hiring and Onboarding Requirements

Hiring

The employment of workers without discrimination in the workplace applies to all employees.

The law prohibits any discrimination that prejudices equal opportunity employment and equal access to jobs, without specifying any particular grounds (sex, race, age, etc.) on which such discrimination is unlawful.

The only specific rules on discrimination in recruitment apply to people with “special needs.” The Ministerial decree stipulates that employers must not discriminate against such individuals in recruitment and selection. Job advertisements must not indicate any intention to discriminate against applicants with special needs.

Employers must consider using a variety of channels to advertise vacancies and to receive job applications to include people with special needs. They must also consider adapting their selection procedures to give applicants with special needs the opportunity to demonstrate their capacities (i.e., giving them more time during interviews).

Onboarding

In Oman, the documents required for the registration of new hires with social security are as follows:

  1. Insured Employees Registration Form (Form 1)
  2. Copy of the Employment contract (certified by the Ministry of Manpower)
  3. Passport copy or Identity Copy (ID)

The documents required for the registration of GCC new hires with social security are as follows:

  1. The unified form for Insurance Protection Extension
  2. Copy of work agreement (work contract/appointment decision) approved by the competent authority of the work location state
  3. Copy of a valid ID card or passport
  4. Approved statement of basic salary progression since the beginning of the employee appointment

Probation

In Oman, the probation period is set to 3 months. Also, it must be clearly mentioned in the employment contract, or it will not apply.

Leave

National Holidays

  • Feb. 18 - Isra'a Wal Miraj
  • Apr. 22 to Apr. 25 - Eid al-Fitr (Tentative Date)
  • Jun. 28 - Arafat Day
  • Jun 29 to July 2 - Eid al-Adha Holiday
  • Jul 19 - Hijri New Year
  • Sept 27 - Mawild
  • Nov 18 - National Day
  • Nov 19 - National Day Holiday

 

Sick Leave

Employees are entitled to ten days of paid sick time per year.

  • After the first two weeks, the employee is entitled to Gross Wage under social security law.
  • Weeks 3rd and 4th are 75% of the gross wage.
  • Weeks 5th and 6th are 50% of gross salary.
  • Week 7th to the 10th week is 25% of gross pay

Maternity Leave

Pregnant employees are entitled to 50 days of paid leave. Maternity leave is only allowed 3 times per employee with the same employer.

Study Leave

For Omani employees who are associate students in one of the schools, institutes, colleges, or universities, they are granted 15 days paid leave during the year for the purpose of sitting an exam.

 

Annual Leave

Employees are entitled to paid annual leave after they have completed at least six months from their joining date. Where an employee has more than one year of service, he/she is entitled to 30 calendar days annual leave, which is equivalent to approximately 22 working days.
An employee shall have the right to a four-day emergency leave with gross salary during the year in emergency cases, and it shall not exceed two days for each case.

Emergency Leave

Special Event Leave:

  • Marriage: 3 days (only one time)
  • Death of close relative: 3 days
  • Death of uncle or aunt: 2 days
  • Al-Haj (pilgrimage), once and only after employment of at least one year: 15 days
  • Death of a Muslim wife’s husband: 130 days

Termination

Notice Period

Any one of the parties may, after a notice of not less than seven days to the other party, terminate the contract during the probationary period if it becomes clear that continuing employment is not suitable.

If the contract is for an unlimited duration, any one of the parties may terminate it after giving written notice to the other party thirty days before the termination date. This is the case for workers employed monthly and fifteen days for the other workers unless a longer period is agreed to in the contract.

If the contract is terminated without observation of such notice period, the party who terminates the contract will be obliged to pay the other party compensation equal to the Gross Wage for the notice period or the remaining part thereof.

Severance Pay

  • For the first three years of service, the employee will get 15 calendar days of basic pay for each year of service.
  • For each year of service beyond three years, the employee will be paid for 30 calendar days of basic pay.

Visa

Overview

The visa for Oman is granted at the request and on the employer's responsibility to a foreigner coming to the country for employment. Unless the foreigner is invited by a government organization, a labor permit from the Ministry of Manpower is needed.

  1. The visa for staying in the country is valid for two years in accordance with the date of stamping on the passport.
  2. Multi-entry visa.

Requirements

The sponsor must be local and have full legal competence. It's the responsibility of the sponsor to validate their own information.

The person for whom the work visa is requested shall not be below 21.

They shall be of the same gender as mentioned in the labor permit issued by the Ministry of Manpower.

The occupation mentioned in the visa application shall be the same as in the labor permit.

All expatriates must obtain an employment visa from the Royal Oman Police. The Ministry of Manpower (MoM) has to issue a labor clearance for the position before obtaining the employment visa. As the approvals are at the discretion of the MoM, the process can often be time-consuming.

Once the expatriate is in Oman, they must obtain a residence permit. This is also provided by the Royal Oman Police. Expatriates can only work for the employer that obtained these clearances and visas.

Employee Background Checks

Legal and Background Checks

Law: Foreign employees must receive prior approval from the Ministry of Manpower and immigration authorities before hiring on local employment contracts. The level of background screening and screening carried out by the authorities varies according to the individual’s nationality.

Allowed: Employers may not obtain the same level of information from background checks as they can in other jurisdictions. In most cases, the employees will be required to provide this information.

Last updated on September 8, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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