In November 2017, the Ministry of Manpower in conjunction with the Central Bank of Oman, launched a new system of wage protection (WPS). The objective of the WPS is to safeguard employees' rights against late as well as non-payment of wages by employers in the private sector. The WPS brings Oman in line with some of its GCC neighbours, where similar wage protection systems have been in place for some time.

An employee's right to receive timely payment of wages is already governed under Oman's Labour Law (promulgated by Royal Decree 35/2003 as amended).

Article 51 of the Labour Law requires employees to be paid their wages on a working day and in the case of monthly paid employees, once every month at least, or in the case of weekly or fortnightly paid employees, once every week or fortnight. The timing of payment for employees employed on piecework depends on when the piecework is completed but generally, must be weekly for the value of any work in progress already completed and the balance within one week of final completion. 

In all cases, an employer may not delay payment for more than seven days from the due pay date.

In the event of an official holiday declared by the Minister of Manpower (such as in relation to Eid), the Minister may issue a Ministerial Decision requiring payment of wages prior to the start of the official holiday period.

On termination of the employment relationship (regardless of the termination reason) an employer is required to pay all outstanding wages and dues, including end of service gratuity (for expatriate employees), immediately on the termination date. The only exception to this rule under Article 52 of the Labour Law is if the employee has abandoned the employment, in which case the employer has seven days to make payment.

It should be noted that under the provisions of the Labour Law, an employer is not discharged of its obligation to pay wages unless the wage is transferred by bank transfer in Omani Rial to an employee's bank account which must be held with one of the licensed banks in Oman.

The WPS is a formal mechanism introduced to allow the Ministry of Manpower to monitor the payment of wages and compliance of the wage obligations under the Labour Law. 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.

Since February 2018, it is mandatory for all private sector employers to register on the WPS and provide up to date information on job and wage information of their workforce. This is done through either the Ministry of Manpower's online portal in the case of expatriate employees or through the Public Authority for Social Insurance online portal in the case of Omani employees. Each employer will also be required to enter into a WPS agreement with their respective bank to provide banking facilities for the WPS service.

An employer's late payment or failure to pay wages may subject that employer to prosecution through the criminal courts where one or more of the following penalties may be applied in relation to each incident of non-compliance:

  • a fine of up to OMR 100, which may be increased to OMR 500
  • the fine may be doubled in case of repeated non- compliance, and/or
  • suspension of services from the Ministry of Manpower, including suspension of labour clearance/non- renewal of 

The introduction of the WPS in Oman has been welcomed by many quarters, particularly in relation to protecting vulnerable blue collar employees and reducing wage complaints. It now remains to be seen how vigorously non-compliance of the WPS will be enforced by the authorities, particularly during times of economic down-turn.

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Gorvinder Pannu

Gorvinder Pannu

Partner, Employment
UAE, Oman and Qatar

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