Oman implements a new Wage Protection System directive for private sector workers

Oman’s Ministry of Labour recently issued a ministerial order - Opens in new tab (No. 299 of 2023) on the Wage Protection System (WPS) that requires private sector employers to transfer workers’ wages to locally licensed banks within a maximum of seven days from their due date. 

The WPS, which will go into effect on the 10th of July 2023, is a joint electronic system between the Ministry of Labour and the Central Bank of Oman that oversees the disbursement of wages for workers in the private sector. 

According to the new law, employers are only excluded from WPS regulations in the following cases:

• When a legal labour dispute arises between the worker and the employer, leading to the cessation of work by the worker;
• When a worker absconds without a valid legal justification;
• When a newly employed worker has not yet completed a period of 30 days from the start of their employment;
• When a worker is on unpaid leave.

Article 2 of the ministerial order stipulates that contracts must accurately specify the wage received by each worker and that employers must update work contracts with the Labour Ministry whenever there is a change. 

Oman has repeatedly issued new plans - Opens in new tab for electronic wage payment systems, but enforcement and compliance have been weak - Opens in new tab. Oman amended its labour law in 2014 to require salaries to be deposited with locally licensed banks.  A  “second” WPS was announced in 2017 - Opens in new tab to improve compliance through more efficient procedures. The new ministerial order appears to be the latest iteration of the system with a more extensive regulatory framework.

Article 3 of the new ministerial order states that the "Wages Protection Section" within the Inspection Department of the Labour Ministry will assume responsibility for monitoring and implementing the electronic wage protection system, as well as overseeing wage disbursement operations in the private sector.

The order states that the Labour Ministry may impose administrative penalties on employers who violate the WPS according to the following gradation:

1 - Warning.

2- Suspending the initial work permit granting service.

3- An administrative fine of OMR 50 (US$ 130), and the fine shall be doubled in case of repeating the violation.

The fine for non-compliance is now half the amount that is currently stipulated in the Labour Law regarding failure to deposit wages in licensed bank accounts. According to Article 116 of the Labour Law, the penalty for non-compliance is set at OMR 100 (US$260) for each affected worker.

Oman's WPS will not include domestic workers, who, as highlighted - Opens in new tab in the US Trafficking in Persons Report 2023, often fall victim to wage theft.