Revamped Wage Protection System: Key Changes and Their Impact on Businesses in Oman
New Wage Protection System Launched by Ministry of Labour
The Minister of Labour has issued Decision 729/2024 regarding the Wage Protection System, reinforcing employers’ obligations to transfer workers’ wages directly to their bank accounts, as stipulated in the Labor Law under Royal Decree 2023/53.
This Wage Protection System is designed to monitor wage payments electronically, ensuring that employers adhere to transferring salaries to their employees’ accounts at banks or financial institutions regulated by the Central Bank of Oman. Payments must match the amounts specified in employment contracts and be completed within the legally prescribed timeframe.
Key updates in this new decision include a reduction in the wage transfer period from seven days to three days. Additionally, new exemptions from using the Wage Protection System have been introduced. For example, an exemption applies when a worker is suspended from duty for reasons not related to the employer for more than 30 days.
Employers must update employment contracts to reflect any changes in their employees’ wages, with the contract indicating the actual salary being paid. Wages are to be transferred via the Wage Protection System within three days following the end of the wage period.
The Ministry of Labour’s dedicated department will monitor the implementation of the system, oversee disbursement processes, and maintain a relevant database.
Exemptions for Employers: Employers are exempt from transferring wages through the Wage Protection System in several scenarios, including when a labor dispute has resulted in a worker being absent for more than 30 days, when a worker has been suspended (for reasons beyond the employer’s control) for over 30 days, or when a worker has left the job and more than 30 days have passed since the departure. New hires who have not yet completed 30 days of employment or employees on unpaid leave also qualify for these exemptions.
To manage exemption requests from private sector establishments, a committee will be established within the Ministry of Labour. The Minister will issue a decision outlining its formation and operational procedures.
Should there be violations of the provisions set forth in this decision, the Ministry of Labour may impose administrative penalties, including warnings, temporary suspension of initial work permit services, and fines of RO50 for each worker involved. Repeat offenses will result in doubled fines.
Special Analysis by Omanet | Navigate Oman’s Market
The recent decision from the Ministry of Labour to implement a Wage Protection System significantly enhances transparency and accountability in payroll processes within the private sector. This creates new opportunities for businesses to build trust with employees and improve retention, but also presents risks for those failing to comply with the shorter wage transfer timeline. Investors and entrepreneurs should consider adapting to these regulations swiftly to leverage better employee relations while mitigating potential penalties related to non-compliance.
