Oman’s Wage Protection System (WPS), which applies to all workers in the private sector, is facing challenges due to non-compliance from employers. In response, the Ministry of Labour (MoL) has recently introduced new regulations and guidelines to address these issues.
Launched in July 2023 as part of a broader reform effort, the WPS mandates that private sector employers transfer workers’ wages to locally licensed banks. The system was rolled out in phases, starting with large enterprises and eventually covering smaller businesses. The final phase, which includes all private sector workers, is set to take effect in March 2024. However, local media reports and Ministry statements indicate that compliance remains low.
As of two weeks ago, the MoL reported that 98,922 private sector businesses in Oman have registered for the WPS. However, only 24,943 businesses—around 25%—have successfully processed wages through the system.
The situation is even more concerning when considering the number of private sector establishments that have yet to register with the WPS. According to data from the National Centre for Statistics and Information, there were 252,312 private sector establishments as of the second quarter of 2024. Assuming the number of businesses hasn’t drastically decreased since then, only 39% of establishments in Oman are currently registered with the WPS.
Saif Salem al Zaabi, a member of the Wage Protection Programme committee at the MoL, recently acknowledged the scale of the non-compliance problem. He noted that "the number of wage-related complaints remains consistently high, between 17,000 and 18,000 annually, even after the introduction of the WPS."
New WPS Regulations
On December 15, 2024, the MoL introduced Ministerial Resolution No. 729/2024, a new WPS law that supersedes the previous regulations. The updated law introduces stricter conditions for wage transfers, as well as exemptions and penalties for non-compliance.
Under the new law, the time frame for transferring wages has been shortened from 7 days to 3 days. Additionally, certain circumstances now allow for exemptions from using the WPS, including:
- Labour disputes resulting in a worker stopping work for more than 30 days.
- Suspension of a worker for reasons not attributable to the employer for more than 30 days.
- The passage of 30 days since an absconding charge was filed against a worker.
- New workers who have been employed for less than 30 days.
- Workers on unpaid leave.
The mechanisms by which these exemptions come into play are unclear, though the law establishes a committee within the MoL to review exemption requests that fall outside these outlined conditions.
To enforce compliance, the new WPS law states that the MoL “may” impose administrative penalties, including:
- A warning.
- Suspension of initial work permits until the violation is rectified.
- A fine of OMR50 (about US$ 130) per worker, with the fine doubling for repeat offences.
However, the penalties appear to be at the MoL’s discretion, rather than automatically imposed on non-compliant employers. It remains unclear how many businesses have been penalised so far for failing to comply.
In addition, the Ministry has issued a new guideline for accurately processing wage transfers. The guideline specifies that employers must ensure that payments align with the terms of the workers' employment contracts, including allowances, overtime, and deductions. It is not clear, however, if there is a system in place to verify that the wages and allowances submitted by employers match what the worker actually receives.
Private Sector Feedback and Future Outlook
In its first meeting of the year, the Labour Market Committee of the Oman Chamber of Commerce and Industry discussed feedback from business owners regarding the implementation of the WPS and associated fines. The committee announced plans to conduct a study to assess the impact of the WPS on the private sector and seek “practical solutions that consider the common interests of all parties.”
While it remains to be seen if the new regulations and guidelines will lead to higher compliance rates, the fact remains that many employers are still not adhering to WPS requirements. Although there are pressures to relax the regulations, ensuring that workers are paid on time should be a non-negotiable right that must be protected.
