We would like to bring to your attention important regulatory updates in Oman concerning End of Service (EOS) benefits for expatriate employees.
The new “EOS” (End of Service) laws in Oman for expatriates are governed by the New Labour Law (Royal Decree 53/2023) and the Social Protection Law (Royal Decree 52/2023). These regulations introduce a significant shift from the traditional gratuity system to a new funded savings scheme.
- Key Changes in Gratuity Calculation for the Existing Scheme.
Under the new Labour Law, the method for calculating end-of-service gratuity has been updated:
- Revised Rate: Expatriates are now entitled to one full month’s basic salary for each year of service.
- Old vs. New Law:
- Prior to July 31, 2023: 15 days’ basic salary for each of the first three years, and one month’s salary for each subsequent year.
- After July 31, 2023: One full month’s basic salary for every year.
- Pro-rata Entitlement: The restriction requiring at least one year of service to be eligible has been removed. Gratuity can now be paid on a pro-rata basis for fractions of a year.
- New Social Protection “Savings System”
The most transformative change is the replacement of the traditional gratuity with a Provident Scheme (Savings System):
- Implementation Date: The mandatory rollout for non-Omani workers is now scheduled for July 19, 2027.
- Funding: Employers will be required to contribute 9% of the employee’s monthly basic wage into a personal savings account managed by the Social Protection Fund (SPF).
- Returns: The scheme acts as an investment vehicle, with a guaranteed minimum return on investment (ROI) of 2% per year.
- Payout Conditions: Workers can withdraw their savings upon leaving Oman, or if they remain unemployed for more than 3 months after ending a contract.
These changes aim to enhance financial security for expatriate employees while introducing a more structured and sustainable framework for EOS benefits.
If you require any support, please contact your local accountant.