Explained: New Savings System or Provident Fund for expats in Oman

Muscat: The Royal Decree 52/2023 issued in July 2023, which promulgated the Social Protection Law, had announced the Savings System (Provident Fund) for non-Omani or expatriate workers in Oman.

The Savings System shall apply compulsorily to non-Omani workers within the limits of the amount of compulsory savings.

Article 137

The savings system replaces the end-of-service grant or gratuity disbursed by the employer to non-Omanis.

Article 139

The financing of the savings system shall be as follows:

1. 9% of the monthly basic wage of the insured non-Omani.

2. Any amounts of savings paid by the employer, the insured, or others to the system to make savings in favor of the covered groups in accordance with the provisions of the regulation.

3. Gifts, bequests, and donations allocated to this system and approved by the board.

4. Loans approved by the board for the savings system after the approval of the Ministry of Finance.

Article 140

The regulation shall specify the dates for the payment of the contributions stipulated in article 139 of this law and the additional amounts imposed on the employer in the event of non-compliance with these dates.

Article 141

The saver shall be entitled to the sum of the contributions, the amounts deposited in hispersonal account, and the returns on its investment. It is permitted for the regulation tospecify a minimum for the investment returns.

Article 142

It is permitted, on the basis of an application by the saver, to disburse his savings in one of the following ways in the manner specified by the regulation:1. One-time payment.2. An annual or monthly instalment, taking into account the additional returns collected until the end of the savings

Article 143

The saver is entitled to his savings from the fund in any of the following cases:

1. The end of the employment relationship for the non-Omani worker, unless he engages in another employment contract within the period specified by the regulation.

2. The end of the service of the Omani saver and his entitlement to a pension, except for the permanent partial occupational disability pension, or if he is entitled to a gratuity for the loss of a pension in accordance with the provisions of this law.

3. Payment of monthly contributions or deposits for a period of not less than 180 months.

4. The death of the saver, and in this case the savings are disbursed to the legal heirs.

The savings are transferred to the savings system in the absence of those entitled inaccordance with the provisions of this clause.5. Permanent disability.

It is also permitted to use the savings to pay the contributions of the insured in thebranch of insurance of the elderly, disability, death, and the branch of insurance againstwork injuries and occupational diseases in the cases specified by the regulation.It is permitted, by a decision by the board, to add or amend the cases of entitlement inthe savings system, provided that the decision specifies the principles and controls forentitlement.

Article 144

In the event that the saver leaves the savings system or loses any of its conditions, he shall notify the fund in the manner specified by the regulation. The regulation shall also specify the administrative fines resulting from the failure to notify the fund.

For expatriates Since July 2023

Under the previous Labour Law (Before July 2023), the worker's gratuity was calculated at a rate of 15 days' wages for each year of service for the first three years, and one month's wages for each subsequent year.

But effective from July 31, 2023, gratuity was calculated at one basic salary for each year of service, based on the employee's most recent basic salary.

Gratuity calculation example (Source: Ministry of Labour)

A worker continued to work for the employer until the effective date of the new Labour Law on July 31, 2023.

For example: An expatriate's employment. Start Date: August 1, 2021. Basic Salary: R0,500.

If the employment relationship between the worker and the employer ends after the new law comes into effect, how is the end-of-service gratuity calculated?

For the period from the start of employment on August 1, 2021, to the effective date of the new law on July 31, 2023, the gratuity shall be calculated at half a basic salary per year of service (RO250 for each year), as this period falls under the provisions of the previous law.

For the period following the enactment of the new law, the gratuity shall be calculated at one full basic salary per year of service (RO500 for each year), under the new law's requirement that the end-of-service gratuity shall not be less than one basic salary for each completed year of service.

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