Wednesday 04 / November / 2026
Muscat — The savings system scheduled for implementation on 19 July 2027 constitutes one of the mechanisms aimed at enhancing the protection of workers' rights and regulating their end-of-service entitlements. This is achieved by providing a clear mechanism for safeguarding and managing their savings, as well as defining the financial obligations borne by employers.
The system is based on the employer paying a monthly contribution equivalent to 9 percent of the non-Omani worker's basic wage. The employer bears this percentage in full without deducting it from the worker's wage. Consequently, the savings system replaces the end-of-service gratuity for the service period effective from its implementation date, while the worker's rights for the preceding period remain preserved and dealt with according to the prescribed options and provisions.
The provisions of the savings system apply to non-Omani workers employed in units of the State Administrative Apparatus, as well as non-Omani workers employed in commercial private sector establishments covered by the provisions of the Labour Law. Conversely, the savings system does not apply to non-Omani workers who are not covered by the Labour Law provisions, including domestic workers.
Clarifying the scope of coverage from the outset contributes to helping employers and workers identify the categories subject to the system's provisions and prepare for the requirements associated with its implementation.
Understanding the relationship between the savings system and the end-of-service gratuity represents an important aspect in introducing the system, particularly in light of inquiries regarding whether the contribution rate constitutes a new obligation added to the end-of-service gratuity.
The system regulates end-of-service entitlements for the period following the start of implementation through the savings mechanism; instead of the end-of-service gratuity accumulating for this period with the employer until the termination of the employment relationship, the employer pays monthly contributions on behalf of the worker into the savings system.
Thus, the 9 percent rate and the end-of-service gratuity for the same period do not combine against the employer, as the savings system replaces the end-of-service gratuity for the service period subsequent to its implementation date. As for the rights due to the worker for their prior service period, they remain preserved and unaffected by the start of the system's implementation.
The system provides a mechanism to safeguard amounts paid on behalf of the worker on a periodic basis within the savings system, rather than retaining the entire obligation related to the post-implementation period with the employer until the end of service. This mechanism gains particular importance for the worker in cases where the establishment may experience financial distress, difficulty, or bankruptcy, as the previously paid contributions will have been transferred to the savings system for the worker's benefit, thereby bolstering the protection of their accrued rights for that period.
Conversely, periodic payment contributes to regulating the employer's obligation by converting the end-of-service gratuity for the subsequent period into specified monthly contributions, instead of accumulating the entire entitlement until the end of the employment relationship. The system thereby provides greater clarity for both parties in terms of savings being formed and preserved for the worker periodically, alongside a defined and organized obligation for the employer.
Among the key advantages offered by the savings system to employers, particularly small and medium enterprises, is the ability to plan financial obligations associated with the end of service of non-Omani workers in advance through specified monthly contributions that can be incorporated within standard budgets and operational costs. Instead of end-of-service gratuities accumulating for the post-implementation period and becoming due as a single lump sum upon termination of the employment relationship, the system allows the obligation to be distributed over regular monthly periods.
This assists employers in managing cash flows more clearly and reduces the likelihood of facing large, unplanned financial liabilities when the services of multiple employees end within close intervals.
This regulation contributes to enhancing establishments' financial planning capacity, business stability, and more efficient direction of resources toward operational and development needs. This supports business continuity, improves the quality of production and services, and provides an environment more conducive to growth and expansion according to each establishment's capacity and circumstances, rendering the contribution amounts and payment schedules known in advance, which enhances the clarity of obligations and aids in making more stable financial and operational decisions.
The savings system comes as part of the trajectory to develop the social protection ecosystem in the Sultanate of Oman, aligning with international trends and practices that enhance the protection of workers' rights, regulate the funding of their entitlements, and provide clearer and more sustainable mechanisms for dealing with end-of-service rights.
The transition from accumulating end-of-service gratuities as an obligation due upon termination of the employment relationship to forming periodic savings for the worker reflects a move toward strengthening the proactive protection of rights and organizing them throughout the employment period, achieving greater clarity for both worker and employer.
This also comes within the context of continuous development of social protection systems and drawing upon international and regional practices and experiences, while taking into consideration the specific characteristics of the labor market and national legislation.
The worker's savings consist of the contributions paid for their benefit plus the returns generated on them in accordance with the provisions governing the savings system. Thus: the 9 percent rate is not deducted from the worker's wage, nor is it borne by the worker; rather, it is paid by the employer, and in return, no additional end-of-service gratuity is due for the same period covered by the savings system.
The system separates the service period preceding the start of implementation from the period following it, thereby preserving the rights due for each period. The end-of-service gratuity for the period prior to July 2027 will be settled in accordance with the prescribed options: either by retaining it with the employer and disbursing it to the worker upon end of service according to governing provisions, disbursing it to the worker at the start of system implementation, or depositing it into the worker's account with the Social Protection Fund.
Accordingly, the rights for the prior service period remain clear and separate from the savings that begin accumulating starting from the implementation of the savings system.
The accuracy of worker data and basic wage represents one of the most critical elements for the proper implementation of the system, as the contribution percentage is calculated based on the registered basic wage. The employer bears the responsibility of verifying the accuracy of the worker's data and basic wage and updating them to ensure the correctness of contribution calculation and payment.
The importance of this is not limited to meeting procedural requirements; accurate wage data preserves the worker's right and simultaneously assists the employer in fulfilling obligations based on correct information. Early data correction also contributes to reducing objections and labor disputes related to wages, and avoiding additional amounts that may arise under governing provisions in cases of payment delay or payment based on inaccurate wage data.
Hence, reviewing wages and data prior to implementation is not merely a formal procedure, but an important step toward protecting the rights of both parties and ensuring a smoother transition to the system.
The savings system regulates an existing right through savings formed periodically for the worker's benefit, enhancing the preservation of rights, regulating employer obligations, and making data accuracy and early preparation the foundation for implementation.
