Oman introduces mandatory savings scheme for expat workers from July 2027

Dubai: Oman has introduced a mandatory savings scheme for expatriate workers, requiring employers to contribute 9 per cent of their monthly basic salaries to a government-regulated fund from July 19, 2027, in a major reform aimed at protecting end-of-service benefits and strengthening financial security.

The new Provident Fund Scheme will replace the traditional end-of-service gratuity system for employment periods beginning from its implementation date, allowing foreign workers to accumulate savings and investment returns throughout their service.

The Social Protection Fund (SPF) confirmed the implementation date and outlined arrangements for safeguarding benefits earned before the new system takes effect, according to local media reports.

How the new savings scheme works

Under the new regulations, employers will be responsible for making monthly contributions equivalent to 9 per cent of each expatriate employee's basic salary.

The contributions will accumulate in individual savings accounts, with workers entitled to their savings and applicable investment returns in accordance with Oman's Social Protection Law.

Unlike the existing gratuity system, under which employers pay workers their accumulated entitlements when employment ends, the new framework establishes a contribution-based savings mechanism administered through the Social Protection Fund.

The legislation provides for savings to be paid as a lump sum or in instalments, subject to the applicable regulations.

What happens to existing gratuity?

The SPF has clarified that end-of-service benefits accumulated before July 19, 2027, will remain protected.

Employers will have three options for settling those entitlements.

They may retain the accumulated gratuity and pay it when the employee leaves, based on the worker's basic salary at the time of departure and the applicable Labour Law.

Alternatively, employers may pay the accumulated amount directly into the worker's bank account when the scheme takes effect or transfer it to the employee's individual account with the Social Protection Fund.

The arrangements are intended to ensure that workers do not lose benefits accumulated under the previous system during the transition to the new framework.

Expatriate workers welcome move

Expatriate workers in Oman have welcomed the government's decision, saying the scheme could provide greater financial security and help safeguard benefits accumulated over years of service.

The new system is expected to offer workers greater clarity over their entitlements by establishing regular contributions rather than relying solely on a gratuity payment at the end of employment.

For employers, the reform will require adjustments to payroll systems, financial planning and the management of existing end-of-service liabilities.

Part of wider social protection reforms

The savings scheme forms part of Oman's broader efforts to modernise its social protection system and expand financial safeguards for workers.

In March, the Social Protection Fund announced a phased programme of reforms covering sick leave insurance, mandatory savings for expatriates and occupational injury protection.

The government plans to introduce occupational injury insurance for expatriate workers in 2028, following the implementation of the savings scheme in 2027.

According to figures released by the SPF in March, Oman had more than 1.06 million insured expatriate workers as of January 2026, highlighting the scale of the workforce potentially affected by the reforms.

The introduction of the savings scheme marks a significant shift in how expatriate workers' end-of-service benefits are managed, moving towards a structured system designed to provide greater transparency and long-term financial protection.