Oman will introduce a new Provident Fund Scheme for expatriate employees on 19 July 2027, replacing the existing end-of-service gratuity system. The change is part of the Sultanate’s wider reforms to its social protection framework.
How the new contribution scheme will work
Under the arrangement, employers must pay 9% of an expatriate worker’s monthly basic salary into the fund. The scheme is designed to create a structured savings mechanism, giving workers accumulated savings along with applicable investment returns under the relevant regulations.
Handling gratuity entitlements built up before 2027
The transition will also cover end-of-service gratuity entitlements accrued before the scheme takes effect. Employers may keep those liabilities to settle when employment ends, pay the accumulated amounts directly to employees, or transfer them into individual accounts under the Social Protection Fund, subject to the applicable rules.
The change marks a significant shift from a gratuity-based system towards a contribution-based savings arrangement.
What the change means for employers in Oman
The new requirements will affect payroll administration, employee benefit provisions, financial planning and compliance procedures. Companies operating in Oman are expected to review their existing gratuity liabilities and prepare their HR, payroll and accounting systems before the July 2027 start.
The initiative aims to establish a more structured approach to how expatriate employees save for their end-of-service benefits.
