Employment law updates for 2025: Oman, Saudi Arabia & UAE
Countries in the Gulf region are implementing significant employment law changes this July. Here’s what employers need to know across Oman, Saudi Arabia, and the UAE.
Oman updates
1/ New SPF employer contribution & employee benefits
Oman is introducing comprehensive changes that will impact all employers operating in the Sultanate. The most significant development is the mandatory 1% employer contribution towards the Social Protection Fund (SPF) for sick and extraordinary leave insurance, covering both Omani and expatriate employees.
The country is also restructuring its sick leave system, extending maximum coverage to 182 days annually with a graduated payment structure. Employees will receive full salary for the first week, with decreasing percentages for extended periods. Additionally, compassionate leave has been expanded to include marriage (3 days), family bereavement (3-10 days), and medical accompaniment (15 days at full pay).
2/ IBAN update
Effective July 1, 2025, the use of the International Bank Account Number (IBAN) will be mandatory for all domestic corporate and personal financial transactions in Oman.
Saudi Arabia’s GOSI system changes
Saudi Arabia’s General Organization for Social Insurance (GOSI) is implementing a graduated contribution increase that will affect:
- New hires below 50 years of age
- Joining after July 3, 2024
- Registered with GOSI for the first time
Starting July 2025, their contribution rates will begin at 9.5% and increase by 0.5% annually until reaching 11% in 2028.
The Kingdom is also introducing greater retirement flexibility, allowing employees to retire between ages 58-65, with early retirement options available after 25-30 years of contributions. A notable addition is the extension of maternity benefits to three months of full compensation through GOSI, available to all female subscribers regardless of nationality.
UAE’s latest employment practices
The UAE continues its focus on workplace modernization with new provisions for remote work, reduced hours, and job-sharing arrangements. Maternity leave has been extended from 45 to 60 days, while probation period notices now require 14 days advance warning.
The Emiratisation drive has also intensified, with companies employing 20-49 people now required to hire two Emiratis instead of one.
GPSSA contribution penalties
Effective 1st July 2025, the General Pension and Social Security Authority (GPSSA) will begin applying penalties on employers who delay payment of due contributions for their GCC national employees.
Key Details:
- Contribution Due Date: 1st of the month following the contribution period.
- Grace Period: Until the 15th of that month.
- Example: Contributions for July 2025 must be paid between 1st – 15th August 2025.
- Penalty: A daily fine of 0.1% of the outstanding amount will apply from the 16th of the month onward.
No prior notice or warning will be issued before penalties are applied.
What is the financial impact of these changes?
These changes will have varying financial implications:
- Oman: Additional 1% payroll cost for insurance coverage
- Saudi Arabia: Graduated increases affecting only new hires and first time registered to GOSI
- UAE: Minimal direct costs with enhanced flexibility benefits
What should employers focus on?
- Update payroll systems to reflect new contribution rates and benefits
- Revise employment contracts and policy documents
- Recalculate budget projections incorporating additional costs
- Train HR teams on new regulatory requirements
These July 2025 reforms signal the GCC’s evolution toward more comprehensive employee protection while maintaining economic competitiveness. Despite creating new compliance obligations, these changes also enhance the region’s appeal as a destination for top talent.
Stay ahead of GCC employment developments with Trans Skills – your partner in regional compliance and talent management. For tailored employment solutions that align with your business needs, get in touch with our team.
