Oman End-of-Service Gratuity: One Basic Wage per Year

What the rule says and where it comes from

Oman's current Labour Law is Royal Decree 53/2023. The Sultan issued it on 25 July 2023 and it took effect on 31 July 2023, replacing the 2003 law. Article 61 covers the end-of-service gratuity. It applies when employment ends for workers who do not benefit from the Social Protection Law, which in practice means most expatriate staff. The employer must pay a gratuity for the period served that is not less than the basic wage for each year of service.

The same article says the worker is entitled to the gratuity for fractions of a year in proportion to the time served. It also says the final basic wage is the basis for the calculation. Service that began before the law took effect is counted within the total period. Article 61 applies until the savings system under the Social Protection Law comes into force.

Many websites quote this rule with different article numbers. Some point to Article 53, which does not match the official text. The official text of Royal Decree 53/2023 places the gratuity in Article 61, and Article 48 covers employer savings programmes that may replace it. Check the article in the official text before you quote it in a letter or a payroll memo.

In August 2026 the Ministry of Labour issued a circular on the calculation. Oman Observer reported on 6 August 2026 that workers on contracts concluded under the new law receive not less than one basic wage for each completed year. The same circular confirms that the last basic wage is the basis. Workers on contracts concluded under the previous law keep a tiered formula, which is covered below.

How the figure is worked out, step by step

1. Confirm the worker is outside the Social Protection Law. Omani nationals are insured under that law and receive a different benefit, so HR should confirm each employee's status before any calculation.
2. Take the last basic wage in Omani rials (OMR) from the final contract or payslip. Leave out housing, transport and other allowances.
3. Record the start date and the last working day. If the start date is before 31 July 2023, split the service into two periods at that date.
4. For service from 31 July 2023 onwards, multiply the basic wage by the number of years. Count fractions of a year by months divided by 12.
5. For service that began under the previous law, use the older formula. The first three years count at 15 days of basic wage per year, and each later year counts at one month of basic wage. Divide the basic wage by 30 to get the daily rate.
6. Add the two periods together. Round only the final total, and never round a part year down.

One worked example

The figures below are invented to show the arithmetic. They are not taken from a real employer. The employee's last basic wage is OMR 600 a month. The employee started on 1 August 2021 and left on 31 October 2025, which is four years and three months of service.

The earlier period is worked out on the same last basic wage. The Ministry's earlier clarification, published by Oman Observer on 23 October 2024, used the same approach, with the pre-2023 period at half a basic wage per year and the later period at a full basic wage per year. Under this example, the gratuity is about 3.25 times the monthly basic wage, which is worth checking against the contract before any payment.

The cases that change the answer

The basic rule is simple. The exceptions are where most disputes start, so the table below lists them with the position under the law and what to check.

Two points deserve a separate note. First, Article 61 applies only until the savings system under the Social Protection Law starts. One 2026 guide by Teamed reports that the savings system must start no later than 19 July 2027, and that gratuity already earned before then remains owed. Confirm the start date with the Social Protection Fund before you plan a long-service payout. Second, domestic workers are not covered by the company rule in this guide, so do not apply this formula to a household employee.

Common mistakes

• Using the 2003 formula for service after 31 July 2023.
• Using total pay, including allowances, instead of the basic wage.
• Using the starting salary instead of the last basic wage.
• Rounding part years down, for example treating 4 years and 6 months as 4 years.
• Assuming resignation cuts the amount.
• Ignoring the pre-2023 period when the employee started years earlier.

What to check with HR or a lawyer

Ask HR for four documents: the signed contract with the basic wage clause, the payslips for the last three months, a record of every pay change with its date, and the insurance status under the Social Protection Law. Ask whether the employer runs a savings programme and whether it credits the employee. Ask who made any misconduct decision, and on what documented basis. Automation cannot decide whether conduct meets the legal test for withholding, so that decision belongs to a person who reads the file.

When the employee has less than one year of service, or when the employer wants to end the job in a way that changes pay or duties, speak to a lawyer. Any reduction in pay, hours or roles needs the employee's agreement or a check on the notice, consultation and severance rules, which apply in Oman.

This explains the rule in general terms; it is not legal or tax advice for your case.

How employers take routine HR and payroll work off their staff

Gratuity calculations look simple until several leavers, mixed pre-2023 service and changing pay records arrive in the same month. Employers can set up AI workers to pull service dates and basic wages from the HR and payroll records, apply the two-period split, and produce a statement for each leaver. A person still checks the contract, the pay history and any misconduct decision before anything is paid. The accuracy of the output depends on the quality of the HR records, and the free audit measures that starting point.