End-of-Service Gratuity in Oman: What Changed for Expats, How It's Calculated, and Five Worked Cases

From experience, the rule was applied unevenly. Many companies treated gratuity as a matter of agreement with each employee: one employee received it, another did not, a third received a different amount.

For an employee hired before the law and still employed after it, each period is calculated under its own law. Service before 31 July 2023 is paid at the old rate, 15 days' basic wage a year for the first three years, then 30 days a year, under the Ministry of Labour's clarification (Oman Observer, 23 October 2024). Service from 31 July 2023 is paid at the new rate, one full basic month a year. The Ministry's example: a basic wage of OMR 500, hired in August 2021, earns OMR 250 for each year before the law and OMR 500 for each year after it.

Article 61 of the Labour Law (Royal Decree 53/2023): a worker not covered by the Social Protection Law is entitled to one month's basic wage for each year of service.

The base is the basic salary in the contract, not the gross: allowances are not included.

Oman has no minimum wage for expatriates yet, neither basic nor gross. The minimum applies to Omanis only: OMR 225 basic and OMR 325 gross.

Fractions of a year are paid pro rata.

It is paid when the employment relationship actually ends (residency cancellation or exit), not before.

This changes again for expatriates when the Social Protection Fund's savings branch starts for them, on a date the fund's board sets and no later than 19 July 2027: from that day the employer pays 9% of the basic wage to the fund, and service from that day is covered by the fund instead of Article 61. Service before it stays under Article 61.

Omanis do not receive gratuity from the company. They belong to the Social Protection Fund (formerly PASI): the employer pays 14.5% (from 19 July 2026) and the employee 8% of the gross wage every month, and their retirement and savings rights sit with the fund, not the employer.

Case 1 (a real case): gross wage OMR 375, basic OMR 150, two years of service under the new law, left in 2025. 150 × 2 = about OMR 300. On the gross wage it would have been OMR 750: that gap is what surprises employees.

Case 2 — basic OMR 200, hired 1 August 2023, leaving 31 October 2026, so 3 years and 3 months: 200 × 3 + 200 × 3/12 = OMR 650.

Case 3 — the Ministry's example: basic OMR 500, hired August 2021, left July 2025. Two years before the law at the old rate (250 × 2) and two years after it at the new rate (500 × 2): OMR 1,500.

Case 4 — basic OMR 180, three years of service from August 2023, then a sponsorship transfer to another company: 180 × 3 = OMR 540, settled by the old employer before the transfer. The count starts again from zero at the new employer.

Case 5 — an Omani employee, basic OMR 400, six years of service: Article 61 does not apply, so the company owes no gratuity. Their rights sit with the Social Protection Fund.

On a transfer to another company, the employee must receive gratuity from the old employer before moving. It is a matter between the employee and the first employer, and the system protects the employee who files a complaint. The new company owes nothing for the earlier period.

The law establishes the right but does not prescribe how it is paid. In practice there are two approaches, and nothing prohibits either so far:

Monthly accrual (the most common): gratuity is computed every month, booked as a liability and paid in one sum at exit. There are no cash-flow surprises.

Inside the monthly salary (some contracts): it is paid as a monthly allowance documented in the contract, so nothing is due at exit.

Whichever approach is used is stated clearly in each employee's contract.

Gratuity is an earned right of the employee. Honouring it is an ethical duty before it is a legal one, and the law now makes it legal. Mistakes in this area are common; the simplest way to avoid them is to calculate automatically from the day of hiring, on basic pay, with the right rule for each nationality: that is what payroll in Oman on SmartPRO does.

This guide is general information, not legal advice.