When an employment relationship ends in Oman, employees may be entitled to an end of service gratuity along with other final employment dues. Understanding the basic calculation can help workers estimate their entitlement and review the figures provided by their employer.
Under Article 61 of Oman's Labour Law issued through Royal Decree 53/2023, workers who are not covered by the Social Protection Law are entitled to a gratuity of at least one basic wage for each year of service. The employee's final basic wage is used as the basis, and fractions of a year are calculated proportionally.
How Is Oman Gratuity Calculated?
The current basic formula is straightforward:
Final basic wage × completed years of service
For example, suppose an employee earns a basic salary of OMR 500 and completes five years of qualifying service.
The calculation would be:
OMR 500 × 5 = OMR 2,500
So the estimated gratuity would be OMR 2,500, before considering any other final settlement amounts.
Employees can use an Oman Gratuity Calculator to estimate their potential benefit using their basic salary and period of service.
Why Is Basic Salary Important?
Oman's gratuity calculation is based on the employee's last basic wage, rather than simply using the entire salary package.
For example, an employee might receive OMR 700 per month consisting of:
Basic salary: OMR 500
Allowances: OMR 200
In this example, the basic salary of OMR 500 is the important figure for the statutory gratuity calculation.
Employees should therefore check their latest salary records before calculating their expected benefit.
What About Employees Who Started Before the New Labour Law?
This is an important point for long-serving employees.
Oman's 2023 Labour Law changed the gratuity structure. For workers whose contracts were concluded under the previous Labour Law, the Ministry's 2026 clarification states that the earlier formula applies to the relevant service period: 15 days' wages for each completed year during the first three years, followed by one month's wage for each subsequent completed year. For contracts concluded under the new Labour Law, the gratuity is at least one basic wage for each completed year.
This means an employee who started working before the new law came into force may need a split calculation rather than applying today's formula to the entire employment period.
What If the Employee Has Worked Part of a Year?
Article 61 also provides for gratuity to be calculated proportionally for a fraction of a year.
For example, if an employee qualifies for one month's basic salary for each year and has completed four years and six months, the additional six months can be considered proportionally.
With a basic salary of OMR 600:
Four years: OMR 600 × 4 = OMR 2,400
Six months: OMR 600 × 0.5 = OMR 300
Estimated total:
OMR 2,700
The exact calculation should take into account the applicable law and the employee's actual service record.
Gratuity Is Only One Part of the Final Settlement
Employees should remember that end of service gratuity may not represent the entire amount they are owed when leaving a job.
The final settlement can also involve unpaid salary, eligible annual leave, notice-related payments, and other contractual or legal entitlements.
Keeping copies of the employment contract, salary records, joining date, final working date and leave records can make it easier to review the settlement.
A Useful Way to Check Your Estimate
Before accepting a final settlement, employees can first identify their last basic salary and total qualifying service. They should then determine whether their employment falls under the old or new gratuity provisions, particularly if they started working in Oman before the 2023 Labour Law.
An Oman Gratuity Calculator can provide a quick estimate, but employees with older service periods should make sure the calculation accounts for the applicable transitional rules. The Ministry's recent clarification specifically distinguishes between contracts under the previous Labour Law and contracts concluded under Royal Decree 53/2023.
Final Thoughts
Oman end of service gratuity is mainly influenced by the employee's final basic wage and qualifying service period. Under Article 61 of the 2023 Labour Law, the applicable gratuity for workers not covered by the Social Protection Law is at least one basic wage for each year of service, with proportional treatment for fractions of a year.
Employees with service spanning the old and new legal frameworks should pay particular attention to the transitional calculation rules. Understanding these differences can help workers estimate their expected benefits and review their final employment settlement more accurately.
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