End-of-Service Gratuity in Oman: How It Is Calculated

End-of-service gratuity in Oman is one month’s basic salary for each year of service, under Article 61 of the Labour Law issued by Royal Decree 53/2023, calculated on the employee’s last basic salary. Said Ibrahim Ambusaidi Advocates and Legal Consultations (SIA), a law firm in Muscat, explains the rules, the transition formula for older service, and a worked example.

What law governs end-of-service gratuity in Oman?

The governing provision is Article 61 of the Labour Law issued by Royal Decree 53/2023, in force since 31 July 2023. It requires the employer to pay a worker who is not covered by the Social Protection Law, which in practice means the non-Omani worker, an end-of-service gratuity of no less than one month’s basic salary for each year of service. The gratuity is calculated on the last basic salary the worker received, and the worker is entitled to a proportionate amount for any fraction of a year.

The key point is that the calculation uses the basic salary only. Allowances, bonuses, and other additions to pay are not part of the gratuity base, so the first thing to check is the basic salary figure stated in the employment contract. Article 61 also sets only a minimum. If the contract or company policy promises a better gratuity, the better terms apply.

Why is the service period split at 31 July 2023?

Because the current Labour Law took effect on 31 July 2023, an employee who started before that date and continued working after it has a gratuity calculated in two parts, as the Ministry of Labour has clarified:

• Service before 31 July 2023 follows the formula of the previous Labour Law, Royal Decree 35/2003: half a month’s basic salary for each of the first three years of service, and one month’s basic salary for each year after that.
• Service from 31 July 2023 onward follows the new rule: one full month’s basic salary for each year.

Both parts are calculated on the last basic salary the employee was receiving when the employment ended.

How do you calculate your gratuity, step by step?

1. Identify your last basic salary, excluding allowances and bonuses.
2. Calculate your total service period, from your joining date to the end of the contract.
3. Split the period at 31 July 2023.
4. Apply the old formula to the earlier period: half a month per year for the first three years, then one month per year.
5. Apply the current rule to the later period: one full basic month per year.
6. Pro-rate any fraction of a year in each period.
7. Add the two amounts together to reach the total gratuity due.

What does a worked example look like?

An employee joined on 1 August 2019 and left on 31 July 2026, with a last basic salary of OMR 600.

Period	Length	Rule applied	Amount
Before 31 July 2023, first three years	3 years	Half a basic month per year	OMR 900
Before 31 July 2023, fourth year	1 year	One basic month for the year	OMR 600
From 31 July 2023 to the end of service	3 years	One basic month per year	OMR 1,800
Total	7 years		OMR 3,300

If the entire service falls after 31 July 2023, the calculation is simpler: the number of years multiplied directly by the last basic salary.

What will change under the new savings system?

The Social Protection Law, Royal Decree 52/2023, created a mandatory savings system for non-Omani workers that will gradually replace the end-of-service gratuity. Under it, the employer pays a monthly contribution of 9 percent of the worker’s basic salary into a savings account held in the worker’s name with the Social Protection Fund. Implementation has been postponed to July 2027 by Royal Decree 60/2025. Until then, the gratuity rules of the Labour Law continue to apply, and entitlements for service periods before the system takes effect remain governed by the Labour Law.

Key facts

• End-of-service gratuity in Oman is at least one month’s basic salary for each year of service, under Article 61 of the Labour Law, Royal Decree 53/2023.
• The gratuity is calculated on the last basic salary, excluding allowances and bonuses.
• Service before 31 July 2023 is calculated under the previous law’s formula: half a month per year for the first three years, then one month per year.
• Workers are entitled to a proportionate gratuity for fractions of a year.
• The savings system under the Social Protection Law, Royal Decree 52/2023, will gradually replace the gratuity, and its implementation has been postponed to July 2027 by Royal Decree 60/2025.

When to involve a lawyer

Involve a lawyer when the employer calculates the gratuity on only part of the salary rather than the correct basic salary, ignores service that predates the new law, makes payment conditional on waiving other dues such as leave balances or unpaid wages, or simply refuses to pay after the contract ends.

At Said Ibrahim Ambusaidi Advocates and Legal Consultations we review your gratuity calculation, draft the claim for your full entitlements, and represent you before labour dispute bodies and the courts across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.