Oman Gratuity Law: The 2023 Changes Explained

Oman's gratuity law changed on 31 July 2023, the day Royal Decree 53/2023 came into force and repealed the previous Labour Law. Under the old Oman gratuity law you earned 15 days' basic wage for each of your first three years, then a month a year after that. Article 61 of the new law replaced that schedule with a single flat rate: not less than one month's basic wage for every year of service, from year one.

What catches people out is the service they had already banked. The new rate is not simply applied backwards over your whole career. The Ministry of Labour splits your service at the end of July 2023: years you completed by 31 July 2023 are paid at the old rates, service from 1 August 2023 earns the new one-month rate, and the two amounts are added into a single end-of-service payment.

Put your dates and basic wage in below to see the split applied to your own service, then read on for what actually changed, who gained from it, and the one line in Article 61 that almost nobody quotes.

How Oman gratuity law changed in 2023

Three things changed at once, and only the first gets much coverage.

The rate went flat. Under the repealed law, Article 39 paid 15 days' wage for each year of the first three years, then one month's wage for each following year. Article 61 pays not less than one basic wage for each year, with no step and no starting tier. For a worker who leaves at the three-year mark, that is the difference between 45 days of pay and 90.

The qualifying period went away. The old law paid nothing to a worker with less than a year of continuous service. Article 61 grants the gratuity "for the fractions of the year proportional to the period he spends in service", with no minimum stated. Seven months of service now earns roughly seven-twelfths of a month's basic wage, where it once earned nothing.

Gratuity became a placeholder. Article 61 is explicitly written as an interim rule. Its second paragraph says the provisions apply "until the savings system stipulated in the Social Protection Law comes into force". More on that below, because the timing has moved twice already.

What did not change: the wage base. Both the old Article 39 and the new Article 61 calculate on the final basic wage, not the gross package. And neither law reduces the gratuity because you resigned rather than being terminated.

Old law vs new law, side by side

Read the two middle rows together and the real scope of the change becomes clear. The schedules only ever disagree about years one to three. From year four the old law already paid a full month. That single fact decides who gained from the 2023 reform and who gained nothing, which is worth its own section further down.

The timeline: how Oman got here

Before 31 July 2023. Royal Decree 35/2003 governs. Article 39 pays 15 days a year for the first three years, then a month a year, on the last basic wage, and only to workers who complete at least a year of continuous service.

25 July 2023. His Majesty issues Royal Decree 53/2023 promulgating a new Labour Law.

30 July 2023. The decree is published in the Official Gazette. Article V of the promulgating decree states that it comes into force the day after publication.

31 July 2023. The new Labour Law takes effect and Royal Decree 35/2003 is repealed. Article 61 becomes the operative gratuity provision from this date. Employers were given six months, to the end of January 2024, to bring their arrangements into line.

23 October 2024. The Ministry of Labour issues a circular clarifying how the two schedules meet. Service under the previous law is calculated at 15 days a year for the first three completed years and a month a year thereafter; service under the new law at not less than one basic wage per completed year; the last basic wage is the basis for both. This is the guidance the market has followed since.

13 July 2025. Royal Decree 60/2025 amends the Social Protection Law. The deadline for the Social Protection Fund's board to bring in the mandatory savings system for non-Omani workers moves from 19 July 2026 out to 19 July 2027.

August 2026. The Ministry of Labour restates the same two-part rule in fresh guidance. Nothing about the calculation changes.

Today. Article 61 applies in full, with pre-31-July-2023 service still paid on the old schedule. The savings system has not started.

How service before and after the law change is treated

This is the part of the Oman gratuity law that generates the most argument at settlement time, so it is worth being precise about the mechanics.

Your service is not treated as one block. It is cut at the end of July 2023, and each side of the cut is valued under its own schedule:

1. Period one, up to and including 31 July 2023. Value the years you had completed by that date under the old Article 39 schedule: 15 days for each of your first three years, one month for each year after that.
2. Period two, from 1 August 2023. Value every year from that date at the new Article 61 rate of one month's basic wage.
3. Add them. Both periods are paid at your final basic wage, not the wage you were on at the time. A worker who has had three promotions since 2023 has their old-law years revalued at today's basic wage.

One date detail is worth pinning down, because it is the only place where the law and the Ministry's method sit a day apart. The Labour Law came into force on 31 July 2023. The Ministry's split point is the end of that same day: service up to and including 31 July 2023 is old-law, service from 1 August 2023 is new-law. In effect July 2023 is treated as the last full month under the old rules, even though the new law was technically live for its final day. The Ministry's own worked example confirms it, since the employee who joined on 1 August 2021 is paid the old rate for the service year that closed on 31 July 2023. The only people this affects are those whose service anniversary falls on exactly that date.

Step three is the one employees most often miss in their own favour. The split affects the rate your early years earn, never the wage they are paid at. Article 61 is unambiguous that the final basic wage is the basis for calculating the gratuity, and the Ministry's guidance repeats it.

There is also a protection in the promulgating decree itself. Article 3 prohibits any reduction in the standards and terms of employment a worker was engaged under before the law came into force, if they remain in service afterwards. A transition cannot be used to leave anyone worse off than the old law would have.

The counterintuitive part: it is completion dates that matter, not your joining date

Joining before the change does not automatically put your early years on the old 15-day rate. What matters is whether a service year finished by the end of July 2023.

Someone who joined in February 2023 had not completed a single service year by the end of July 2023. Their first anniversary fell in February 2024, under the new law, so every year of their service earns the full month. Someone who joined in February 2020 had completed three years by then, and all three sit on the old rate.

This is exactly how the Ministry's own published illustration works. It takes a worker who joined on 1 August 2021 on a basic wage of RO 500, counts the two service years that closed before the law changed at RO 250 each, and pays RO 500 for each year after that.

Worked examples

Four scenarios, all calculated the way the tool above does it: daily wage is the monthly basic wage divided by 30, so a "month" of gratuity is exactly one month's basic wage. These are illustrations. Your own entitlement depends on your contract, your recorded service dates, and how your employment ended.

Example 1: hired entirely under the new law

Joined 1 September 2023, leaving 1 September 2028, basic wage RO 700.

Every year falls after the law change, so the flat rate applies throughout.

• 5 years × 30 days = 150 days
• Daily wage = 700 ÷ 30 = RO 23.33
• 150 × 23.33 = RO 3,500, which is five months' basic wage

Under the repealed law the same service would have paid 45 days for the first three years plus 60 for the next two, so 105 days, or RO 2,450. The 2023 change is worth RO 1,050 to this worker.

Example 2: service straddling the change

Joined 1 August 2021, leaving 1 August 2026, basic wage RO 500. This mirrors the Ministry of Labour's own illustration.

• Two service years closed before the law changed (August 2022 and August 2023): 2 × 15 = 30 days
• Three years from August 2023 onward: 3 × 30 = 90 days
• Total 120 days × (500 ÷ 30 = RO 16.67) = RO 2,000

Split the way the Ministry presents it, that is RO 250 for each of the two old-law years and RO 500 for each of the three new-law years. Same figure, same method.

Example 3: the long-serving employee who gained nothing

Joined 1 January 2015, leaving 1 January 2026, basic wage RO 900.

• Years one to three all closed well before July 2023: 3 × 15 = 45 days
• Years four to eleven: 8 × 30 = 240 days
• Total 285 days × RO 30 = RO 8,550

Now run the same service under the repealed law: 45 days for the first three years, 240 for the rest, 285 days. Identical. Anyone who had already passed their third anniversary by the end of July 2023 got no increase at all from the new law, because the only years the two schedules value differently were already behind them.

Example 4: a partial year

Joined 1 March 2024, leaving 1 September 2026, basic wage RO 450.

• Two completed years × 30 days = 60 days
• 184 remaining days: (184 ÷ 365) × 30 = 15.12 days
• Total 75.12 days × RO 15 = RO 1,126.85

Fractions of a year are paid in proportion at the rate applying to the year in progress. Under the old law a worker leaving at two and a half years would have been on the 15-day rate for that whole stretch: 30 days for the two completed years plus 7.56 for the part-year, so RO 563.

Who actually gained from the 2023 change

Because only years one to three are valued differently, the size of your gain depends almost entirely on where those three years sat relative to July 2023.

The reform was aimed squarely at shorter-tenure and newer workers, and at the people the old law excluded entirely. If you have been with the same employer since before 2020, the 2023 law almost certainly did not change your number.

Is Oman gratuity calculated on basic salary or total salary?

On the basic wage, and Article 61 says so in terms: the final basic wage is taken as the basis for calculating the gratuity. Three terms get used loosely in conversation, and the Labour Law separates them clearly.

Basic wage. Article 1 defines it as the monetary consideration agreed between worker and employer in the employment contract, plus the periodic allowance. That last clause matters. If your contract carries a periodic increment, it forms part of your basic wage rather than sitting outside it, so it belongs in your gratuity base.

Gross wage. Article 1 defines this as the basic wage plus all other allowances and stipends prescribed for the worker in return for their work. This is the bigger number on your payslip and it is not the gratuity base.

Allowances. Housing, transport, phone, fuel and similar payments sit in the gross wage, outside the basic. On a package where basic is 60% of the total, using the gross figure would inflate a gratuity estimate by two-thirds.

Worth knowing if you are checking a whole final settlement: Oman does not use one wage base for everything. Gratuity and overtime run on the basic wage, while annual leave and payment for an unused leave balance run on the gross wage. The Oman annual leave and leave salary guide works through that side, and how to calculate overtime in Oman covers the Article 71 rates.

The line in Article 61 that nobody quotes

Here is a genuine tension in the law that most Oman gratuity guides skip, and you should know about it before you sign a settlement.

Article 61 says this about earlier service: "The period of service that began before the entry into force of this law is counted within the period of service considered in determining the period of the gratuity due." Read on its own, alongside the entitlement of "not less than the basic wage for each year of his service", the statute can be read as granting a full month for every year, including the years before 2023. On that reading there is no split at all.

The two-period split is not in the statute. It comes from the Ministry of Labour's transitional guidance, first published in October 2024 and restated in 2026. It is what employers apply, it is what the Ministry expects, and it is what our calculator implements, which is why the tool flags a note whenever any of your service predates the change.

The gap is real money. Take Example 2 above: RO 2,000 under the Ministry's method, RO 2,500 if all five years were valued at a month each. For the eleven-year employee in Example 3, it is RO 8,550 against RO 9,900.

We are not telling you the literal reading is correct, and we have not seen a published court ruling settling it. What we will say is this: if a large share of your service predates 31 July 2023, the difference is worth understanding before you accept a figure, and it is a fair question to put to your employer or the Ministry of Labour.

The savings system, and why gratuity still applies today

Article 61 does not present itself as permanent. Its second paragraph limits it to the period "until the savings system stipulated in the Social Protection Law comes into force", and allows an employer to settle a worker's pre-savings-system service either into that system or directly to the worker, calculated at the basic wage on the settlement date.

The savings system comes from the Social Protection Law, issued by Royal Decree 52/2023. It is a defined-contribution scheme for non-Omani workers funded by a monthly employer contribution of 9% of the insured worker's basic wage, and it is designed to take over from the employer-paid lump sum.

It is not running yet. The original law gave the Social Protection Fund's board three years to implement it, which pointed at 19 July 2026. Royal Decree 60/2025, issued on 13 July 2025, extended that to four years and moved the deadline to 19 July 2027. That is a deadline for implementation, not a switch that has already been flipped.

So the position today is straightforward:

• Employer-paid end-of-service gratuity under Article 61 is live and enforceable now.
• Omani nationals are covered by the social insurance and Social Protection Fund system rather than employer gratuity.
• Nothing in the Social Protection Law has abolished the Article 61 entitlement in the meantime.
• If you are an expatriate whose departure falls near mid-2027, treat any estimate as provisional and check the position again closer to the date.

We will not speculate beyond that. How accrued service will be handled at the crossover, and whether the transfer will be mandatory, are matters for the implementing regulations, which have not been issued.

Mistakes that cost people money

Applying the old 15-day rate to current service. A surprising number of pages still describe 15 days a year for the first three years as Oman's rule. It has not been the rule since July 2023. If a settlement offer uses it for years worked in 2024 or 2025, it is wrong.

Assuming every year was upgraded. The opposite error. Pre-July-2023 years are paid on the old schedule under the Ministry's guidance, not retroactively at a month each.

Using the joining date instead of anniversary dates. The split turns on which service years completed by 31 July 2023. Joining in early 2023 usually means the whole entitlement sits on the new rate.

Calculating on the gross package. Gratuity is a basic-wage benefit. Include the periodic allowance, exclude housing and transport.

Using the wage from the time, not the final wage. Old-law years are paid at your last basic wage. If your salary rose, so does the value of your early service.

Expecting a resignation penalty. Oman has none. Resignation, termination and contract expiry all pay the same gratuity, which is not true across the Gulf. Some neighbours still cut it, as the Kuwait indemnity rules show.

Forgetting that dismissal for cause can remove it. Article 40 lets an employer dismiss without notice and without end-of-service gratuity on a specific, closed list of serious grounds. It is narrow, and the burden sits with the employer, but it exists.

Overlooking a company savings scheme. Under Article 48, if your employer runs a supplementary or savings programme whose rules say the employer's contributions stand in place of the gratuity, you receive the greater of the two, not both.

Checking your own number

If you started in Oman after July 2023, your gratuity is simple arithmetic: one month's basic wage for every year, prorated for the part-year, paid whatever the reason for leaving. If your service straddles the change, count how many service years you had actually completed by 31 July 2023, put those on the old schedule, and value everything from 1 August 2023 at a month a year, all at your final basic wage.

The Oman gratuity calculator at the top of this page applies the split automatically and shows the two periods separately, so you can see which years are being valued at which rate before you compare it against an employer's offer. For the rest of a final settlement, check your unused leave with the Oman leave salary calculator, any outstanding hours with the overtime calculator, and your notice entitlement with the notice period calculator.

The primary sources are worth reading if a number is in dispute: Royal Decree 53/2023 promulgating the Labour Law, Royal Decree 60/2025 amending the Social Protection Law, and the Ministry of Labour. This guide is an explanation of the law, not legal advice; for a disputed settlement, take it to the Ministry of Labour or a qualified Omani lawyer.

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