What end of service gratuity in Oman is
End of service gratuity is a lump sum an employer in Oman pays a worker when the employment relationship ends. It applies to workers who are not covered by the Social Protection Law's retirement scheme, which in practice means expatriate (non-Omani) employees in the private sector. Omani nationals build up a pension with the Social Protection Fund instead, so they do not receive this gratuity.
For most expatriates it is the biggest single payment in the final settlement, bigger than the last month's salary or unused leave. A gratuity calculator for Oman needs four things: your joining date, your last day, your last basic wage, and the reason your job ended. The tool above uses them to apply the current law, the older rules for service before mid-2023, and, if you choose, the coming savings system.
The legal basis: Royal Decree 53/2023 and 52/2023
Two laws issued in July 2023 shape the rules today.
- The Labour Law, Royal Decree 53/2023. Published in Official Gazette No. 1504 on 30 July 2023 and in force from 31 July 2023. Article 61 says the employer must pay workers who do not benefit from the Social Protection Law a gratuity of "not less than the basic wage for each year of his service", that fractions of a year are paid in proportion, and that the final basic wage is the basis. The same article says it applies "until the savings system stipulated in the Social Protection Law comes into force".
- The Social Protection Law, Royal Decree 52/2023. It creates a savings system for non-Omani workers. Article 137 says the savings system "replaces the end-of-service grant or gratuity", and Article 139 funds it with a contribution of 9% of the monthly basic wage, paid by the employer.
- Royal Decree 60/2025 (13 July 2025) pushed back the deadline for the savings system. The original decree gave the Fund's board three years from July 2023; the amendment gives four, so the board must bring it in on a date it chooses, no later than 19 July 2027. Law firm summaries from DLA Piper and Bondoni, and the Oman Observer, all give the same 19 July 2027 date.
- The old Labour Law, Royal Decree 35/2003 (Article 39), still matters for service before 31 July 2023. It paid 15 days' basic wage a year for the first three years and one month a year after that, and required at least one year of service.
The Ministry of Labour has explained these rules twice. In October 2024 it said service that began under the old law and continued under the new one is split, with each part worked out under its own law, and gave an example of a worker who joined on 1 August 2021 on OMR 500 basic: OMR 250 a year before the new law, OMR 500 a year after. In August 2026 a further Ministry circular, reported by the Oman Observer and Times of Oman, repeated the two formulas and told employers to pay promptly when contracts end.
Which rule applies to you
The answer depends on when each part of your service took place, as well as when you leave.
| Service period | Rule | Benefit |
|---|---|---|
| Up to 31 July 2023 | Old Labour Law (RD 35/2003), as applied by the Ministry | ½ month a year for years 1–3, then 1 month a year |
| From 31 July 2023 until the savings system starts | Labour Law RD 53/2023, Article 61 | At least 1 month a year, from year one |
| From the savings system start date (by 19 July 2027 at the latest) | Social Protection Law RD 52/2023 | Employer pays 9% of basic each month into your savings account |
Gratuity already earned does not disappear when the savings system arrives. Article 138 of the Social Protection Law says the employer must pay the gratuity for the service period before contributions begin, either under the Labour Law when your service ends or by settling it into the savings system or paying it to you. Savings are paid only for the period after contributions start.
Use Labour Law gratuity (current) in the calculator if you are leaving now or before the savings system begins. Choose Gratuity + savings system if you expect to keep working after it starts and want an idea of how the two parts will add up. Because the board has not announced the exact start date, you can change it.
How the Oman gratuity formula works
Gratuity = last basic wage × months of basic wage earned
Service from 31 July 2023: 1 month × years of service (including the part year)
Service before 31 July 2023: ½ month × years 1–3, plus 1 month × each later year
Under the new law there is no tiered scale. A worker earns one full basic wage per year from the first day, and the law has no cap. Part years are pro rata: six months counts as half a year, and leftover days are counted at 365 a year. The calculator counts your service from the joining date up to and including your last working day.
For service that started before 31 July 2023, the calculator splits the period at that date, as the Ministry's 2024 clarification and most Omani law firms do. The first three years of your whole service are paid at half a month if they fall before the split. Two other options are available because readings differ:
- Old scale for the whole contract. The August 2026 circular, as reported in the press, describes the old formula as applying to "contracts concluded under the previous law" without spelling out the split. If your employer reads it that way, the half-month rate covers the first three years even if some of them fell after July 2023. This is the less generous reading and is not the Ministry's 2024 example.
- One month for all years. Article 61 sets a minimum. Many contracts and company policies already paid one month a year from the start, and those terms still bind the employer.
What counts as "basic wage"
Gratuity uses your last basic wage, not your gross pay. Housing, transport and other allowances are left out unless your contract includes them. One detail is worth knowing: Article 1 of the new law defines the basic wage as the agreed pay plus any "periodic allowance", so an allowance paid regularly as part of the agreed wage may count. If your payslip splits pay in an unusual way, check your contract.
Worked examples
Example 1: service on both sides of July 2023
This example appears in SIA Law Firm's guide. A worker joined on 1 August 2019, left on 31 July 2026, and had a last basic wage of OMR 600. It is the calculator's default.
- Old-law period: 1 August 2019 to 31 July 2023 is 4 years. Years 1–3 at half a month = 1.5 months. Year 4 at one month = 1 month. Total 2.5 months × 600 = OMR 1,500.
- New-law period: 1 August 2023 to 31 July 2026 is 3 years at one month = 3 months × 600 = OMR 1,800.
- Gratuity: 1,500 + 1,800 = OMR 3,300, or 5.5 months of basic wage.
If the whole 7 years had been under the new law, the gratuity would be 7 × 600 = OMR 4,200. The old scale costs this worker OMR 900.
Example 2: the Ministry of Labour's own case
The Ministry's 2024 clarification used a worker who joined on 1 August 2021 with a basic wage of OMR 500. If that worker leaves on 31 July 2025:
| 1 Aug 2021 – 31 Jul 2023: 2 years × OMR 250 | OMR 500 |
| 1 Aug 2023 – 31 Jul 2025: 2 years × OMR 500 | OMR 1,000 |
| Total gratuity | OMR 1,500 |
Masirat's 2026 guide gives the same OMR 1,500 for this case.
Example 3: new-law service with a part year
A worker joins on 1 January 2024 on OMR 400 basic and resigns, working until 30 June 2026. That is 2 years and 6 months, or 2.5 years. Gratuity = 2.5 × 400 = OMR 1,000. Resigning does not reduce it.
Example 4: staying on after the savings system starts
Same start date, 1 January 2024, basic wage OMR 500, but the worker stays until 31 December 2028, and we assume the savings system starts on 19 July 2027.
- Gratuity for 1 January 2024 to 18 July 2027 (3 years, 6 months, 18 days ≈ 3.549 years): 3.549 × 500 ≈ OMR 1,774.66.
- Savings contributions from 19 July 2027 to 31 December 2028 (1 year, 5 months, 13 days ≈ 17.43 months): 9% × 500 = OMR 45 a month, so about OMR 784, plus whatever investment return the Fund pays.
For comparison, one month a year for those 17.43 months would be about OMR 726. At 9% of basic, a full year of savings (1.08 months' basic) is slightly more than a year of Article 61 gratuity (1 month), before returns.
How the savings system will work
The savings system is a defined contribution scheme run by the Social Protection Fund. From what the law and the Oman Observer's July 2025 summary say:
- It is compulsory for non-Omani workers once it starts. Employers pay 9% of the monthly basic wage into an account in the worker's name.
- The law lets the regulation set a minimum investment return; the Observer reports this as 2% a year. Treat that figure as provisional until the Fund publishes final rules.
- Savings are paid when employment ends, unless you start a new job in Oman within the period set by regulation (reported as three months). They are also paid on death (to heirs) or permanent disability, as a lump sum or in instalments.
Until the Fund's board sets the start date, none of this changes your current entitlement. If you are leaving in 2026, your whole service is paid under the Labour Law rules above.
Resignation, dismissal and other reasons for leaving
- Resignation: Article 61 does not reduce gratuity for workers who resign. A worker who resigns with proper notice gets the same amount as one whose contract expires. This differs from Saudi Arabia, where resignation cuts the award.
- Minimum service: the new law has no one-year minimum. The old law did, so a worker whose whole service ended before 31 July 2023 with less than a year got nothing.
- Article 41, leaving because of the employer: a worker can leave without notice and keep all rights, including gratuity, in listed cases, such as fraud by the employer or wages unpaid for more than two months in a row.
- Article 40, serious misconduct: an employer can dismiss a worker without notice and without gratuity in listed cases, such as a mistake causing serious material loss to the employer, or a final conviction for a felony or a crime of honour or trust. The calculator shows zero for this choice.
- Arbitrary dismissal: where a dismissal is found to be arbitrary, compensation includes the gratuity the worker is legally owed.
- Debts: Article 96 lets the employer deduct government dues and proven debts owed to the employer from the gratuity. Enter these under "Debts owed to employer".
Who this calculator covers, and who it does not
It suits expatriate employees in Oman's private sector under the Labour Law, and HR teams checking a final settlement. It does not fit:
- Omani nationals, who are insured with the Social Protection Fund and receive pension benefits instead of this gratuity.
- Expatriates in government jobs, who follow civil service rules with their own formula and caps.
- Domestic workers, whose gratuity is set by separate regulations.
- Workers in an approved employer savings or provident plan. Article 48 says that if an employer's plan is meant to replace the gratuity and pays at least as much, the worker receives the plan amount instead.
Common mistakes
- Using gross salary. The base is the last basic wage. Using gross pay overstates the gratuity.
- Applying half a month to all years. Since 31 July 2023, new-law service earns a full month from year one. Some old payroll templates still use the 15-day scale for everyone.
- Ignoring pre-2023 service. The opposite error: paying only for the time after July 2023. Earlier service still counts, at the old rates.
- Dropping the part year. Fractions of a year are paid in proportion. Ask for them if they are missing.
- Assuming the savings system has started. As of October 2026 it has not. Until the Fund announces a date, gratuity keeps building up.
- Mixing gratuity with leave pay. Unused annual leave is paid separately and should be its own line in your settlement.
Frequently asked questions
How is gratuity calculated in Oman?
Multiply your last basic wage by one month for each year of service from 31 July 2023, including part years. For service before that date, use half a month a year for the first three years and one month after. A gratuity calculator for Oman like the one above does both and adds them.
Is Oman gratuity one month's salary per year?
Yes, for service since 31 July 2023. Article 61 of Royal Decree 53/2023 sets a minimum of one basic wage per year of service, from the first year. Earlier service follows the old half-month scale for the first three years.
Do I get gratuity if I resign in Oman?
Yes. The Labour Law does not reduce gratuity for resignation. You receive the same amount as if your contract had ended, as long as you were not dismissed under Article 40.
Is there a minimum service period for gratuity in Oman?
Not under the new law. Article 61 pays fractions of a year in proportion. The old law required one year, which still matters only for service that ended before 31 July 2023.
Is gratuity based on basic or gross salary?
On the last basic wage. Allowances such as housing and transport are excluded unless the contract makes them part of the basic wage.
When does the expat savings system start in Oman?
No firm date has been announced as of October 2026. Royal Decree 60/2025 lets the Social Protection Fund's board choose the date, no later than 19 July 2027. Until then, the Labour Law gratuity applies.
What happens to my gratuity when the savings system starts?
It is not lost. Under Article 138 of the Social Protection Law, the employer must pay gratuity for service before contributions begin, either when you leave or by settling it into the fund or paying it to you. After that, the employer pays 9% of your basic wage into your savings account each month.
How much gratuity for 5 years in Oman?
If all 5 years are after 31 July 2023, it is 5 months of basic wage: OMR 2,500 on a basic of OMR 500. If they straddle July 2023, it is lower, because the old half-month rate applies to early years before that date.
Can my employer deduct money from my gratuity?
Only government dues and debts you actually owe the employer, under Article 96. Ask for each deduction to be listed in writing.
This gratuity calculator gives an estimate for information only and is not legal advice. Your contract, company policy, a Ministry of Labour decision or a court ruling may produce a different figure. Rates verified: October 2026.