Oman End-of-Service Gratuity: Calculation Rules for Expat Employees

Under Oman's current Labour Law, an eligible employee's end-of-service gratuity is calculated using the final basic wage and qualifying length of service. Article 61 provides for at least one basic wage for each year of service, with partial years calculated proportionately.

At a glance

• The statutory calculation uses the employee's final basic wage, not total monthly remuneration.
• Article 61 provides at least one basic wage for each year of qualifying service.
• A fraction of a year is calculated proportionately.
• Service that began before the 2023 Labour Law requires careful transitional treatment.
• Final employment dues are generally payable immediately when employment ends; where the employee leaves on their own initiative, payment is due within seven days.
• A future Social Protection savings system is intended to replace employer-paid gratuity for non-Omani workers once its mandatory provisions take effect.

What is end-of-service gratuity in Oman?

End-of-service gratuity is a statutory payment due at the end of employment to workers who fall within the relevant provisions of Oman's Labour Law. For expatriate private-sector employees, the key current provision is Article 61 of the Oman Labour Law.

It should be separated from final salary, unused leave, overtime, contractual allowances or other amounts that may also become payable when employment ends. Gratuity has its own statutory calculation based on service and basic wage.

Who does Article 61 apply to?

Article 61 addresses workers who do not benefit from the relevant provisions of the Social Protection Law. In practice, this remains particularly important for non-Omani private-sector employees while the future mandatory savings system is not yet fully in force.

The rule should not automatically be applied to every person working in Oman. Employees subject to a special public-sector or other statutory employment regime may have different rules and should be assessed under the legislation that actually governs their employment.

How is Oman gratuity calculated?

The current statutory starting point is one final basic wage for each full year of qualifying service. Any remaining fraction of a year is calculated in proportion to the period actually served.

1. Identify the final basic wage. Use the basic salary component rather than the employee's total package.
2. Determine qualifying service. Establish the employment start and end dates and identify periods that should not be included in the gratuity calculation.
3. Calculate full years. Each qualifying year attracts at least one basic wage under Article 61.
4. Add the partial year. A remaining fraction of a year is calculated proportionately.
5. Review pre-2023 service separately. The new law recognises service that began before it took effect, but older service may require transitional analysis.
6. Separate gratuity from other final dues. Outstanding salary, leave and lawful deductions are different settlement components.

The current Labour Law text expressly refers to the final basic wage and proportional treatment of partial years. This is why using gross salary for a statutory gratuity estimate can materially overstate the amount.

Is gratuity based on basic salary or gross salary?

It is based on the final basic wage. Article 61 does not use total compensation or gross monthly remuneration as the general statutory basis.

Housing allowance, transport allowance and other benefits therefore should not automatically be added to the gratuity base simply because they are paid every month. The basic salary figure stated in the employment contract and payroll records is the key reference.

What happens to service before the 2023 Labour Law?

Pre-2023 service is not automatically lost, but it should not be treated casually. Article 61 recognises service that began before the new law, while the previous Labour Law used a different gratuity formula.

Under the previous Labour Law, the statutory formula was 15 days of basic wage for each of the first three years and one month of basic wage for each subsequent year. That older law also expressly required at least one year of service.

The current Article 61 does not repeat that one-year threshold. It is therefore unsafe to import the old minimum-service rule into every new-law case without a proper legal basis.

For employees whose service spans both regimes, the prudent approach is to identify the exact employment dates and assess the old and new periods carefully. A generic online gratuity calculator may not deal correctly with transitional service.

Does unpaid leave count toward gratuity?

Certain unpaid leave periods remain part of the employment relationship but are excluded from the gratuity calculation. This treatment is reflected in Articles 80 and 83 and in the Ministry of Labour's employee rights guidance.

For a long-service employee, excluding unpaid leave can make a meaningful difference. The calculation should therefore be based on qualifying service rather than simply the calendar time between joining and leaving.

Does resignation affect end-of-service gratuity?

Resignation does not create a general statutory reduction under Article 61. Loss of gratuity is tied to specific legal circumstances rather than to resignation as a category.

The Ministry's publication of Articles 40 and 41 is important here. Article 40 sets out specific cases in which dismissal may occur without end-of-service gratuity, while Article 41 allows an employee in certain serious situations to leave while preserving full rights, including gratuity.

Examples under Article 41 include prolonged non-payment of wages and serious breach of employer obligations. A resignation or departure should therefore be analysed by reference to the legal circumstances, not by applying a blanket penalty.

When must the employer pay the final settlement?

Final wages and other amounts due are generally payable immediately when the employment relationship ends. If the employee leaves work on their own initiative, Article 91 allows up to seven days for payment.

Article 96 also permits lawful amounts owed to the government or established debts owed to the employer to be deducted from end-of-service entitlements. That does not give the employer a general right to make arbitrary deductions.

What records should an employee keep?

There is no single statutory document pack labelled as a gratuity file, but the calculation and any later claim depend heavily on reliable employment records. The employee should be able to prove service dates, basic wage and the circumstances in which employment ended.

• Employment contract and salary amendments
• Evidence of start and end dates
• Payslips or payroll records showing final basic salary
• Records of unpaid leave, if any
• Resignation, termination or contract-expiry notice
• Evidence of unpaid salary or final settlement amounts
• Supporting documents relevant to any Ministry of Labour complaint

After leaving private-sector employment, workers can also use the government employment record service to review their employment history and obtain an end-of-service form.

What can an employee do if gratuity is not paid?

The dispute process starts with the Ministry of Labour. A labour dispute must first go through the Ministry's settlement process before it proceeds to court.

1. Calculate the amount claimed and identify the legal basis.
2. Collect the employment contract, payroll records and termination documents.
3. File through the Ministry's labour complaint service.
4. Upload relevant supporting evidence.
5. Attend any scheduled conciliation session.
6. Allow the Ministry to attempt settlement between employee and employer.
7. If settlement fails, the dispute proceeds under the statutory referral process.

Filing the complaint is free. According to the Ministry's published service levels, electronic registration is immediate, while conciliation sessions may commonly be scheduled within roughly one to two months depending on workload.

Timing also matters. The Ministry's employee-rights guidance states that claims under the Labour Law are generally subject to a one-year limitation period from the date the right became due, subject to the law's transitional provisions.

How will the Social Protection savings system change gratuity?

Oman has created a future savings system for non-Omani workers that is intended to replace employer-paid end-of-service gratuity once the relevant provisions become mandatory. As of the research date, it should not be described as already replacing every current gratuity case.

The Social Protection Law provides that the mandatory savings contribution for non-Omani workers will be 9 percent of monthly basic wage once Article 139 takes effect. The savings system will then operate in place of the employer-paid gratuity mechanism for the covered period.

A 2025 Royal Decree amended the commencement mechanism so that the Social Protection Fund Board determines the start date, subject to the statutory outer limit. Until an official commencement decision applies, employers and employees should not assume that the savings system has already displaced Article 61.

Service earned before the mandatory savings system begins is protected. The Social Protection Law preserves the employer's responsibility for earlier service unless those rights are settled in accordance with the statutory mechanism.

Common gratuity calculation mistakes

Most errors come from using the correct formula in the wrong factual situation. Service dates, final basic salary, unpaid leave and the applicable legal period all need to be checked together.

• Using gross salary instead of basic salary. Article 61 uses final basic wage.
• Applying the new formula to all historical service. Pre-2023 service requires transitional analysis.
• Assuming resignation automatically removes gratuity. Article 61 does not impose a general resignation penalty.
• Including all unpaid leave in service. Certain unpaid leave periods are excluded from the gratuity calculation.
• Treating the new savings system as already universal. Its mandatory commencement still depends on the official implementation mechanism.
• Waiting too long to bring a claim. Labour claims are subject to a limitation period.

Frequently asked questions about Oman end-of-service gratuity

What should you do next?

If your end-of-service settlement is tied to a change of employer, residence status, business ownership or a wider relocation decision in Oman, review each issue under its own legal process rather than treating the final settlement as the only step.

For Connsect services in Oman, use the Connsect consultation request.