Oman Labor Ministry Announces New Gratuity Calculation Method Based on Final Basic Salary

Oman Ministry of Labour Mandates Final Basic Salary for End-of-Service Gratuity

Employee service benefits and gratuity upon contract termination must now be calculated using the final basic salary received by the worker, under a new circular issued by the Oman Ministry of Labour. The directive establishes clear calculation frameworks for both legacy contracts and agreements signed under the current labour framework, addressing long-standing questions regarding end-of-service entitlements in the Sultanate.

Tiered Calculation Rules for Legacy Contracts

Under the guidelines outlined for employees who entered service during the tenure of the previous labour legislation, gratuity calculations follow a tiered structure. According to the Ministry of Labour, the initial three years of service accrue at a rate of 15 days of salary per year. Each subsequent completed year of service accrues at a rate of one full month of salary.

Shift to Standardized Rates Under the New Framework

For contracts signed under the new labour law framework, the calculation method shifts. The Ministry of Labour states that agreements established under the current legislation require employers to disburse a gratuity equivalent to a minimum of one basic salary for every completed year of service.

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Frequently Asked Questions on Regulatory Compliance

Which salary figure is used to calculate gratuity in Oman?

According to the Oman Ministry of Labour, the calculation is based strictly on the final basic salary received by the employee at the time of contract termination.

How is service calculated for employees under the old labour law?

The Ministry of Labour specifies that the first three years of service are calculated at 15 days of salary per year, and subsequent completed years are calculated at one full month of salary per year.

What is the gratuity rate under the new Oman labour law?

According to the regulatory circular, contracts signed under the new labour law mandate a minimum of one basic salary for every completed year of service.

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