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Oman gratuity rules in 2026: what changed

Oman's end of service gratuity rules in 2026 explained: the 31 July 2023 split between the old and new formulas, who it does not cover and what is coming after 2026.

The rule in Oman today is Article 61 of the Labour Law under Royal Decree 53 of 2023: an expatriate worker is owed not less than one basic wage for each year of service, with no cap, paid on the final basic wage. What changed was the date the rule took effect, 31 July 2023, not 2026; nothing in the gratuity calculation has moved since then, and nothing moves during 2026 itself. This guide sets out where the rule stands, why service that straddles that date needs splitting into two parts, who it leaves out and what is scheduled to replace it later.

The two periods, and why the split matters

Article 61 came into force on 31 July 2023. Service from that date onward is paid at one basic wage per year, from year one, with fractions of a year paid pro rata and no ceiling. Service before that date is valued under the previous rule, Royal Decree 35 of 2003: 15 days of wage for each of the first three years of service, then one month, 30 days, for each year after that, again on the last basic wage. An employee who worked through the reform date has their gratuity worked out in two separate pieces, one per rule, then added together.

Take a worker on a basic wage of OMR 600 a month, employed from 1 August 2021 to 31 July 2026, five years exactly. The daily rate, taking a month as 30 days, is OMR 20.

• 1 August 2021 to 30 July 2023 (two years, under the old rule, within the first three years): 15 days a year x 2 years = 30 days x OMR 20 = OMR 600.
• 31 July 2023 to 31 July 2026 (three years, under the new rule): one basic wage a year x 3 years, equivalent to 30 days a year, so 90 days x OMR 20 = OMR 1,800.
• Total gratuity: OMR 2,400.

The split matters here because the reform date falls inside this worker's first three years of service. Had the old rule applied to the whole five years without a reform, it would have paid 15 days a year for years one to three and 30 days a year for the following two, 105 days in total, OMR 2,100. The 31 July 2023 split lifts that third year of service onto the new, flat one-month rate three years early, a difference of OMR 300 on this wage. Once an employee's service has already passed three years before the reform date, the old and new rules pay the same month a year, and the split stops changing the total. An Oman gratuity calculator runs this two-period arithmetic for any basic wage and any pair of dates, which is the quickest way to check a specific employee's figure rather than working the days by hand.

Who this does not apply to

Article 61 covers a worker who does not benefit from the provisions of the Social Protection Law. Omani nationals are the main group that falls outside it. They are not on a lump sum gratuity at all; instead they accrue Social Protection Fund contributions through their working life, paid by both employee and employer, in place of an end of service payment. A business with a mixed workforce needs both tracks running side by side: gratuity accrual for its expatriate staff under Article 61, and Social Protection Fund contributions for its Omani staff, not one formula stretched to cover everyone.

What is coming, and why 2026 itself is not the year it happens

The gratuity system for expatriates is due to be replaced by a compulsory savings system, introduced under Royal Decree 52 of 2023, Article 136, with an employer contribution reported at 9% of the insured worker's monthly basic wage. That system was originally due to start on 19 July 2026. Royal Decree 60 of 2025 deferred it by a year, to 19 July 2027.

Two things follow from that. First, the rule people are searching for under "new gratuity rules in Oman 2026" is not a 2026 event: the one-month-a-year rule people are asking about is the one that took effect in 2023, and the next real change is the 2027 savings system, not anything scheduled for this year. Second, that 2027 date is not fixed in the sense of being locked in; it has already moved once, from 2026 to 2027, by decree. A business planning its payroll systems around the savings system start date should treat 19 July 2027 as the current target, not as a date beyond revision.

What employers should do now

• Keep every expatriate employee's start date on file to the day, not just the year, since the 31 July 2023 cutoff has to be applied to exact service dates, not rounded tenure.
• For anyone hired before 31 July 2023, calculate the gratuity in two parts rather than applying one rule to the whole tenure, and keep the working for each part on the employee's file.
• Base every calculation on the final basic wage only, not total package; allowances, overtime and commission sit outside Article 61's wage base.
• Accrue the liability monthly rather than only at exit, so a resignation or termination does not surface an unbudgeted figure.
• Do not change anything about gratuity processing for 2026 on the basis of the current rule; the next scheduled change is the 2027 savings system, and even that date has already shifted once.
• Revisit the position again well before 19 July 2027, since a deferred date can move again.

Sources

• Oman Labour Law under Royal Decree 53 of 2023, Article 61, in force from 31 July 2023.
• Oman Observer, Labour Ministry clarifies end of service gratuity, 6 August 2026, on the 15-day and one-month tiers for service under the previous law.
• Oman Observer, savings system for expatriates and how it works until July 2027, on the 9% employer contribution.
• DLA Piper, Social Protection Law under Sultani Decree 60 of 2025, on the deferral to 19 July 2027.

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Running one business across Oman and its neighbours means carrying the right gratuity rule, split date and wage base for every employee without re-deriving it by hand each time someone leaves. The Axion People box accrues end of service gratuity to each GCC country's own rules, including Oman's split at 31 July 2023, alongside payroll, leave and statutory contributions, in Arabic and English.