How Oman gratuity is calculated in 2026
The rule sits in Article 61 of the Labour Law issued by Royal Decree 53 of 2023. On the end of the employment relationship the employer pays a worker who does not benefit from the provisions of the Social Protection Law a gratuity for the period of service, "not less than the basic wage for each year of his service", and the worker "is entitled to the gratuity for the fractions of the year proportional to the period he spends in service". The decree was published in Official Gazette 1504 on 30 July 2023 and comes into force the following day, so 31 July 2023 is the date the current rule starts.
- Take the final basic wage. Article 61 fixes the calculation on the worker's final basic wage, not the total package.
- Service from 31 July 2023: one month of basic wage for each year, from the first year, pro rata for part years.
- Service before 31 July 2023: 15 days of wage for each completed year in the first three years of service, then one month of wage for each subsequent year, as the Ministry of Labour circular reported by the Oman Observer on 6 August 2026 sets out.
- Add the two parts together. Article 61 states no maximum, so nothing trims the total.
The wording "not less than" makes the figure a floor. A contract, a company policy or a settlement agreement can pay more, and this calculator only produces the statutory minimum.
Service that spans 31 July 2023
Article 61 counts service that began before the law came into force within the period of service used to determine the gratuity, and the ministry circular then values those earlier years on the previous formula. In practice that means a two part calculation, which is how practitioners describe the transition as well: the old formula for service up to 30 July 2023, the one month a year formula from 31 July 2023, added together on the same final basic wage.
The split matters most when the reform date lands inside the first three years of service, because that is where the two rules differ. Once three years of service are complete, both formulas pay one month of basic wage a year, so the split makes no difference to the total.
There is a genuine open point here. The circular is ministry guidance rather than a line in the decree, and Article 61 could be read as applying one month a year across the whole period of service, earlier years included. The calculator follows the circular, and the "one month a year applies from" field lets you set the switch to the first day of employment to see the other reading. If the amount is contested, take advice rather than treating either figure as settled.
What counts as basic wage
Only the basic wage. Article 61 fixes the calculation on the final basic wage, and the ministry circular states that "the employee's last basic wage shall be adopted as the basis of calculation" for service under both the old and the new law. Allowances, overtime, commission and bonuses are outside the figure you enter above, so if a contract shows a single total, take the basic line from the payslip.
No ceiling, and a disputed qualifying period
Article 61 as published sets no minimum period of service before gratuity is due, and it states no maximum. Fractions of a year are paid in proportion to the period served, so six months of service earns half a month of basic wage rather than nothing. That is unlike the UAE, which requires one completed year and caps the benefit at two years' wage, and unlike Kuwait, which reduces the award on resignation.
Sources disagree on the qualifying period, so treat a figure for under a year as contestable. Article 61 as published on decree.om states no minimum and pays fractions of a year in proportion to the period served, which is what the calculator does. A practitioner summary at Commoner Law instead lists a minimum of one year of service with nothing payable below it, which was the position under the previous Labour Law. The calculator flags service under a year rather than choosing between the two readings. If you are comparing several Gulf states, the end of service gratuity guide for the GCC sets the six rules side by side.
The savings system from 19 July 2027
Oman is moving end of service provision for non-Omani workers into a compulsory savings system run under the Social Protection Law. DLA Piper reports that Royal Decree 60 of 2025 deferred that system to 19 July 2027, having previously been due in 2026, and describes it as a long-term replacement for the traditional end of service gratuity for non-Omani employees. The Oman Observer reports the employer contribution as 9% of the monthly basic wage of the insured non-Omani worker.
Article 61 says its own provisions apply until the savings system stipulated in the Social Protection Law comes into force, so the calculator stops the gratuity accrual on the switch date and prints the employer contribution for the period after it as a separate planning line. Gratuity already accrued is not lost: the article lets the employer settle the worker's rights for the earlier period either into the savings system or directly to the worker, and the Oman Observer describes the same two routes. What the sources read for this page do not fix is the mechanics, meaning which route applies in a given case and when the settlement falls due. Clear the tick box in the form to keep accruing gratuity past the date instead, and compare the two figures.
What sits beside gratuity: contributions and the 2028 income tax
Gratuity is not the only line in an Omani payroll. PwC Tax Summaries, last reviewed on 7 July 2026, states that social protection contributions for Omani employees total 22.5%, being 14.5% from the employer and 8% from the employee. The retirement and workplace injury branches are applied to total salary up to an initial subscription wage ceiling of OMR 3,000, while the job security, maternity and sick leave branches carry no ceiling. The branches that extend to non-Omani workers differ from those that apply to Omani nationals, so check the position for a specific employee with the Social Protection Fund. This calculator does not compute contributions.
From 1 January 2028, under Royal Decree 56 of 2025, Oman applies a personal income tax of 5% where annual gross income exceeds OMR 42,000. EY states that employers must withhold and pay tax on salaries, wages, retirement pensions, end of service gratuities and board membership allowances, and that the executive regulations were due within one year of the law's publication in the Official Gazette. Nothing is withheld before that date, and this calculator shows the gratuity gross.
Worked example
A non-Omani worker on a final basic wage of OMR 800, employed from 1 March 2022 to a last working day of 31 August 2026, so four years and six months of service. Press "Load the worked example" in the calculator to see the same lines live.
| Period | Working | Months of basic | OMR |
|---|---|---|---|
| 1 March 2022 to 30 July 2023 | 1.42 years, all inside the first three years, at 15 days a year | 0.71 | 566.210 |
| 31 July 2023 to 31 August 2026 | 3.08 years at one month of basic wage a year | 3.08 | 2,467.580 |
| Ceiling check | Article 61 states no maximum, so nothing is trimmed | ||
| Gratuity | 3.79 months x OMR 800 | 3.79 | 3,033.790 |
Applying one month a year to all four and a half years instead would give OMR 3,600, which is OMR 566.21 more than the split produces. That gap is the whole point of checking which side of 31 July 2023 each year of service falls on.
Assumptions and exclusions
- The worker does not benefit from the provisions of the Social Protection Law. Omani nationals and anyone else covered by that law are outside Article 61 and get a note rather than a figure.
- The wage entered is the final monthly basic wage. Allowances, overtime, commission and bonuses are excluded.
- 15 days of wage is treated as half a month of basic wage, and one month of wage as one month of basic wage, so every band is expressed in months.
- Length of service is measured from the first day of employment. Each boundary date is converted to years plus months divided by 12 plus days divided by 365, counted from that first day, and a period is the difference between its two ends. Measuring from one anchor keeps the parts adding up to the whole.
- The last working day is inclusive, so 1 January to 31 December is one year.
- Service under one year is paid in proportion, following Article 61 as published. At least one practitioner summary reads a minimum of one year into the entitlement, so a result below a year is flagged rather than treated as settled.
- The pre 2023 period is pro rated on the same basis as Article 61. The ministry circular speaks of completed years for that period and does not spell out how fractions are treated, so this is a convention rather than a quoted rule.
- The savings system is modelled by stopping gratuity accrual on 19 July 2027 and reporting employer contributions of 9% of basic wage after it, because Article 61 applies until that system comes into force. The article lets the employer settle the earlier period into the savings system or pay it to the worker, and the sources read for this page do not fix which route applies or when the settlement falls due.
- Social protection contributions, the 5% personal income tax that starts on 1 January 2028, unpaid leave, breaks in continuity and deductions for amounts owed to the employer are not modelled.
How Axion People accrues gratuity every month
In Axion, the People box calculates end of service gratuity from the employee record: start date, current basic wage and the country rule feed the accrual, so the liability is visible every month rather than discovered at the final settlement. It sits alongside payroll runs, statutory contributions and leave in the same box, in Arabic and English. Axion reports the accrual and the settlement figure; it does not pay gratuity or file anything with an authority.
Frequently asked questions
How is end of service gratuity calculated in Oman in 2026?
For service from 31 July 2023, Article 61 of the Labour Law issued by Royal Decree 53 of 2023 gives a worker who does not benefit from the provisions of the Social Protection Law a gratuity of not less than the basic wage for each year of service, worked out on the final basic wage, with fractions of a year paid in proportion to the period served. For service before that date, a Ministry of Labour circular reported in August 2026 applies the previous rule: 15 days of wage for each completed year in the first three years of service, then one month of wage for each subsequent year, again on the last basic wage. Service that spans the date is worked out in two parts and added together.
What happens to service completed before 31 July 2023?
It still counts. Article 61 states that service which began before the law came into force is counted within the period of service used to determine the gratuity due. The Ministry of Labour circular reported by the Oman Observer on 6 August 2026 says the earlier years are valued on the previous formula of 15 days per year for the first three years and one month per year afterwards, on the employee's last basic wage. The circular is ministry guidance rather than a line in the decree, so an employer or a court could read Article 61 as applying one month a year to the whole period. The calculator lets you set the switch date to the first day of employment to see that reading.
Is there a minimum service period or a maximum gratuity in Oman?
Article 61 as published on decree.om states neither. It sets no qualifying period before gratuity is due and no ceiling on the amount, and it pays fractions of a year in proportion to the period served, so a few months of service still earns a proportionate share of the accrual. Sources disagree on the qualifying period: a practitioner summary at Commoner Law lists a minimum of one year with nothing payable below it, which was the position under the previous Labour Law, so a figure for under a year is contestable. The absence of a ceiling is not in dispute, and it is different from the UAE, which requires one completed year and caps the benefit at two years of wage.
Does resigning reduce end of service gratuity in Oman?
Article 61 as published on decree.om ties the gratuity to the period of service and does not set a lower rate for a worker who resigns, and the Ministry of Labour circular reported in August 2026 does not mention a reduction either. Saudi Arabia and Kuwait do reduce the award on resignation, so a figure carried over from those rules should not be applied to an Omani contract.
What is the savings system that starts in July 2027?
Royal Decree 60 of 2025 deferred the compulsory savings system for non-Omani workers to 19 July 2027, and DLA Piper describes it as the long-term replacement for the traditional end of service gratuity. The Oman Observer reports the employer contribution as 9% of the monthly basic wage of the insured non-Omani worker. The calculator stops accruing gratuity on that date and shows the employer contribution for the period after it separately, for planning. Article 61 applies until that system comes into force and lets the employer settle the earlier period either into the savings system or directly to the worker, so accrued gratuity is not lost, but the sources read for this page do not fix which route applies or when the settlement falls due.
Will end of service gratuity be taxed in Oman?
From 1 January 2028, under Royal Decree 56 of 2025, Oman applies a 5% personal income tax where annual gross income is above OMR 42,000, and EY states that employers must withhold and pay tax on salaries, wages, retirement pensions, end of service gratuities and board membership allowances. The executive regulations were due within a year of the law's publication in the Official Gazette. Nothing is withheld before that date, and this calculator does not deduct any tax.
Related tools and guides
- End of service gratuity across the GCC in 2026, the guide behind this calculator, with the rules for all six states side by side.
- UAE gratuity calculator, for the 21 and 30 day bands and the two year cap.
- Saudi end of service calculator, for the half month and full month award and the resignation fractions.
- GCC payroll compliance in 2026: WPS, GOSI and gratuity.
- All Axion tools, the Axion feature list and the Axion FAQ.
Sources
All sources checked on 5 September 2026.
- Oman Labour Law issued by Royal Decree 53 of 2023, Article 61 (gratuity of not less than the basic wage for each year of service, on the final basic wage, pro rata for fractions, service before the law counted), published in Official Gazette 1504 on 30 July 2023
- Oman Observer, Labour Ministry clarifies end of service gratuity, 6 August 2026 (15 days per year for the first three years then one month per year for service under the previous law, last basic wage as the basis in both periods)
- Oman Observer, savings system for expatriates and how it works until July 2027, published 19 July 2025 (employer contribution of 9% of the monthly basic wage of the insured non-Omani, and the savings system replacing the end of service gratuity paid by the employer)
- DLA Piper, Social Protection Law under Sultani Decree 60 of 2025 (compulsory savings system for non-Omani workers deferred to 19 July 2027)
- PwC Tax Summaries, Oman individual other taxes, last reviewed 7 July 2026 (social protection contributions of 22.5%, being 14.5% employer and 8% employee, with an initial subscription wage ceiling of OMR 3,000 on the retirement and workplace injury branches and no ceiling on the job security, maternity and sick leave branches)
- KPMG Oman, personal income tax effective 1 January 2028 (5% above OMR 42,000 of annual gross income, Royal Decree 56 of 2025)
- EY, Oman to introduce personal income tax from January 2028 (employers withhold on salaries, wages, pensions and end of service gratuities)
- Commoner Law, Oman end of service gratuity (two part calculation for service spanning 31 July 2023)
This calculator gives an estimate based on the published rule and the day counting conventions set out above. It is not legal advice and it is not a tool of the Ministry of Labour, the Social Protection Fund or any other Omani authority. Article 61 sets a floor, so contracts, company policies and settlement agreements can pay more, and the treatment of service that spans 31 July 2023 or 19 July 2027 can be read in more than one way. Check the final figure with your employer or a qualified adviser before relying on it.