If you work in Oman on a private-sector contract, the rules that govern your pay, leave and final settlement are set by the Labour Law issued under Royal Decree 53/2023. This law replaced the old 2003 statute and changed several things that directly affect expatriate workers, including how end-of-service gratuity is calculated. This guide breaks down the essentials in plain terms so you know what you are entitled to before you sign, resign or reach your last working day.
What Royal Decree 53/2023 changed
Royal Decree 53/2023 was issued on 24 July 2023 and came into force on 31 July 2023, repealing the previous labour law (Royal Decree 35/2003). It applies to most private-sector employees, both Omani and expatriate, and is administered by the Ministry of Labour. The reform tightened Omanisation, reduced weekly working hours, expanded leave entitlements and simplified the gratuity formula for expats. Below are the parts that matter most day to day.
End-of-service gratuity under the new law
End-of-service gratuity (often called EOSB) is the lump sum an expatriate worker receives when their employment ends. Under Article 61 of the new law, the formula was simplified and made more generous:
- One full month’s basic wage for each year of service, from the first year onward.
- A minimum of one year of continuous service is required to qualify.
- The calculation is based on your last drawn basic wage — not gross pay. Allowances and bonuses are excluded unless your contract specifically includes them.
- Fractions of a year beyond the first are paid on a pro-rata basis.
This is a clear improvement on the old system, which paid only 15 days’ basic wage for each of the first three years and one month for each year after that. Omani nationals covered by the Social Protection Law do not receive gratuity, because they are covered by social insurance instead.
If your service spans both laws
Workers who started before 31 July 2023 and continued afterwards get a split calculation. Service before that date is calculated under the old tiered formula (15 days per year for the first three years, one month per year thereafter), while service from 31 July 2023 onward uses the new one-month-per-year rule. Employers are expected to add the two portions together for your final settlement.
The coming savings scheme
The Social Protection Law introduces a compulsory savings scheme that will eventually replace the lump-sum gratuity for expats, funded by a monthly contribution set at 9% of salary into individual accounts. The start date has been deferred, and current guidance points to it taking effect around July 2027. Until that scheme actually launches, the Article 61 gratuity described above is what you are owed. If you are comparing systems across the Gulf, our breakdown of UAE gratuity and end-of-service calculation shows how the two countries differ.
Notice periods
Either party can end an open contract with proper written notice and a legitimate reason. For workers paid a monthly wage, the notice period is 30 days; for those paid on other cycles it is shorter unless the contract sets a longer period. If either side terminates without serving the notice, that party must pay compensation equal to the wage for the notice period or the remaining part of it, based on the worker’s last comprehensive wage. Article 43 also lets an employer end a non-Omani worker’s contract when replacing the role under an approved Omanisation plan.
Annual leave, working hours and other entitlements
- Annual leave: 30 days of paid annual leave per year, with the ability to carry over unused days as permitted.
- Working hours: a maximum of 8 hours a day and 40 actual working hours a week, excluding a rest break. This is a reduction from the previous 45-hour week.
- Probation: no more than 3 months for monthly-paid staff, and a worker may only be placed on probation once with the same employer.
- Sick leave: up to 182 days per year, paid on a tiered scale that reduces as the leave extends.
- Maternity leave: extended to 98 days, among other family-related protections added by the reform.
Omanisation basics
Omanisation is the government policy of reserving a share of jobs for Omani nationals. The new law reinforces it through industry-specific quotas, incentives for companies that exceed their targets and penalties for those that fall short. Employers must submit an Omanisation plan through the Ministry of Labour’s online portal at the start of each calendar year, setting out which roles are Omanised and how expatriate positions are being substituted over time. In practice, this is the legal basis that allows an employer to end an expat contract in order to hire an Omani replacement for the same job.
Practical steps to protect your rights
- Keep a copy of your signed contract and check whether your basic wage is stated clearly, since gratuity depends on it.
- Retain payslips and any records of allowances, overtime and leave taken.
- Confirm your residency paperwork stays valid throughout employment — see our guide to the Oman resident card, its costs and renewal.
- Before accepting or leaving a role, budget realistically; our Muscat cost-of-living guide for expats helps you weigh salary against expenses.
- If a dispute arises, you can raise a complaint with the Ministry of Labour before pursuing the courts.
The law sets the floor for your entitlements; your individual contract can offer more but not less. Reading both together is the best way to know exactly where you stand.
Frequently Asked Questions
How is end-of-service gratuity calculated in Oman in 2026?
Under Article 61 of Royal Decree 53/2023, expatriate workers receive one full month’s basic wage for every year of service, based on the last basic wage drawn, with at least one year of service required and fractions of a year paid pro-rata. If your service began before 31 July 2023, a split calculation applies the old formula to the earlier period.
What is the notice period under Oman’s Labour Law?
For monthly-paid workers the notice period is 30 days, given in writing with a legitimate reason. If either party skips the notice, they must pay the other compensation equal to the wage for the unserved notice period, calculated on the last comprehensive wage.
Will the new savings scheme replace gratuity for expats?
Eventually, yes. A compulsory savings scheme funded by a monthly contribution of around 9% of salary is planned to replace the lump-sum gratuity, but its start has been deferred and current guidance points to roughly July 2027. Until it actually launches, the Article 61 gratuity remains your entitlement.
