How to calculate gratuity in Oman
Written by Usama Afzal, Founder & Editor, GratuityHisab. Last updated: October 2026. Based on the Oman Labour Law; not legal advice.
To calculate gratuity in Oman, first check when your contract was concluded. Contracts from 31 July 2023 use the new rule: at least one month's basic salary for every year of service. Contracts signed before that date use the old rule: 15 days' basic salary for each of the first 3 years, then a full month's basic salary per year after. So for a new contract on OMR 400 basic over 5 years, the Oman gratuity calculation is 400 × 5 = OMR 2,000; for an old contract the same service gives OMR 1,400. Always use your last basic salary — allowances are excluded.
How to calculate gratuity in Oman: the short version
If you only need the number, here is how to calculate gratuity in Oman in one line. First find your contract date, then pick the formula:
Old contract (before 31 July 2023): gratuity = (basic ÷ 30 × 15) × first 3 years + basic × remaining years.
| Contract concluded | Rate per year | Example: OMR 400, 5 years |
|---|---|---|
| From 31 July 2023 | 1 month's basic salary per year | OMR 2,000 |
| Before 31 July 2023 | 15 days' basic × 3 years, then 1 month per year | OMR 1,400 |
The rest of this guide on how to calculate gratuity in Oman walks through both formulas step by step — which salary goes in, two worked examples, a quick-reference table, and the mistakes that shrink the payout. To skip the maths, run our free Oman gratuity calculator — it applies both the old and new formulas.
The Oman gratuity formula: old contract vs new contract
Every correct answer to how to calculate gratuity in Oman starts from one date: 31 July 2023, when Oman's new Labour Law (Royal Decree 53/2023) took effect. An August 2026 Ministry of Labour clarification confirmed that the contract date decides which of the two formulas prices your service. The old law is Royal Decree 35/2003; the gratuity rule comes from Article 39.
- New contract (concluded on or after 31 July 2023): at least one month's basic salary for every year of service. "At least" means your contract or company policy can promise more, never less.
- Old contract (concluded before 31 July 2023): 15 days' basic salary for each of the first 3 years, then a full month's basic salary for each year after. This is the tiered band that makes old-contract maths slightly longer.
So how to calculate gratuity in Oman when you are not sure which applies? Check the date on your current contract. If you signed a renewal or a fresh contract after 31 July 2023, you may have moved onto the new formula. Our guide on old vs new contract rules in Oman explains the switch in detail.
Which salary counts in the Oman gratuity calculation?
The biggest source of disputes about how to calculate gratuity in Oman is the salary figure. The law counts only your last basic salary — the basic wage you were on when the contract ended, not the salary you started on. Housing, transport, food and other allowances are left out of the daily wage, along with overtime and bonuses.
How the daily wage is fixed for your Oman gratuity
Take this example: your basic salary is OMR 500 and your contract adds an OMR 200 housing allowance. Your Oman gratuity calculation uses OMR 500 only: daily wage = 500 ÷ 30 = OMR 16.67. If you mistakenly used the OMR 700 total, you would over-estimate by OMR 6,000 over 5 years on a new contract — a figure no labour department would uphold. The Oman gratuity calculator asks for basic and allowances separately for exactly this reason.
If you got pay rises during your service, the whole period is valued at the last basic wage — early low-salary years are not calculated separately. The same rule applies when you resign in Oman: resignation does not reduce the award, only the salary figure and contract date decide it.
Worked example: calculating gratuity in Oman on OMR 600
Take a worker whose last basic salary is OMR 600 and who completed exactly 8 years. Here is the Oman gratuity calculation step by step under both formulas:
- New contract: one month's basic per year — 600 × 8 = OMR 4,800.
- Old contract: 15 days' basic for the first 3 years = (600 ÷ 30 × 15) × 3 = OMR 900.
- Old contract, years 4–8: one month's basic per year = 600 × 5 = OMR 3,000.
- Old-contract total: 900 + 3,000 = OMR 3,900.
The gap is OMR 900 on identical service — which is why the first question in any Oman gratuity calculation is always the contract date. Note there is no stated cap on either formula, so long service keeps paying out in full.
Oman gratuity calculation: quick table for common salaries
The table below shows how to calculate gratuity in Oman at the basic salaries people search for most, comparing the new formula with the old-contract tiered formula:
| Monthly basic wage | 5 years — new contract | 5 years — old contract | 10 years — new contract |
|---|---|---|---|
| OMR 300 | 1,500 | 1,050 | 3,000 |
| OMR 400 | 2,000 | 1,400 | 4,000 |
| OMR 500 | 2,500 | 1,750 | 5,000 |
| OMR 600 | 3,000 | 2,100 | 6,000 |
| OMR 800 | 4,000 | 2,800 | 8,000 |
Because the new formula is flat, awards grow in a straight line with service. Old-contract awards lag behind only because of the 15-day band in the first three years — from year 4 on, both formulas pay a full month per year. Also see our overview of Oman's old vs new contract rules for split-service situations.
Partial years, renewals and split service in Oman
Partial years count proportionally in the Oman gratuity calculation. If you worked 5 years and 6 months on a new contract at OMR 400 basic, the formula gives 400 × 5.5 = OMR 2,200 — those 6 months are worth OMR 200, so don't let anyone round them down. Keep your appointment letter and payslips as proof of the exact start and end dates.
Two complications come up often. First, renewals: signing a new contract after 31 July 2023 can move you onto the new formula — check the renewal date on your current contract. Second, split service: some employers price the years before 31 July 2023 under the old formula and the years after under the new one. The Ministry's clarification is the reference point — get any split in writing and compare it with the Oman gratuity calculator.
Do you still get gratuity if you resign in Oman?
Yes. Oman is straightforward here: an ordinary resignation does not reduce your gratuity, as long as you serve your notice period (30 days for monthly-paid workers). The same Oman gratuity calculation applies whether you resign or the employer ends the contract. See gratuity if you resign in Oman for the full resignation rules.
The award is lost only if you are dismissed for serious misconduct under Article 40. If the employer breaks the contract seriously, Article 41 lets you leave without notice and keep your full rights. Skipping notice the other way — walking out without serving it — can cost you notice pay, deducted from the settlement (see notice period in Oman).
7 mistakes that shrink your Oman gratuity calculation
- Using gross salary instead of basic salary. Allowances are excluded — the single most expensive error in any Oman gratuity calculation.
- Applying the wrong formula. Check the contract date before you calculate: pre-31 July 2023 and post-31 July 2023 use different rules.
- Mixing up the old-contract year bands. 15 days' basic applies only to the first 3 years; from year 4 it is a full month per year.
- Throwing away part-years. Extra months count proportionally, not as zero.
- Using an old salary figure. The calculation looks at your last basic salary — a recent raise lifts the entire award.
- Assuming a cap like the UAE. No cap is stated for either Oman formula; the award keeps growing with service.
- Signing the final settlement without a breakdown. If the employer's figure differs from yours, ask for their written calculation and never sign a "no dues" letter you don't fully understand.
Gratuity vs final settlement: what else you are owed in Oman
Knowing how to calculate gratuity in Oman is only half the final settlement. On top of the end-of-service award you are also owed: unused annual leave encashed at the last basic wage, notice-period pay if the notice was not served (see notice period in Oman), and any unpaid overtime (see how overtime is paid in Oman). These are separate from — and added to — the gratuity figure.
Looking ahead: Oman is introducing a new savings scheme for expatriates from 19 July 2027, which will change how end-of-service benefits accrue. See Oman's 2027 savings scheme so you know what's coming.
Your 5-minute Oman gratuity checklist
- Check the date your current contract was concluded — before or after 31 July 2023 decides the formula.
- Get your last basic wage figure — from a recent payslip, with all allowances stripped out.
- Count your continuous service in years and months — partial years count proportionally.
- Apply the formula step by step — or run the Oman gratuity calculator and choose the matching contract type.
- Before signing the final settlement, check gratuity + unused leave + notice pay are listed separately — and ask for a written breakdown if any figure differs from yours.
Frequently asked questions
How to calculate gratuity in Oman in 2026?
Check your contract date first. New contracts (from 31 July 2023): one month's last basic salary × years of service — e.g. OMR 400 basic over 5 years = OMR 2,000. Old contracts: 15 days' basic per year for the first 3 years, then one month per year — the same OMR 400 over 5 years = OMR 1,400. Use your last basic salary; allowances are excluded.
What is the gratuity formula in Oman?
The Oman gratuity formula depends on when your contract was concluded. From 31 July 2023 (new Labour Law): gratuity = last basic monthly salary × years of service. Before that (old law): gratuity = (basic ÷ 30 × 15) × first 3 years + basic × remaining years. The Ministry of Labour's August 2026 clarification confirmed the contract date decides.
Is gratuity in Oman calculated on basic salary or total salary?
Basic salary only. Your Oman gratuity calculation uses your last basic wage — housing, transport, food and other allowances, overtime and bonuses are all excluded. If you got pay rises, the whole service period is valued at the last basic wage.
How much gratuity do I get after 5 years in Oman?
On a new contract (from 31 July 2023) with OMR 400 basic: OMR 2,000 (400 × 5). On an old contract: OMR 1,400 — (400 ÷ 30 × 15) × 3 = OMR 600 for the first 3 years, plus 400 × 2 = OMR 800 for years 4–5. Resignation does not reduce either figure as long as notice is served.
Does resigning reduce gratuity in Oman?
No. An ordinary resignation with notice served does not reduce the award — the same Oman gratuity calculation applies whether you resign or the employer ends the contract. The award is lost only on dismissal for serious misconduct under Article 40.
Work out your own amount
Enter your dates and salary to see your end-of-service pay instantly.
More questions
- What is the 2027 savings scheme?
- Old or new contract formula?
- What is the notice period?
- How is overtime paid?
Sources
This guide is based on the Oman Labour Law (Royal Decree No. 35/2003, as amended). Labour laws are amended from time to time; for the latest version, always check the official gazette of Oman.
