MUSCAT : The gratuity is a mandatory payment to workers upon termination of employment, provided certain conditions are met.

Article 61 stipulates that upon the termination of employment contract for workers not covered by the Social Protection Law, employers are required to pay a post-service gratuity to the worker. This gratuity should not be less than the basic wage for each year of the worker’s service.

The worker is also entitled to the gratuity for fractions of the year proportionate to the period of service, with the last basic wage considered as the basis for calculation. Any service period that commenced before the implementation of this law is also included in the calculation of the gratuity. These provisions will remain valid until the savings system under the Social Protection Law is implemented.

“The provisions of this article shall apply until the savings system stipulated in the Social Protection Law comes into force. The employer may settle the rights of the worker for the period of his service prior to the start of the savings system to the savings system to the worker, and in this case, the settlement must be calculated at the basic wage on the settlement date,” states the Article.

The calculation of the end-of-service gratuity depends on certain legal conditions and transitional arrangements. If the entitlement to gratuity originated under the previous law and continued under the new law, the calculation is based on a specific rate of wages for each period. However, if the entitlement arises solely under the new law, the calculation is based on the latest basic salary of the employee.

“Where the entitlement arose and was established under the previous law, and the worker’s service continued under the new law, the gratuity shall be calculated at a rate of fifteen days’ wages for each year of service for the first three years, and one month’s wages for each subsequent year. The calculation shall reflect the provisions of the previous law for years covered under its effect and the provisions of the new law for subsequent years,” it notes.

The Ministry shared the following example to highlight the gratuity calculation:

A non-Omani worker started employment on August 1, 2021, with a basic salary of RO 500. If the employment ends after the effective date of the new Labour Law on July 31, 2023, the gratuity calculation would be as follows:

“For the period from the start of employment on 1 August 2021 to the effective date of the new law on 31 July 2023, the gratuity shall be calculated at half of a basic salary per year of service (i.e. OMR 250 for each year), as this period falls under the provisions of the previous law. For the period following the enactment of the new law, the gratuity shall be calculated at one full basic salary per year of service (i.e. OMR 500 for each year), in accordance with the new law’s requirement that the end-of-service gratuity shall not be less than one basic salary for each completed year of service,” the Ministry’s notice explains.

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