Wednesday 23 / October / 2024
Muscat: The Ministry of Labour (Mol) has clarified the end-of-service gratuity according to Article 61 of the Labour Law.
The Ministry has outlined the end-of-service gratuity calculation according to Article 61 of the Labour Law in the Sultanate of Oman. This law applies to workers who are not covered by the Social Protection Law and whose employment contracts have terminated.
Article 61 of the Labour Law : "Without prejudice to the provisions of article 48 of this law, on the employment contract termination of workers who are not beneficiaries of the Social Protection Law the employer shall pay the worker a post service gratuity for the period of his service, not less than the basic wage for each year of his service. "
"The worker shall be entitled to the gratuity for fractions of the year proportional to the period of his service and the last basic wage of the worker shall be considered the basis for the calculation of the gratuity. The period of service that began before the enactment of this law shall be included within the period of service considered in determining the period for which gratuity is payable. "
"According to the article, 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 or to the worker, and in this case, the settlement must be calculated at the basic wage on the settlement date."
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. If the entitlement arises solely under the new law, the new law's provisions shall apply immediately, with the gratuity amounting to no less than the equivalent of one basic salary for each year of service, based on the employee's most recent basic salary.
Example Calculation:
The provided example demonstrates the calculation for a worker whose employment started before the new law and continued after its enactment.
-A worker continued to work for the employer until the effective date of the new Labour Law on July 31, 2023.
-A worker not covered by the provisions of the Social Protection Law.
-Employment Start Date: August 1, 2021
-Basic Salary: OMR 500
Previous Period: The gratuity for the period under the previous law (August 1, 2021 to July 31, 2023) is calculated at half a basic salary per year (OMR 250).
New Period: The gratuity for the period under the new law (after July 31, 2023) is calculated at one basic salary per year (OMR 500).
Overall Calculation:
To calculate the total gratuity, you would add the gratuity amounts calculated for the previous and new periods.
Additional Considerations:
The specific provisions of the Social Protection Law may also impact the gratuity calculation for certain workers.
It is important to consult with an HR professional or legal expert for accurate and personalized advice on gratuity calculations in Oman.
