Private sector workers in Oman now entitled to mandatory annual performance-based bonuses

TL;DR:

• Oman’s Ministry of Labour has issued Ministerial Decision No. 317/2025 , mandating minimum annual performance-based periodic allowances for Omani employees in the private sector.

• Effective January 1 annually, eligibility requires at least six months’ service and performance rated “Acceptable” or above.

• Bonus rates: 5% of basic salary for “Excellent”, 4% for “Very Good”, 3% for “Good”, and 2% for “Acceptable”. No bonus for “Poor”.

• Employers may reduce or suspend bonuses with valid economic justification or disciplinary proceedings approved by the Ministry’s committee.
  

In a landmark labour reform, Oman’s Ministry of Labour issued Ministerial Decision No. 317/2025, establishing a performance-based minimum annual bonus for Omani nationals employed in the private sector. The regulation aims to enhance worker rights and standardize annual bonuses according to job performance. From January 1, 2026, eligible Omani employees will receive mandatory allowances tied to their performance ratings, from “Acceptable” up to “Excellent” ensuring transparent and equitable bonus entitlements.

What the Regulation Covers

Eligibility Criteria

To qualify for the annual periodic allowance, employees must:

• Be Omani nationals working in the private sector.
  
  
• Have completed a minimum of six months of service at the same employer.
  
  
• Obtain a performance rating of “Acceptable” or higher in the annual review. Ratings deemed “Poor” disqualify eligibility.
  

Bonus Structure

Based on performance, the minimum allowance of the basic salary, effective every January 1, is as follows:

• Excellent: 5%
  
  
• Very Good: 4%
  
  
• Good: 3%
  
  
• Acceptable : 2%
  

No bonus is awarded for a “Poor” rating. These baseline rates are binding unless superior employer benefits exist.

Reduction, Suspension & Grievance Mechanisms
Employers may reduce or suspend bonuses only under specific circumstances:

• Economic justification: Must be supported by a committee review as per Oman’s Labour Law.
  
  
• Disciplinary investigations: If an employee is under investigation for misconduct. If later cleared, the bonus must be paid in full.
  
  
• Extended unpaid leave: Absences exceeding six months negate eligibility for that year’s bonus. Once resolved, payment must resume.
  

Employees are entitled to file grievances if they dispute their performance rating, through designated Ministry channels.

The ministry has mandated that violations such as failure to pay due allowances, carry an administrative fine of OMR 50 per affected employee. This serves as a deterrent and ensures compliance across employers.

Why It Matters

• Strengthens Worker Rights: Guarantees a baseline bonus for Omani employees, regardless of individual employer discretion.
  
  
• Aligns with Vision 2040 Work Reforms: Supports Omanisation goals and enhances private sector attractiveness for nationals.
  
  
• Standardizes Award Mechanisms: Reduces ambiguity and variability in annual discretionary bonus schemes.
  
  
• Supports Wage Transparency: Clarifies employer obligations in fostering fair performance-based compensation.
  
  

Ministerial Decision No. 317/2025 marks a significant advance in Oman’s labour reform journey, introducing mandatory, performance-based periodic allowances for Omani nationals in the private sector. With enforced timelines, clear bonus tiers by performance ratings, and mechanisms for dispute resolution, the regulation provides both predictability for employers and a structured recognition system for employee contributions. By bridging employment rights and national economic strategy, Oman further cements its commitment to fair work and inclusive growth.

FAQ

• 1. Who is eligible for the periodic allowance?

Only Omani nationals working in the private sector who have completed at least six months of continuous service and received a performance rating of “Acceptable” or higher are eligible.

• 2. What is the bonus amount based on performance?

The minimum annual bonus, calculated on basic salary, is:

• 5% for Excellent
  
  
• 4% for Very Good
  
  
• 3% for Good
  
  
• 2% for Acceptable. No bonus is granted for a “Poor” rating.

• 3. Can an employer skip the allowance due to poor company finances?

Yes, but only with official approval from the Ministry’s committee, citing valid economic reasons as per the Labour Law.

• 4. What happens if an employee is on long unpaid leave?

If the employee is on unpaid leave exceeding six months, the employer is not required to pay the bonus for that year. The payment resumes once the leave ends.

• 5. What is the penalty for non-compliant employers?

Employers who fail to pay the required bonus may face a fine of OMR 50 per affected employee.