Oman: Amendments to mandatory performance bonus for Omani employees

Employer Action Code: Act

Ministry of Labor (MoL) Decision No. 317/2025 amends the minimum level of performance-based compensation that private sector employers must pay to their Omani employees annually and provides further details on the mandate. Note, this mandate does not apply to foreign workers, who constitute roughly 75% of the private sector workforce.

Key details

• The revised minimum mandatory performance bonus as a percentage of base pay, payable to eligible Omani employees each January 1 starting in 2026, depends on the performance rating of the employee for the prior year as follows:
  • Excellent — 5%
  • Very good — 4%
  • Good — 3%
  • Acceptable — 2%
  • Poor — none
  Up to January 1, 2025, the minimum bonus was 3% of base pay for all ratings other than “poor” (in which case it was zero), under Ministerial Decision No. 541/2013
• The employee must have been employed for at least six months in the preceding year. When an employee has changed employers in the prior year, the employer where the worker’s service is longest will be responsible for preparing the evaluation and assigning the performance rating, although the current employer will be responsible for paying the bonus on January 1
• Employees will have the right to appeal their performance rating to the MoL, which presumably will mediate disagreements. Employers will have the right to suspend payment of the bonus for individual Omani employees but only under very limited circumstances

Employer implications

Employers should review their compensation policies and practices to align them with the new rules. The specificity of the rating/bonus scale and disparity with the treatment of non-Omani workers may present additional challenges. Although the share of Omani nationals in the private-sector workforce is relatively small, it has been slowly increasing due to the government’s Omanization policies, which promote the employment of Omanis in the private sector.