Annual periodic allowance for Omani workers: What you need to know

Under Ministerial Decision 317/2025, the Ministry of Labour has introduced updated rules governing the annual periodic allowance for Omani national employees in the private sector, ensuring that workers receive fair and performance-based salary increases. The decision, which replaces the older Ministerial Decision 541/2013, came into effect on 28 July 2025 and applies to all eligible Omani workers across the country.

In an exclusive interview with Times of Oman, Dr. Mohammed Ibrahim Al Zadjali, Founding Partner of Mohammed Ibrahim Law Firm, explains that “the periodic allowance is a mandatory salary increase based on the workers annual performance evaluation. To qualify, an Omani employee must have completed at least 6 months of service at their workplace by 1 January, which is the date the allowance is calculated and paid each year.”

He stated that “the amount a worker receives is a percentage of their basic salary and depends entirely on their performance rating. A worker rated “Excellent” is entitled to a minimum increase of 05 percent. Those rated “Very Good” receive at least 04 percent, while a “Good” rating guarantees 03 percent. Even employees rated “Acceptable” receive a 02 percent increase. However, workers rated “Poor” receive no allowance for that year. If an employee disagrees with their evaluation, they have the right to file a grievance with the competent administrative division at the Ministry of Labour.”

“Employers may reduce the allowance if the company faces genuine economic hardship, but only with approval from a special committee. The allowance can also be suspended if a worker is accused of committing a misdemeanor or felony inside the establishment, or if the worker takes unpaid leave or is suspended from work for a period exceeding 6 months during the year in which the allowance is calculated. Once the reason ends, payments resume,” Dr. Mohammed noted.

“To ensure compliance, the Ministry of Labour has imposed a clear penalty. Any employer found violating the provisions of this decision will face an administrative fine of 50 Rial Omani for each worker affected. This penalty is meant to hold companies accountable and protect the right of the workers. This system ensures transparency and fairness, rewarding performance while protecting workers rights,” he concluded.

(Mohammed Ibrahim Law Firm (info@mohammedibrahim.net), (+968 244 87 600) was established on 14th December 2006 and is serving clients through its offices in Muscat and Sohar, as well as operating on a request basis in other areas. It offers legal representation across a wide range of practice areas that include Labour Law, Corporate, Commercial, Contracts, Banking and Finance, International Trade, Foreign Investment, Insurance, Maritime Law, Construction and Engineering Contracts, International Arbitration, Intellectual Property and more).