New Bonus Policy for Omani Private Sector

Oman’s Ministry of Labour has announced a significant policy change affecting private sector employees, introducing mandatory annual performance-based bonuses. This new regulation, outlined in Ministerial Decision No. 317/2025, will take effect on January 1, 2026. The decision mandates that all private sector employers must provide bonuses ranging from 2% to 5% of an employee’s basic salary, depending on their performance rating.

Performance-Based Bonus Structure

The bonus structure is designed to reward employees based on their annual performance evaluations. Employees rated as “Acceptable” will receive a minimum bonus of 2% of their basic salary, while those achieving an “Excellent” rating can expect up to a 5% bonus. This initiative aims to incentivize higher productivity and recognize the contributions of diligent workers in the private sector.

Conditions for Bonus Adjustments

While the bonuses are mandatory, there are provisions for adjustments under specific circumstances. Employers may seek approval from the Ministry of Labour to reduce or suspend bonuses due to economic challenges or during disciplinary investigations. This clause ensures that businesses facing genuine financial difficulties can manage their obligations without compromising their operational viability.

Implications for Employers and Employees

This policy is expected to have far-reaching implications for both employers and employees in Oman. For employers, it necessitates a structured performance evaluation system and financial planning to accommodate the new bonus requirements. For employees, it offers a tangible incentive to enhance performance and contribute more effectively to their organizations.

Economic Impact and Future Outlook

The introduction of mandatory bonuses is part of Oman’s broader strategy to enhance employee satisfaction and productivity in the private sector. By aligning compensation with performance, the government aims to foster a more competitive and motivated workforce, ultimately contributing to the nation’s economic growth.