New mandatory annual pay rises for private sector workers

At a glance

• The Omani Ministry of Labour has implemented new regulations requiring private sector employers to provide annual salary increases based on employee performance ratings.
• An employee must have completed six months of employment to be eligible for the increases.
• Employers failing to comply with the new regulations face penalties of OMR50 per violation.

The Omani Ministry of Labour has implemented new regulations requiring private sector employers to provide annual salary increases based on employee performance ratings. 

Under Sultani Ministerial Decision No. 317/2025, Omani workers who have completed six months of employment will be eligible for yearly increments each January, with increases determined by their performance appraisal scores.

The new payment structure establishes clear percentage increases tied to performance ratings:

• Excellent performance: 5% basic wage increase.
• Very Good performance: 4% increase.
• Good performance: 3% increase.
• Acceptable performance: 2% increase.
• Weak performance: No increase. 

The decision also addresses operational challenges, particularly in cases where Omani employees are transferred between employers under Article 50 of the Labour Law. In these cases :

• The employer with whom the worker spent the longest period during the year is responsible for preparing the performance evaluation.
• The receiving employer is obligated to pay the allowance based on that evaluation.

In addition, the decision grants employers the right to:

• Withhold the allowance if the employee receives a poor evaluation.
• Reduce the allowance if there is a proven economic justification, subject to approval by the committee referenced in Article 45 of the Labour Law.
• Suspend the allowance in two specific cases:
  • If the employee is referred for investigation for a misdemeanor or felony committed in the workplace. If acquitted by a final court ruling, the suspended allowance must be paid retroactively.
  • If the employee takes unpaid leave or is absent for more than six months in a calendar year, as per Articles 80 and 83 of the Labour Law.

In contrast, the decision explicitly grants employees the right to appeal their performance evaluation results to the Ministry of Labour. 

Employers failing to comply with the new regulations face penalties of OMR50 per violation, with fines multiplied by the number of affected employees.