From 2026, Omani private-sector employers must grant staff annual salary hikes tied to performance, with the best performers guaranteed a 5% boost and underperformers left empty-handed.
In a bold decision that will leave cost-of-living-crisis impacted workers in much of the world open-mouthed with green-eyed incredulity, the Omani Ministry of Labour has introduced a mandatory system of annual salary increases for Omani employees in the private sector. The regulation, which stipulates that the first pay rises will be payable from 1 January 2026, applies to employees who have completed at least six months of service with their employer and requires that increments be awarded on 1 January each year, based on individual performance ratings.
The decision prescribes percentage increases to basic salary according to five performance categories. Employees rated ‘excellent’ must receive a 5% increase; those rated ‘very good’ receive 4%; ‘good’ ratings warrant a 3% increase; and ‘acceptable’ ratings attract 2%. Employees assessed as ‘weak’ are not entitled to an increase. The provisions apply to basic salary rather than total remuneration, such as overtime or commission and bosses must determine ratings in accordance with their performance evaluation procedures, while affected employees have the right to appeal their evaluation to the competent division of the Ministry of Labour.
Special rules address cases where an employee transfers from one private-sector employer to another. The previous employer must inform the new employer of the most recent performance evaluation to ensure the correct application of the increment.
Further, employers may suspend or reduce the annual increase in defined circumstances, including disciplinary action against the employee or adverse economic conditions affecting the business. If the grounds for suspension are overturned, the increment must be paid retrospectively from the effective date.
The ministry has specified financial penalties for non-compliance. Employers who fail to award the required increases are liable to an administrative fine of OMR 50 (GBP 96) per employee, calculated separately for each case.
The new regulations also repeal earlier rules governing periodic allowances for Omani private-sector employees, consolidating the process into a single, performance-linked mechanism. The ministry has indicated that enforcement will be supported by a wage protection system, under which employers must submit payroll data for monitoring.
According to the Arabic-language text published in Oman’s Official Gazette, seen by ICLG News and translated using Google, the regulation applies exclusively to Omani nationals working in the private sector. It does not cover expatriate employees, although employers may choose to apply similar policies to non-Omani staff in the name of fairness.
In a statement, the Ministry of Labour said that the decision aims to “enhance productivity, improve job satisfaction, and ensure fair remuneration for Omani workers in the private sector”, adding that the annual review process would “contribute to a more competitive and motivated workforce”.