Oman


Gratuity benefits can be disbursed at any time



Times of Oman, in association with Khalifa Al Hinai Legal Consultants, will answer the legal queries of readers every Monday.

Questions can be sent to: readersclub@timesofoman.com

Is it illegal for an organisation (a non-profit community school in particular) to give the post-gratuity service benefits to its expatriate staff on an yearly basis? It has been the usual practice followed right from the beginning when the organisation was formed, but recently changed by the current Board of Trustees. Now, it will be recalculated starting from the changed date, and will be given only on the last day of the service, and not on a yearly basis anymore.
Larry Sabado
 
There is no illegality involved in giving away the gratuity at the end of every year and many entities in Oman follow this practice. The Labour Law is not specific about the actual time of disbursement of "end of service" benefits (even though by its very name, it should be given away at the time of termination of the employment). Nevertheless, from the wording used in the text of the article concerning the end of service benefits, inferences can be drawn that such benefits shall be paid at a time when an employer and employee decide to end their relationship. This, however, does not mean that it is illegal to distribute the gratuity at a time mutually agreed to by the employer and the employee.

But there is a hidden factor in the "premature distribution" of gratuity which is to the advantage of the employer. The gratuity is to be calculated on the basis of the last drawn basic salary of the employee. The employment contracts often get revised and there are occasions when an employee receives a higher basic salary than what he drew during the previous years, especially when the relationship extends over decades. Under such circumstances, the employee would be losing the differential part of the increased basic salary. There are no precedents in Oman where a Court of Law has declared yearly distribution of gratuity by an employer as illegal or undesirable.

In your case, we hope that the new arrangement would work out to the advantage of the employees since their gratuity would be settled on the basis of the last basic salary drawn by them (at the time of ending the relationship).

I am an expatriate working at a leading SAOG company and have completed 20 years of service. I took the first 10 years' indemnity (gratuity) in 2012. Now I am planning to go back to India. But our company has informed me that (for second time) indemnity will be calculated as a new one (for first three year 15 days, and for the balance 7 years, 30 days). My question is whether I am eligible for gratuity @30 days for the entire 10 years or not. For the first 10 years, I got as per old basic salary. Now my salary is more. So I am asking you whether I will get the balance amount for the first 10 years also as per my present basic salary or not?
Rajeevan
 
From your communication, it is not clear under what circumstances did you receive the gratuity for the period that ended in 2012.

If it was on the basis of mutual understanding and agreement with your employer to enter into a new contract for the benefit of both sides, it can be presumed that your initial relationship with the employer ended in 2012 and you signed a new contract with more benefits and facilities.

It is also not clear whether there was any change in the ownership or senior management structure of the company and the dues settlement for all employees was made just to begin a new chapter on a clean slate. If there are instances like signing a new contract or a change in the ownership structure of the company, you will be treated as a new employee from the date of signing of the new employment contract. If it is not so, you are entitled to receive your end of service benefits as part of an ongoing employment contract.

For the purpose of calculating gratuity, you will not be entitled to benefits on a retrospective basis as indicated by you. Whatever amounts you have received have been accounted for and only the remaining 10 years' gratuity will be calculated on the basis of your revised basic salary.

Disclaimer: Opinions expressed in this column are for general guidance purposes only. They are based on facts presented to us and are not substituted for expert legal advice. Readers are advised to seek legal assistance for specific legal issues. Times of Oman and Khalifa Al Hinai Advocates & Legal Consultancy do not assume  any responsibility towards anyone on this matter.

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Dear sir
I haver completed 3 years in company. now company have terminate me. I want to check regardidng gratuity, How many months I can received gratuity. 3 month or less.