The Bahrain labour law is for people living and working in the private sector of Bahrain. It was set out by the Ministry of labour in 2012. This was amended from the original Labour law (now referred to as the old law) set out in 1972. The enhancements were set out to improve the private sector labour market, whilst simultaneously protecting employers’ rights.
If your business is based in Bahrain, it is imperative to know the labour law to ensure your HR and payroll are compliant.
Penalties were introduced as part of the revision of the labour law against employees who fail to comply with the regulations. The fines range from BD 50 ($133) to BD1000 ($2650) and imprisonment of up to three months for certain offences. The penalties are applied for each breach and will be multiplied according to the number of employees subject to the breach. Repeat offenders will be subject to twice the penalty.
Some of the important features of the Bahrain labour law;
Employment of foreigners
As set out by the Bahrain labour law, no employer shall employ a foreigner without a valid Work Permit issued by the Ministry of Labour and Social Affairs.
A work card will be issued upon the following conditions:
- that the employer has already been granted a valid Permit for such employment in Bahrain as required by the preceding Article;
- that the foreign worker has entered the country lawfully;
- he is in possession of a valid passport;
- he has obtained a residence permit;
- he is of good repute and behaviour;
- he is physically fit for such employment and free from infectious diseases, and such condition shall be regulated by an Order made by the Minister for Health in agreement with the Minister for Labour and Social Affairs.
Working hours for employees
Employees can work a maximum of 8 hours per day (48 hours per week). An employee can work additional hours under certain circumstances, however, the basic work and additional work cannot exceed 60 hours per week and the Ministry of Labour and Social Affairs shall be notified of the period required to complete the work. Employees will be compensated for the additional work, known as overtime.
Furthermore, during the holy month of Ramadan, working hours shall not exceed 6 hours per day.
No worker shall work for more than six consecutive hours without a preceding interval for rest or a meal of not less than half an hour duration which shall not be deemed to be part of the hours of work.
Probation period
A probation period is to be set by an employer from the beginning of an employee’s employment period. The minimum probation period is 3 months, and the maximum is 6 months.
Termination during the probation period is 1 day and can be by either party (employer or employee).
The notice period after the probation period is 1 month.
Gratuity
Expatriates are entitled to a gratuity payment at the end of their service. It is paid in a lump sum by the employer. It is calculated on the basis of 15 days basic salary for each year of the first three years of service, and of one-month wages for each year of service thereafter. If an employee is terminated as per article 107, the Employer is not liable to pay any Gratuity to the employee.
Annual leave
Employees are entitled to 30 days of annual leave per year (pro-rated at 2.5 days per month). An employee must take a minimum of 15 days annual leave per year, and of these 15 days, 6 days must be consecutive. After this, employees are entitled to en-cash their remaining days.
Employees are also entitled to 6-day contingent leave (AKA emergency leave). This is deducted from their annual leave balance.
Sick leave
Employees are entitled to 15 days sick leave at full pay, 16-20 days at half pay and over 20 days as unpaid. During an employee’s probation period, they are not entitled to paid sick leave.
Maternity leave
Expected mothers are entitled to 60 calendar days paid maternity leave, and can get an additional 15 days unpaid maternity leave. It is important to note that a new mother is not allowed to return to work until 40 days after giving birth.
Other types of leave
An employee is entitled to up to 3 days paid leave following a death of a relative (up to the 4th degree) and a spouse’s relatives (up to 2nd degree).
Hajj Leave
Employees are entitled to 14 days paid Hajj leave, but only after completing 5 years service with the same employer. Furthermore, employers have the right to decide on priority of when an employee can go on Hajj leave.
Income Tax and Social Security in Bahrain
There is no income tax in Bahrain for employees, either expatriate or local, however, there are social security contribution towards SIO (Social Insurance Organisation). SIO is the official authority responsible for social security services.
SIO is used to protect employees for instances such as injuries at work, old age and retirement. During the Covid-19 pandemic, it was used to help employers pay employed Bahrain National citizens salaries.
Social Insurance- SIO
Who does it cover?
Bahrain nationals- employer 12% employee 7%
Expats- employer 3% employee 1%
The current rate of contributions to the SIO is 19% for local employees (12% employer; 7% employee) and 4% for expatriate employees (3% employer; 1% employee), subject to BD 4,000 per month contribution base maximum.
The employer’s contribution is 12% of gross wages for insurance against old age, disability and death (applicable only to Bahraini employees) and 3% of gross wages for insurance against employment injuries (applicable to all employees).
The employee’s contribution is 7% of gross wages for insurance against old age, disability and death (applicable to Bahraini employees only) and 1% of gross wages for insurance against unemployment.
SIO contributions are calculated by the authorities based on the contractual salaries reported by employers in January of the respective calendar year.
Monthly social security contributions must be paid by the 15th of every month.
If you’d like advice on Bahrain’s labour, get in touch with one of our payroll specialists of labour law experts