Bahrain employment law: the Labour Law, SIO end-of-service contributions and LMRA permits
Bahrain's private sector follows the Labour Law of Law No. 36 of 2012. Probation is up to 3 months (6 for occupations the Minister names), notice is 30 days and annual leave is at least 30 days after a year's service. Since 1 March 2024 employers fund expatriate end-of-service pay through monthly SIO contributions of 4.2% of wage for the first three years and 8.4% after.
What Teamed handles in Bahrain
- Arabic contracts with probation stated
- Monthly SIO end-of-service contributions
- LMRA permits within Bahrainisation targets
Bahrain moves expatriate end-of-service pay to monthly SIO contributions
What happened
Since 1 March 2024, Prime Minister's Decision No. 109 of 2023 has required employers to pay the Social Insurance Organisation (SIO) a monthly end-of-service contribution for each non-Bahraini private sector worker. The employer alone pays 4.2% of the worker's wage for the first three years of service and 8.4% after that.
What it means for you
End-of-service pay for expatriate staff is now a monthly cost, not a lump sum at exit. The SIO pays the award when service ends. Service before 1 March 2024 is still settled by the employer under the Labour Law.
Source: Legislation and Legal Opinion Commission. We check this page every week. Last checked .
Bahrain employment law means the rules a private sector employer in the Kingdom must follow when it hires, pays and lets go of staff. The core statute is the Labour Law for the Private Sector of Law No. 36 of 2012, covering contracts, probation, hours, leave, notice, dismissal compensation and the leaving indemnity. Social insurance sits in the Social Insurance Law of Legislative Decree No. 24 of 1976, run by the Social Insurance Organisation, which since 1 March 2024 also collects end-of-service contributions for non-Bahraini workers. Expatriate work permits and Bahrainisation are handled by the Labour Market Regulatory Authority.
Which law governs employment in Bahrain?
The Labour Law for the Private Sector issued by Law No. 36 of 2012, amended in 2014, 2015, 2018 and 2021. None of those amendments changed probation, notice or annual leave. Social insurance is run by the SIO, and expatriate work permits by the LMRA under Law No. 19 of 2006.
What are the rules on contracts, probation, notice and leave?
Contracts must be in writing and in Arabic. Probation is allowed only if the contract states it, for up to 3 months, or 6 for occupations the Minister names. Notice is 30 days in writing, annual leave is at least 30 days after a year, and working time is capped at 48 hours a week. See the full guide to contracts, probation, notice and leave in Bahrain.
How does end-of-service pay work for expatriates?
Since 1 March 2024 the employer alone pays the SIO 4.2% of an expatriate's monthly wage for the first three years and 8.4% after, and the SIO pays the award when service ends. Service before that date is still paid by the employer under Article 116 of the Labour Law. See the full guide to end-of-service and SIO contributions in Bahrain.
How do Bahrainisation and LMRA work permits fit together?
The LMRA sets a Bahrainisation target rate for each activity and size band and checks it when issuing work permits, which cost BHD 200 for two years or BHD 100 for one. A business below its target can still get permits by paying a parallel fee of BHD 500 or BHD 250. See the full guide to Bahrainisation and work permits.
How are wages and social insurance paid?
Wages go through the Wage Protection System at least once a month. Bahraini staff are insured for a pension, with the employer share rising to 17% of wage and the employee share at 7%, and every insured worker pays 1% for unemployment insurance. See the full guide to payroll and social insurance in Bahrain.
Key figures
| Detail | Value |
|---|---|
| Governing statute | Labour Law for the Private Sector, Law No. 36 of 2012, amended by Law No. 31 of 2014, Law No. 37 of 2015, Legislative Decree No. 59 of 2018 and Legislative Decree No. 16 of 2021. (source) |
| Probation | Only if expressly stated in the contract; up to 3 months, or up to 6 months for occupations set by ministerial resolution. Either party may end it with at least one day's notice; once per employer. (source) |
| Notice | 30 days' prior written notice by either party to end the contract; an employer may agree to a longer period. Pay in lieu equals the wage for the notice period or its remainder. (source) |
| Annual leave | At least 30 days on full pay after one year's service, at two and a half days per month; pro rata for less than a year. The leave balance must be settled at least every two years. (source) |
| SIO end-of-service contributions for non-Bahrainis | Paid by the employer alone, monthly: 4.2% of wage for the first three years of the worker's service with that employer and 8.4% for later years. In force from 1 March 2024. (source) |
| End-of-service award | Half a month's wage for each of the first three years and one month's wage for each later year, pro rata for part years, on the last wage and capped at the contributions paid. Paid by the SIO when service ends. (source) |
| Social insurance for Bahrainis | Employer share set to reach 17% of wages and employee share 7%. The employer share started at 11% when Law No. 14 of 2022 took effect and rises by 1 percentage point a year until it reaches 17%. (source) |
| Unemployment insurance | 1% of the insured worker's wage paid by the worker each month, with a further 1% employer share and 1% from the government. Unemployed foreign workers can claim if they remain lawfully resident to look for work. (source) |
| Work permit and Parallel Bahrainisation fees | Work permit BHD 200 for two years or BHD 100 for one year. Optional parallel fee for a permit outside the required Bahrainisation ratio: BHD 500 (two years) or BHD 250 (one year). (source) |
| Secondment of expatriate workers | 90 days, with approval of the worker and both employers, who share liability for the worker's rights. Fee BHD 5, plus BHD 62.5 if the receiving employer's Bahrainisation target rate is lower than the current employer's. (source) |
Frequently asked questions
Can probation in Bahrain be extended beyond 3 months?
Only for occupations the Minister names by resolution, and then to no more than 6 months. In every case the probation clause must be written expressly into the contract, and it can only be used once with the same employer.
Do I still pay a leaving indemnity directly to expatriate staff in Bahrain?
Only for service before 1 March 2024. For service since then you pay the SIO a monthly contribution of 4.2% of wage for the first three years and 8.4% after, and the SIO pays the worker when service ends.
What if my company is below its Bahrainisation target?
You can still obtain expatriate work permits through the Parallel Bahrainisation System by paying an extra fee per permit, BHD 500 for a two-year permit or BHD 250 for a one-year permit, on top of the normal fee.
Do Bahraini employees pay social insurance?
Yes. Law No. 14 of 2022 set the pension contribution at 7% of wage for the employee and 17% for the employer, with the employer share phased up from 11% by 1 point a year.
Each of the six Gulf states writes its own labour law, its own end-of-service rules and its own quota for hiring citizens. When Teamed is your legal employer, we apply the right rules for the country each person works in and update your contracts, policies and payroll as the law changes, so you never have to read a statute to stay compliant.
