Bahrain payroll: wage payment, the Wage Protection System and SIO contributions (2026)
Bahrain employers must pay monthly-paid staff at least once a month through the Wage Protection System, using a bank or payment provider licensed by the Central Bank of Bahrain. For Bahraini staff the SIO pension contribution is set to reach 17% of wage from the employer and 7% from the employee, and every insured worker pays 1% of wage for unemployment insurance. For expatriates the employer pays an end-of-service contribution to the SIO instead of a pension.
Payroll and social insurance in Bahrain
- Monthly Wage Protection System file
- SIO pension for Bahraini staff
- Expatriate end-of-service SIO contributions
LMRA launches the enhanced Wage Protection System
What happened
On 21 October 2025 the LMRA announced an enhanced Wage Protection System, built with the Central Bank of Bahrain and BENEFIT. Employers submit the payroll file through the LMRA's Expat Management System and approve it through their bank to complete the transfer. The LMRA said full-scale use would follow in the first quarter of 2026.
What it means for you
The enhanced system is available now, but it is not yet compulsory. The LMRA's WPS questions page, updated 10 August 2026, says the date it becomes mandatory will be announced in the near future. Under it, an employer names a Wage Responsible Person to prepare and approve the payroll file.
Source: Labour Market Regulatory Authority. We check this page every week. Last checked .
Payroll and social insurance in Bahrain means paying wages on time through the channels the law allows, and paying the contributions the Social Insurance Organisation collects. The wage rules sit in the Labour Law of Law No. 36 of 2012 and the LMRA's Wage Protection System resolutions. Contributions sit in the Social Insurance Law of Legislative Decree No. 24 of 1976 as amended by Law No. 14 of 2022, the unemployment insurance law of Decree-Law No. 78 of 2006, and, for expatriates, the end-of-service system of Prime Minister's Decision No. 109 of 2023.
When must wages be paid in Bahrain?
At least once a month for monthly-paid staff, in Bahraini dinars unless a legal foreign currency is agreed. When employment ends, wages and all sums due are payable at once, or within seven days if the worker left of their own accord. Late wages carry compensation of 6% a year for up to six months, then 1% more for each month, up to 12% a year.
Article 40 also sets weekly payment for most workers not paid monthly, unless agreed otherwise, and weekly advances for production work lasting over two weeks. A monthly-paid worker cannot be moved to daily, weekly or piece pay without written consent. Wage claims cannot be heard if denied after five years from the date the wage fell due.
What is the Wage Protection System in Bahrain?
It is the LMRA's system requiring private sector employers to pay wages through banks or payment providers licensed by the Central Bank of Bahrain and registered with the LMRA. Resolution No. 68 of 2019 made it a duty for every private sector employer, for Bahraini and expatriate staff alike. The bank reports each payment to the LMRA.
Resolution No. 22 of 2021 phased it in: employers with 500 or more workers from 1 May 2021, 50 to 499 from 1 September 2021, and 1 to 49 from 1 January 2022, each with a six-month grace period. The bank reports the worker's name, ID number, amount paid, payment date and account details. Since Legislative Decree No. 59 of 2018, Article 46 of the Labour Law says an employer is only cleared of a wage if it paid by the mechanism the Minister sets.
How does a payroll run work under the WPS?
Under the enhanced WPS, the employer registers through the LMRA's Expat Management System and names a Wage Responsible Person. Each month that person uploads the salary file, a checker approves it, and the file is approved through the employer's bank to pay workers' accounts. The employer must keep worker profiles, salaries and account numbers up to date.
The enhanced WPS is available, but it is not yet compulsory. The LMRA's WPS questions page, updated 10 August 2026, says its mandatory date will be announced in the near future. The same page says failing to pay through the system breaks the law and leads to the measures the law sets.
What can be deducted from wages in Bahrain?
An employer can deduct no more than 10% of a wage to recover a loan it made, with no interest, or up to 25% for a housing loan with the worker's written consent. Wages can be attached or deducted for a debt only up to 25%, or 50% for maintenance debts.
If a worker leaves before a loan is repaid, the employer can take what is left from the worker's final dues. The employer can also charge the actual administrative costs of a loan. An employer cannot make a worker buy goods or services from named shops or from the employer.
What social insurance do Bahraini employees pay?
Law No. 14 of 2022 set the pension contribution at 17% of wage for the employer and 7% for the employee. The employee share started at 6% when the law took effect and rose to 7% at the start of the next year. The employer share started at 11% and rises by 1 percentage point a year until it reaches 17%.
The law was issued on 18 April 2022 and took effect the day after it was published in the Official Gazette. It also replaced age 55 with 60 for insured women wherever the Social Insurance Law used it, and set the old-age pension at one fiftieth of the average monthly wage over the last five years, multiplied by the years of contribution. The five-year average is phased in from two years, adding one year each January after the law took effect.
Who pays unemployment insurance in Bahrain?
Every insured private sector worker pays 1% of wage each month. The law sets a further 1% employer share and 1% from the government, and says the Labour Fund pays the employer share for private sector staff. It covers private sector workers insured for work injury, which includes expatriates.
Unemployment insurance is a branch of the social insurance fund, and the SIO collects the contributions. An unemployed foreign worker can claim only while lawfully resident in Bahrain to look for work, and the right lapses if they leave the country for good. A worker dismissed for disciplinary reasons cannot claim.
What does an employer pay for expatriate staff instead of a pension?
An end-of-service contribution to the SIO: 4.2% of wage each month for the first three years of service and 8.4% after that, paid by the employer alone. It has applied since 1 March 2024 under Prime Minister's Decision No. 109 of 2023. Expatriates also pay the 1% unemployment contribution.
Our arithmetic for an expatriate on BHD 1,000 a month in the first three years: the employer pays BHD 42 to the SIO for end-of-service, and the worker has BHD 10 deducted for unemployment insurance. GCC nationals covered by the unified GCC insurance scheme are outside the end-of-service system.
Key figures
| Detail | Value |
|---|---|
| Pay frequency | Monthly-paid staff at least once a month; in Bahraini dinars unless a legal foreign currency is agreed. (source) |
| Final pay | At once when employment ends, or within seven days if the worker left of their own accord. (source) |
| Late wage compensation | 6% a year for up to six months late, then 1% more per month, up to 12% a year. (source) |
| Wage Protection System | Every private sector employer must pay wages through a payment method licensed by the Central Bank of Bahrain. (source) |
| WPS phases | 500+ workers from 1 May 2021; 50 to 499 from 1 September 2021; 1 to 49 from 1 January 2022; six-month grace at each stage. (source) |
| Loan deductions | Up to 10% of wage, interest free; up to 25% for housing loans with written consent. (source) |
| Bahraini pension contribution | Employer 17% and employee 7% of wage. Employer started at 11% and rises 1 point a year to 17%; employee started at 6%, then 7% from the next year. (source) |
| Unemployment insurance | 1% of wage from the worker, 1% employer share and 1% from the government each month. (source) |
| Expatriate end-of-service contribution | Employer alone: 4.2% of wage for the first three years, 8.4% after, since 1 March 2024. (source) |
| Enhanced WPS | Launched by the LMRA on 21 October 2025; payroll file submitted through the Expat Management System and approved through the employer's bank. (source) |
Frequently asked questions
Can I pay Bahrain staff in cash?
No. Resolution No. 68 of 2019 requires every private sector employer to pay wages through the Wage Protection System, using a bank account, prepaid card or other method from a provider licensed by the Central Bank of Bahrain.
Can salaries in Bahrain be paid in US dollars or another currency?
Article 40 says wages are paid in Bahraini dinars, but the two sides can agree on a foreign currency that is legal tender.
What is the SIO employer pension rate in Bahrain this year?
Law No. 14 of 2022 phases the employer share up from 11% by 1 point a year to 17%. The law does not print a calendar of the yearly steps, so check the current rate with the SIO.
Do expatriates in Bahrain pay into a pension?
No. Expatriates are not in the pension branch. The employer pays an end-of-service contribution to the SIO for them, and they pay 1% of wage for unemployment insurance.
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.
