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Payroll and Benefits Guide Bahrain

Last updated: May 02, 2023

Currency
Bahraini Dinar (BHD)
Employer Taxes
Unknown
Payroll Frequency
Monthly
Employee Costs
9%
Capital
Manama
Date Format
dd/mm/yyyy
Fiscal Year
1 January - 31 December
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Contribution

Employer Employer Payroll Contributions
14% Local workers/3% Expat workers Old Age, Disability & Death Insurance (GOSI)
3%  Insurance against employment injuries (applicable to all employees)
BHD 22.5 per annum for Bahraini workers/BHD 72 per annum for non-Bahraini workers Ministry of Health, Healthcare fee
  17% Total Employment Cost
Employee Employee Payroll Contributions
8% Local workers/4% Expat workers  Insurance against old age, disability & death (applicable only to Bahraini employees)
1% Insurance against Unemployment Injuries
9% Total Employee Cost
Employee Income Tax
There is no individual income tax in Bahrain

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

General

There is no minimum wage in Bahrain.

Payroll

Payroll Cycle

Salaried employees are paid at least once a month, generally at the end of the month.

13th Salary

There is no requirement for a 13th salary payment in Bahrain.

Working Hours

General

The working week in Bahrain tends to vary between 40 and 48 hours depending on company policy. In the month of Ramadan, the working day is reduced to six hours and legally this should apply to all staff, but many companies only apply it to Muslims who fast during daylight hours. Friday is the Muslim rest day, but some companies with a five-day workweek give off either Thursday or Saturday. Saturday is often the most popular choice for international companies as taking Thursday off would mean a reduction in the number of operational days in common with much of the rest of the world. Conversely, other companies insist on Thursday, as the school ‘weekend’ is Thursday and Friday.

Workers are not to be present at the workplace for more than 11 hours per day. This includes working hours plus rest breaks.

Private sector companies can decide whether or not to grant time off during public holidays. If employees work, they have the choice of having another day off in lieu or receiving a payment of 150% salary in addition to their regular salary.

If a public holiday falls on a weekend (i.e. Friday or Saturday) an employer is obliged to provide employees with a day off in lieu.

Overtime

Overtime should not exceed two hours per day. Employees receive their wage plus at least 25 % for each additional working hour for hours worked during the day and at least 50% for hours worked during the night. Overtime pay cannot be included within the annual salary offered in the employment contract.

Senior Managers are exempt from receiving overtime pay.

Leave

Annual Leave (vacation)

An employee with at least one year of service is entitled to paid annual leave at the regular salary of no less than 30 working paid days at the rate of 2.5 days for each month.

Under the labor law, an employee cannot lose his/her annual leave entitlement as this is a statutory benefit. Accrued but untaken leave must either be carried forward to the next leave year or paid out every two years or upon the termination of employment.

Sick Days

Employees are not entitled to statutory sick leave once they have completed 3 months’ service and provided they have proven their sickness with a certificate from a medical professional approved by the employer.
Employees are entitled to 55 days of sick leave per year of service thereafter, paid as follows:

The first 15 days of sick paid at full pay
The subsequent 20 days of sick paid at half pay
The next 20 days of sick unpaid

The entitlement of a worker to sick leave on full or half pay may be accumulated for a period not exceeding 240 days.

Public Holidays

The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.

The religious holidays are determined by the lunar cycle and will be confirmed nearer the date of the holiday.

Date Day Holiday Note
1 Jan 2024 Monday New Year’s Day
10 Apr 2024 Wednesday Eid al-Fitr Tentative
11 Apr 2024 Thursday Eid al-Fitr Holiday Tentative
12 Apr 2024 Friday Eid al-Fitr Holiday Tentative
1 May 2024 Wednesday May Day
16 Jun 2024 Sunday Arafat Day Tentative
17 Jun 2024 Monday Eid al-Adha Tentative
18 Jun 2024 Tuesday Eid al-Adha Holiday Tentative
19 Jun 2024 Wednesday Eid al-Adha Holiday Tentative
8 Jul 2024 Monday Muharram Tentative
17 Jul 2024 Wednesday Ashoora Tentative
18 Jul 2024 Thursday Ashoora Holiday Tentative
16 Sep 2024 Monday The Prophet’s Birthday Tentative
16 Dec 2024 Monday National Day
17 Dec 2024 Tuesday National Day Holiday

Maternity Leave

Pregnant employees receive 75 days of maternity leave. The first 60 days are fully paid and the last 15 days are unpaid.

On her return, the employee will be entitled to an additional two hours each day for nursing until the child reaches six months of age. Then, women receive two breastfeeding periods of no less than 1 hour each.

Paternity Leave

Paternity leave entitlement is up to 5 days after the birth, but generally companies offer 1 day of paid paternity leave.

Parental Leave

Only maternity and paternity leave entitlements are available in Bahrain.

Other Leave

Pilgrimage leave: a Muslim employee with 5 years of consecutive service in employment is entitled to a leave of 14 working days with full pay to perform Hajj once during the period of service provided that the employee has not availed of this leave in any previous employment.

Vacation Days
Public Holidays
Highest
Lowest

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

Termination

Termination Process

To terminate an employee, an employer must have sufficient grounds for the termination as well as provide a notice period. Reasons for termination often occur:

  • during the probationary period
  • on the expiry of a fixed-term contract
  • dismissal with notice provided it is for a valid reason
  • failure to improve performance after reasonable opportunity (i.e., 60 days)
  • resignation, incapacity or death, redundancy, retirement (age 60)
  • dismissal by reason of any of the grounds listed in Article 107 of the Labor Law

Should an office need to close this must be reported to the Ministry of Labor and Social Development. Bahrain nationals are generally entitled to higher protection from dismissal in such circumstances and may accordingly be awarded higher compensation payments by the authorities.

Notice Period

Either the employer or employee may terminate the contract following the official notification at least 30 days before the date of the termination. The labor contract remains in force during the notice period and its parties shall execute all the obligations arising from it.
If notice is not given, payment in lieu must be made. During the probation period only one week’s notice is required.

Severance Pay

Unless terminated under Article 107 of the Labor Law, employees may be entitled to salary and benefits up to the termination date, notice (or payment in lieu), payment in lieu of accrued but untaken annual leave, an end-of-service gratuity payment (EOSG), and reimbursement of unpaid business expenses.
In case of employer termination, employees are eligible for payment of an EOSG based on the length of service generally calculated at:

  • Up to three years’ service at 50% of the regular monthly salary for each year of service
  • More than three years’ service at 100% of regular monthly salary for each year of service after three years

The calculation is pro-rated for any fractions of a year of service that have not been completed.

Probation Period

Three months of probation period is common practice, however, this can be increased up to a maximum of six months in respect of certain occupations. During the probation period, one week notice is required.

VISA

In order to live and work in Bahrain, all foreigners must have an employment residency visa issued by the immigration authorities together with a work permit from the Labor Market Regulatory Authority (“LMRA”). Gulf Cooperation Council nationals do not require residency visas but must be registered with the LMRA for work permit purposes.

An employer or Bahraini national needs to sponsor anyone looking to obtain a Bahrain working visa. The number of visas each company can sponsor depends on the size of the company and foreign quotas as stated by national regulations. The employer will need to manage the application process on behalf of the employee and must provide evidence of requirement including: a letter of employment, commercial registration number, the employee’s capacity, the contract duration, completed visa application form, the employee’s passport, and health record from an authorized clinic.

If the employee is in Bahrain at the time of application (on an arrival or business visa), the employment contract must be signed by both parties and stamped by the employer/sponsor. In cases where the employee is outside of Bahrain, there is a requirement for a medical report to be sent over from an LMRA-approved health center in the employee’s home country in addition to the employment contract. A work permit is valid for one to two years.

Effective from 17 February 2023, ‘flexi work permits’ are to be canceled and replaced with professional permits. Employers may no longer engage individuals holding flexi work permits and any such individuals must alternatively register themselves with the new professional permits/labor registration program. Employers should be diligent in ensuring that they do not engage any individuals holding flexi work permits and ensure that any such individuals who are under their employ have registered onto the new professional permits/labor registration program as applicable.

In those countries where people are prohibited from entering the Kingdom of Bahrain, the LMRA regulates and controls work permits.

VAT

The standard rate of VAT in Bahrain is 10%.

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Version History

February 21, 2022
The standard rate of VAT in Bahrain has been updated to 10%.
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Questions & Answers

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Priya
Priya
1 year ago

How many days can employee miss without permission?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Priya

During a year, if an employee misses fifteen days of work continuously or thirty days in total, they are considered to have resigned.

ELLEN
ELLEN
2 months ago

my husband passed away last week his 68years pls egyptian nationality his paying monthly for social insurance amount of BHD 22,i can get his insurance?i dont have idea how many years his paying,can you please help me,what i will do?

Enny Shmurin
Admin
Enny Shmurin
2 months ago
Reply to  ELLEN

Hello, this is not something we can advise on; we recommend reaching out to a local lawyer to understand your rights.

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Payroll and Benefits Guide in Bahrain

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Payroll and Benefits Guide
in Bahrain

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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All questions are answered by our in-house compliance department working in conjunction with our local in-country partner for this specific country

Public Holidays Calendar

Bahrain
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CSV
PDF
ICS
Date Day Holiday Note
1 Jan 2024 Monday New Year’s Day
10 Apr 2024 Wednesday Eid al-Fitr Tentative
11 Apr 2024 Thursday Eid al-Fitr Holiday Tentative
12 Apr 2024 Friday Eid al-Fitr Holiday Tentative
1 May 2024 Wednesday May Day
16 Jun 2024 Sunday Arafat Day Tentative
17 Jun 2024 Monday Eid al-Adha Tentative
18 Jun 2024 Tuesday Eid al-Adha Holiday Tentative
19 Jun 2024 Wednesday Eid al-Adha Holiday Tentative
8 Jul 2024 Monday Muharram Tentative
17 Jul 2024 Wednesday Ashoora Tentative
18 Jul 2024 Thursday Ashoora Holiday Tentative
16 Sep 2024 Monday The Prophet’s Birthday Tentative
16 Dec 2024 Monday National Day
17 Dec 2024 Tuesday National Day Holiday