Bahrain, a constitutional monarchy, is one of the open economies in the Middle East. The country’s oil industry accounts for 70% of the government’s revenues, 60% of export receipts, and 11% of the GDP. Aluminum products such as billets, standard ingots, and rolling slab are the 2nd most exported commodity, followed by financial services and construction materials. Bahrain’s state-of-the-art communication and transport facilities have helped it attract several multinational firms and major industrial projects. The 2030 Economic Vision aims to facilitate socio-economic growth by focusing on 3 basic principles of integrity, competitiveness, and sustainability.
Currency: Bahraini Dinar
Principal Language: Bahraini Arabic
Government: Arab Constitutional Monarchy
Capital City: Manama
Major Cities: Muharraq, Riffa, Isa Town, Hamad Town
Employers and employees can enter into employment contracts for a fixed term or an indefinite period. The contracts can be terminated on notice or after executing a particular project. The contracts must contain the following details:
- Employer’s name, address, and trade register number
- Worker’s name, date of birth, job description, qualifications, nationality, residential address, and personal identification documents
- Nature, type, and duration of the contract (for a definite period)
- The wage agreed upon, the time and method of payment and all the benefits be in cash or kind as agreed upon.
Employees can be hired under a probation period if stated clearly in the contract provided the period does not exceed 3 months.
The regular work schedule comprises 6 working days a week and Fridays are the weekly off. If a public holiday falls on a Friday, the employer is required to provide employees a day off. The employer, under special circumstances, can ask employees to work on public holidays or Fridays, subject to local law’s provisions. Barring cases stated in the law, an employer cannot request employees to work for more than 6 hours a day or 36 hours a week.
Whether employees are entitled to overtime pay or not depends on their exempt or non-exempt status. Under the Fair Labor Standards Act, employers need to provide overtime pay to non-exempt employees who work for more than 40 hours in a week. Some category of workers, such as agricultural workers, are excluded from this benefit. Employees are entitled to 1.5 times the regular pay for overtime.
The following national holidays are observed in Bahrain. The dates are for 2018:
- Jan. 1: New Year's Day
- May 1: Labour Day
- May 16: Ramadan
- June 15-17: Eid Al Fitr
- Aug. 22-26: Eid Al Adha
- September 12: Hijri New Year
- Oct. 22: Ashoora Eve
- Oct. 23: Ashoora
- November 21: Birthday of Prophet Muhammad
- December 16: National Day
Employees receive a 50% bonus along with a compensatory day off or 150% payment of the base salary if they work on a public holiday.
Employees are entitled to 30 days’ annual leave after completing 1 year of employment. The annual leave accrues at the rate of 2.5 days for each month. Under the new Labor Law, employees cannot receive monetary compensation instead of the accrued annual leave.
Female employees are entitled to 45 days’ maternity leave on full pay and this period can be extended by 15 days without pay. During the 2-year period on return to employment after childbirth, employees qualify for an additional hour to nurse during workdays.
Muslim employees who have been working with the same employer for 5 continuous years are entitled to 2 weeks’ pilgrimage leave once during their employment to perform ‘Haj.’
Employees are entitled to:
- 15 days’ sick leave on full pay
- 20 days’ sick leave on half pay
- Next 20 days without pay
Entitlements to sick leave can be accumulated for up to 240 days during the entire service period.
Employees can take 6 days’ contingency leave in a year in case of an emergency. The leave should not exceed 2 days in each case and is deducted from employees’ annual leave.
Employees are entitled to educational leave if they have to take an examination at any educational level provided they give a 30 days’ notice to their employer before the start date of the leave.
Muslim female employees are entitled to 1 month’s paid leave in the event of their husband’s death. They are also entitled to 3 months and 10 days’ leave to complete the ‘Idda’ period. In case the balance of their annual leave is insufficient, employees can take unpaid leave.
Pension and Social Security
The normal retirement age in Bahrain is 60 for men and 55 for women and they are eligible for benefits after contributing a minimum of 10 years to the state pension scheme. Men with at least 20 years of coverage and women with 15 years of coverage can retire early.
Health Insurance Benefit
Bahrain’s citizens receive subsidized or free medical care, but foreign workers are required to pay for health insurance.
The old-age pension paid is equal to 2% of an individual’s average monthly wages in the previous 2 years multiplied by the number of contribution years. The minimum pension is either the individual’s average wage during the previous 2 years or 200 dinars each month, whichever is less. The maximum pension is 80% of an individual’s average wages in the previous 2 years of contributions including an additional 10% of the old-age pension.
The pension is decreased by:
- 20% if the individual retires before age 45
- 15% if aged 45 to 49
- 10% if aged 50 to 54
Compensation for prolonged service
A lump sum equal to 11% of an individual’s average annual wages in the previous 2 years is paid for each year of contribution beyond 40 years.
A lump sum equal to 15% of the individual’s average monthly wages in the previous 2 years multiplied by 12 times the number of contribution years, and 5% interest from the date the contributions stop until the date the old-age settlement is paid.
Benefits are hiked by 3% every January.
The disability pension is 44% of an employee’s average monthly wages in the last year of contribution before the disability began or 2% of an individual’s average wages during the previous year of contribution multiplied by the number of contribution years, whichever is greater.
The maximum pension is 80% of an individual’s average waged in the last year of contribution including an extra 10% of the disability pension.
A lump sum equal to 15% of an individual’s average monthly wages in the last year’s contribution multiplied by 12 times the number of contribution years including 5% interest from the date the employment ceased due to disability until the settlement date.
Benefit Adjustment: Benefits are hiked by 3% every January.
A spousal pension equal to 37.5% of the disability or old-age pension, that the deceased was entitled to received or was receiving, is paid to widow/widower.
- 5% - If there is no eligible orphan
- 75% - If there are no eligible survivors
An orphan pension equal to 50% of the disability or old-age pension the deceased was entitled to or received is divided equally among the individual’s eligible children.
- 5% - if the widow is the only eligible survivor
- 100% - to a full orphan
- 5% - If there is no widow, but there are other survivors
Other Eligible Survivors
A lump sum equal to 12.5% of the old-age or disability pension the deceased was entitled to or received is divided equally among dependent brothers, sisters, and parents.
- 5% - If there is no eligible orphan
- 5% - if there are no other eligible survivors
The minimum pension equal to 44% of the deceased’s average monthly wages in the last year of contribution or 200 dinars each month, whichever is greater. The minimum pension amount for each surviving family member is 35 dinars per month.
A lump sum equivalent to 15 times the monthly pension is paid.
A lump sum equal to 15% of the deceased’s average monthly wages in the previous 2 years multiplied by 12 times the number of contribution years including 5% interest from the date of death until the settlement is paid.
A lump sum equal to 6 months of the deceased’s average monthly wages in the last year of contribution, or the disability or old-age pension the deceased was entitled to receive or was receiving, is paid.
A lump sum equal to 3 months of the deceased’s average monthly wages in the last year of contribution, or the disability or old-age pension the deceased was entitled to receive or was receiving, is paid.
The minimum funeral grant of 500 dinars is paid.
Benefit Adjustment: Benefits are hiked by 3% every January.
Maternity Benefit (Employer Liability)
Maternity benefit equal to 100% of an employee’s wages is provided for 60 days. Subsequently, the employee can take 15 days’ unpaid maternity leave.
Sickness Benefit (Employer Liability)
Sickness benefit equal to 100% of employees’ wages is provided for the first 15 days; 50% from the 16th to the 35th day.
- 50% from the 16th to the 35th day
After that, an employee can take 20 days’ unpaid sick leave.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Bahrain and hire their employees without having to establish a branch office or subsidiary in Bahrain.
- Your candidate is hired via our Bahrain PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Bahrain laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
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With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.