Bahrain leaving indemnity calculation: what your employer pays and what SIO pays

Bahrain’s leaving indemnity is half a month’s wage for each of your first three years and one month’s wage for each year after, with part years paid pro rata. What changed in 2024 is who pays: for many non-Bahraini private-sector workers, service from 1 March 2024 is funded through the Social Insurance Organization (SIO), while your employer still owes the indemnity for service up to 29 February 2024. The Bahrain gratuity calculator works out the full statutory amount from your dates.

What changed on 1 March 2024

Under Resolution No. 109 of 2023, Bahrain moved the end-of-service benefit for non-Bahraini private-sector workers from a lump sum paid by the employer to a contribution system run by the SIO.

The resolution has reportedly been amended since, and sources differ on exactly which workers are covered (non-GCC expatriates only, or a wider group). Domestic workers and Bahrainis covered by the pension scheme sit outside it. If you are unsure, confirm your status with the SIO before you rely on any estimate. Our 2026 roundup of Gulf end-of-service changes places this alongside the other countries’ reforms.

The statutory formula

Whoever pays, the amount follows the Labour Law formula:

• Wage used: your last basic wage plus social allowance. Housing and transport allowances are not included. See basic or total salary for the Gulf-wide picture.
• Part years: paid pro rata, so 4 years and 6 months counts as 4.5 years.
• Resignation: no reduction. Bahrain pays the same indemnity whether you resign, are terminated or your fixed-term contract ends. Summary dismissal under Article 107 removes notice and compensation, but not the leaving indemnity.
• No cap is set for this benefit, and no minimum service period.

Table: leaving indemnity by years of service

Figures use a wage of BHD 800 (basic plus social allowance), computed with the engine behind our calculator.

The figures are the same whether you resign or are terminated.

Service before March 2024: paid by your employer

The indemnity for every year you worked up to 29 February 2024 remains your employer’s liability. It is paid directly by the employer when your contract ends, as part of your final settlement, alongside your last salary and unused leave.

If you joined before 2024, your employer’s part therefore covers your early years, including the lower-rate first three years if they fell before March 2024.

Service from March 2024: funded through SIO

For covered workers, the employer no longer accumulates a lump sum for service after 1 March 2024. Instead, it pays a monthly contribution to the SIO, and the SIO pays that part of your benefit when you leave.

Law-firm and adviser summaries report contribution rates of 4.2% of wage for the first three years and 8.4% after, which mirror the statutory formula (half a month and one month a year are roughly 4.2% and 8.3% of annual wage). These rates come from adviser publications rather than the SIO directly, so treat them as indicative.

We could not confirm from an official source exactly how the SIO calculates the payout, for example whether it is the statutory formula or the contributions paid in. That is why we do not split the total in our calculator. The statutory amount is what you are owed in total; the question is only which part comes from whom.

Estimating your total: worked example

Ahmed joined a Manama company on 1 March 2021 and leaves on 28 February 2026, five years in total, on BHD 800.

Step 1: the full statutory indemnity. Five years on BHD 800:

• Years 1–3: 3 × 400 = BHD 1,200
• Years 4–5: 2 × 800 = BHD 1,600
• Total: BHD 2,800

Step 2: the split. Ahmed served three years before 1 March 2024 (March 2021 to February 2024) and two years after.

• Employer, directly: three years at half a month = BHD 1,200
• SIO: the remaining service, from March 2024 onward

If the two parts add up to the statutory total, the SIO part is the remaining BHD 1,600. Because we could not confirm how the SIO counts years and contributions, its figure could differ. Ask the SIO for your account statement before you leave so you can compare.

How to claim from SIO when you leave

We could not verify the SIO’s step-by-step claim procedure from an official source, so check sio.gov.bh for the current process. Practical steps that apply either way:

1. Before your last day, confirm with HR that your SIO registration and contributions are up to date for every month since March 2024.
2. Get a written final settlement from your employer that shows the indemnity for service before March 2024 separately.
3. Keep copies of your contract, CPR and last payslips. You will need them for any claim or complaint.
4. Settle open questions before you fly. If anything is unclear, raise it with your employer or the SIO while you are still in Bahrain.

Bahrain’s statutory notice is 30 days for either party (Article 99). Our final settlement checklist covers every other item to check, and the Bahrain labour law guide explains leave, overtime and notice. The official English text of the Labour Law is published by the Legislation and Legal Opinion Commission: Law No. 36 of 2012.

Common questions about the split

Do I get less because of the change? The new system changes who pays, not the statutory formula. The amount you are owed in total is still half a month’s wage for each of the first three years and one month for each year after. If the SIO’s figure and your employer’s figure together come to less than that, ask both for their calculation.

Does the clock restart in March 2024? Your length of service is continuous; the change does not make you a new employee. Your employer’s direct share covers the years before March 2024, and the SIO’s contributions cover the months after.

What if my employer did not register me? Contributions are the employer’s obligation. If your SIO record shows gaps, raise it with HR first and then with the SIO, ideally before your last day.

What if I joined after March 2024? Then all of your service falls under the new system, and your employer pays no lump sum for it. Your final settlement from the employer will still include your last salary, unused leave and any notice pay.

Does resignation affect the SIO part? Bahrain’s Labour Law does not reduce indemnity on resignation, and we found nothing suggesting the SIO system does. Confirm with the SIO if your contract ends early.

Use the calculator

Enter your basic wage plus social allowance, your start date and your last working day in the Bahrain gratuity calculator. It gives the full statutory indemnity with a line-by-line breakdown. If you joined before March 2024, run it a second time with 29 February 2024 as the end date to see your employer’s direct share.

Frequently asked questions