Bahrain’s private-sector employment rules are in the Labour Law for the Private Sector, Law No. 36 of 2012. Since 1 March 2024, under Resolution No. 109 of 2023, the end-of-service benefit for non-Bahraini workers is collected and paid through the Social Insurance Organization (SIO). One law firm reports that the resolution has since been amended; we could not find the details. This guide gives estimates for information, not legal advice.
Who the law covers
The leaving indemnity in Article 116 applies to workers not covered by the Social Insurance pension law, which in practice means mainly expatriates. Bahraini and other GCC workers are covered by social insurance instead. Sources differ on exactly which nationalities fall under the SIO system.
Leaving indemnity (end-of-service gratuity)
- Wage used (Article 47): your most recent basic wage plus the social allowance, if any. For commission or piece-rate pay, the average of the last three months.
- Formula (Article 116): half a month’s wage for each of the first three years, then one month’s wage for each year after that.
- Part years: paid pro rata; the law says so expressly.
- Minimum service: none in the law. Some websites claim a one-year minimum; Article 116 does not contain one.
- Cap: none.
| Years of service | Indemnity per year |
|---|---|
| Years 1–3 | Half a month’s wage |
| Each year after 3 | One month’s wage |
Resignation and dismissal
There is no reduction for resignation. Dismissal without notice under Article 107 removes your right to notice and compensation, but not the leaving indemnity; the forfeiture rule in the old 1976 law was dropped. Some sites still say otherwise.
The SIO system since 1 March 2024
For non-Bahraini workers, employers now pay monthly contributions to the SIO: 4.2% of the monthly wage for the first three years of service and 8.4% after that (workers who already had more than three years moved straight to 8.4%). When you leave, you claim the benefit from the SIO.
The employer still pays directly for service up to 29 February 2024, under the Labour Law formula above. If you joined before March 2024, your end-of-service money comes from two sources. The SIO uses the wage registered with it, so make sure your registered wage is correct.
Separately, if you are dismissed unfairly, Article 111 gives compensation of two days’ wage per month of service, at least one month and at most twelve months.
Annual leave
Article 58 gives at least 30 days of paid annual leave after a year of service, which is 2.5 days per month. Less than a full year earns leave pro rata. Value your leave with the Bahrain leave salary calculator.
Overtime
- regular daytime overtime: wage + at least 25% (Article 54);
- night overtime: + at least 50%;
- work on the weekly rest day: the day’s wage + 150%, or a day off in lieu (Article 57).
Try the Bahrain overtime calculator.
Notice period
Article 99 requires 30 days’ notice from either party. Only the employer’s notice may be agreed to be longer.
Worked example
An employee earns BHD 500 a month (basic plus social allowance) and leaves after exactly 7 years.
- Years 1–3: 3 × half a month = 1.5 months = BHD 750
- Years 4–7: 4 × one month = 4 months = BHD 2,000
- Total indemnity: BHD 2,750
For a non-Bahraini worker, the part of this earned from 1 March 2024 is paid through the SIO and the part earned before that by the employer. Our Bahrain gratuity calculator shows the total under Article 116.
Common mistakes
- Assuming a one-year minimum. Article 116 pays fractions of a year.
- Thinking summary dismissal forfeits the indemnity. Under the 2012 law it does not.
- Expecting the employer to pay everything. Since March 2024, the SIO pays for later service for non-Bahrainis.
- Leaving out the social allowance. It is part of the wage used.