Definitive Guide to Hiring in Bahrain

Hiring in Bahrain

Hiring employees compliantly in Bahrain means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Bahrain so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Bahrain or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Bahrain

Employee Probation Period

• The maximum term of probation in the Kingdom of Bahrain shall be three months and it must be clearly laid down in the employment contract too.

Annual Leave in Bahrain

• Employees are generally entitled to 30 days of annual paid leave after one year of service.
• During the first year of employment, the employee is entitled to take accrued vacation, which for all employees accrues at a rate of 2 1/2 days per month.
• Six days of the leave must be taken consecutively.
• Employers typically pay for expatriate employees’ air travel home during their vacation.
• Once during employment, Muslim employees are eligible for 14 days of paid leave for a pilgrimage to Mecca, providing they have worked for the employer for at least 5 years.

Holidays in Bahrain

Maternity Leave Bahrain

• Women are generally entitled to 75 days of maternity leave:
• 60 days of paid leave
• 15 days of unpaid leave

Paternity Leave Bahrain

• Employees are entitled to 1 day of paternity leave

Sick Leave in Bahrain

• Generally, employees are entitled to 55 days of sick leave per year:
  • 15 days at full pay
  • 20 days at half pay
  • 20 days without pay

Working Hours in Bahrain

• In Bahrain, the workweek is generally 40 to 48 hours, eight hours per day, with daily hours restricted to six hours per day for Muslim workers during Ramadan.
• Friday and Saturday are the weekend days; the workweek runs Sunday through Thursday.

Overtime in Bahrain

• For each additional hour rendered during the day, the worker is entitled to his hourly wage plus 25% of the said rate.
• Meanwhile for each additional hour rendered during the night, the worker should receive his hourly wage plus 50% of the said rate.

Notice Period in Bahrain

• As per the Bahraini Labor Law, the notice period shall not be less than 30 days.
• However, the employers are bound to follow a longer notice period if it was mentioned in the employee's contract.

Severance in Bahrain

• Unless terminated under Article 107 of the Labor Law, employees are entitled to salary and benefits up to the termination date, notice (or payment in lieu), payment in lieu of accrued but untaken annual leave, the cost of a flight/air ticket to repatriate the employee to their home country unless the employee has obtained alternative sponsorship to remain in Bahrain, 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 which accrues at the rate of half a month's wage for each of the first 3 years of service and 1 month's wage for each of the following years of service.
• The calculation is pro-rated for any fractions of a year of service that have not been completed.

Bahrain Salary and Wages

• The current rate of contributions to the SIO is 19% for local employees (12% employer; 7% employee) and 4% for expatriate employees (3% employer; 1% employee).
• These contributions to the SIO are to be withheld by the employer and remitted to SIO on a monthly basis.
• The Ministry of Health charges an annual health insurance fee of BHD22.5 for each Bahraini employee.
• The fee is paid to the Ministry of Health through the SIO. If the employer already provides medical or health insurance to employees, the health insurance fee need not be paid.
• The employer may approach the Ministry of Health and obtain an exemption letter and present it to the SIO.

Immigration Bahrain

• To work in Bahrain, all expatriates must have a valid work permit.
• To be allotted work visas, an entity that employs expatriates must satisfy the following conditions:
  • It must be established in Bahrain.
  • It must be registered with the Labor Market Regulatory Authority (LMRA).
  • It must have a certain percentage of Bahraini workers (between 5% and 50%, depending on the industry).
• The following documents are normally required to apply for a work visa:
  • Copy of passport (validity of a minimum of six months).
  • Pre-employment medical certificate as per the LMRA guidelines, showing that the employee is fit to work
  • Signed offer letter or contract
  • Copy of diploma or qualifications
  • Copy of marriage certificate (if applicable)
• The LMRA can take up to 10 working days to process the visa application.
• After processing, the LMRA publishes the visa status online.
• Each applicant is allocated an application identification and the visa status can be checked online through the LMRA website.
• Before the employer proceeds with the visa application, it is suggested that the employee inform the future employer as to whether he or she previously worked in Bahrain.
• This ensures that he or she is not given a duplicate personal identification card (Smartcard).
• In addition, the employee should inform the employer as to whether he or she holds a current valid Bahraini visa, such as a multiple re-entry business visa.
• After the employee enters the country, another medical exam needs to be carried out to confirm that the employee is fit to work.
• On completing all the above and providing proof of an address in Bahrain, an expatriate employee can obtain the Smartcard.

Value Added Tax (VAT) in Bahrain

• VAT has been implemented in Bahrain as of 1 January 2019.
• The general VAT rate is 5% and applies to most goods and services, with a number of exceptions where certain goods and services may be subject to a 0% rate or be exempted from VAT.

Mandatory Benefits in Bahrain

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
• Statutory benefits also include social security benefits

Accrued Benefits in Bahrain

Payroll Accrual in Bahrain

Country Accruals Additional Information

Description

The current rate of contributions to the SIO is 19% for local employees (12% employer; 7% employee) and 4% for expatriate employees (3% employer; 1% employee). These contributions to the SIO are to be withheld by the employer and remitted to SIO on a monthly basis.

Payroll Accruals Additional Information

Why use Global Expansion to hire in Bahrain

Establishing a branch office or subsidiary in Bahrain can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Bahrain labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Bahrain law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Bahrain. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Bahrain Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.