In a recent global study, the Kingdom of Bahrain was named the most attractive location for ex-pats. Job seekers come here from all over because it offers a variety of work opportunities, modern healthcare facilities, and incredible tourist attractions.
Bahrain has a GDP of $42 billion, and the company has been on a growth trajectory ever since. Oil has always been a contributing sector, but the nation performs exceptionally well in other sectors. In 2018, Bahrain had a literacy rate of 97.46%. Like any other nation, Bahrain also enforces a labor law code that defines how individuals must be employed and treated in the workplace. Employees, employers, and workers’ committees have legal rights, obligations, and limits under the Bahrain labor law. All parties engaged should adhere to the labor code of Bahrain.
Hence, business owners looking to hire local talent in Bahrain must understand Bahrain’s employment law before hiring and onboarding people for their Bahrain subsidiary.
Who is Covered by the Employment Act in Bahrain?
The employment act protects all employees regardless of whether they are full-time employees, part-time employees, or expatriates.
Per the labor act rules in Bahrain, an employee is defined as an individual working under an employment contract with an employer for a fixed salary. Indefinite employees, independent contractors, and dependent contractors are a few employee categories in Bahrain. An employee’s job role and relationship with the employer determines their worker status.
Under the Bahrain labor law, all employees must follow the common statutes and enjoy company-specific rights, including minimum wage, overtime compensation, paid vacation, sick leaves, and other benefits. While independent contractors are not eligible for these benefits, salaried employees are.
All the registered companies in Bahrain fall under the purview of the Bahrain labor code. Hence, employers must strictly adhere to the country’s hiring practices and treat all employees equally without discrimination.
An employment contract is between an employer and an employee in which the latter performs certain activities in exchange for a fixed salary.
The new Bahrain labor law issued by the King in 2012 governs labor contracts. The work contract is binding on both employers and employees. Since foreign employees are new to the country’s work culture, employers must ensure their ex-pat employees understand their rights, terms, and circumstances under their employment contracts. Expats require an employment contract from their Bahrainian employer while applying for a work visa, residence permit, and other paperwork.
A few key tenets of Bahrain’s labor law are:
Language and format
- Employers must draft all employment contracts in Arabic. One copy of the employment contract should be with each party, i.e., the employer and the employee.
- If the contract is drafted in a foreign language, it must be translated into Arabic, and a copy of the Arabic offer letter must also be attached.
- If any by-laws are mentioned in these contracts, they must be thoroughly read and signed by both parties involved.
Under the Bahrain employment law, the labor contract of an employee must include the following information:
- The company’s name, address, and registration number (obtained after the company’s incorporation)
- The employee’s name, birth date, nationality, educational qualification, residence address, the designation for which the person is employed, etc., for ID verification
- Nature of employment and the duration (in case of fixed contracts)
- Date and mode of payment and other additional benefits provided by the employer
- Salary structure and compensation amount must be mentioned in Bahraini Dinar
An employer can keep an employee on probation for three months if stated in the labor contract. However, the Ministry of Labor can extend the probation period to six months.
The probationary period only applies to an employee if explicitly specified in the contract. During the probationary phase, the employer or employee may cancel the employment contract. In either situation, the party in question must notify the other party one day before the termination date.
- An employer should not hire a probationary employee more than once.
The employment contract mentions the working conditions employers must maintain for all employees. Some of these provisions are:
- The employers must fulfill all the conditions stated in the employment contract.
- The employer should not ask the employee to work on something beyond the contract’s purview unless urgently needed (force majeure).
- The employer may assign a task not agreed upon per an employee’s contract, provided it is not starkly different from the employee’s original work.
- The employer must also train employees to accomplish tasks beyond their job description’s purview to help them deliver the targets without any bottlenecks.
Key Provisions of the Act
Bahrain labor law guarantees various benefits to employees and administers the working conditions. These benefits include working hours, overtime pay, maternity leaves, and other holidays.
The fundamental aspects of Bahrain’s labor law include:
Unlike many countries, Bahrain does not have a pre-decided minimum wage rate for employees. However, the public sector companies have set a minimum pay of 300 BHD for all their employees.
About 25% of employees working in Bahrain have a salary of less than 781 BHD per month, and the remaining 75% earn more than 781 BHD. Also, the gross pay in Bahrain is almost equal to the net income (minus the mandatory social security deductions) since there are no personal taxes in the country.
Except for firms (local and foreign) that engage in the oil and gas sector or receive revenues from the extraction or refinement of fossil fuels (classified as hydrocarbons) in Bahrain, there are no taxes on income, sales, or capital gains and estates in Bahrain.
A company can end an employee’s work contract with or without cause by providing the employee at least one month’s notice. During the notice period, the employee can either pay the salary for the month or choose to pay it out when the final settlement of all the payments are done.
For dismissal without cause, employers must pay an employee the due compensation. However, the compensation amount depends on factors such as the employment term (fixed-term or indeterminate term).
Although the statutory notice time is one month, if the employment contract mentions a more extended notice period, both parties (the employer and employee) are obligated to follow that notice period.
The employees of Bahrain can avail of sick leaves under the Bahrain labor law. However, the employees might have to prove their sickness with a medical certificate issued by Government Medical Centres.
Generally, employees get 55 sick leaves annually. It includes 15 full-pay leaves, 20 half-pay leaves, and 20 unpaid sick leaves. For example, if an employee is ill, they will get fully paid sick leaves for the first 15 days. For the next 20 days, they are paid half the daily salary, and if the employee decides to take any sick leaves beyond the 20 days, those are counted as unpaid.
Holidays and other leaves
All employees in Bahrain are entitled to statutory leaves and holidays.
Official public holidays: Employees get eight mandated official public holidays:
- New Years Day
- Labor Day
- Eid Al Fitr
- Eid Al-Adha
- Hijri New Year
- Prophet’s Birthday
- National Day
Employees are given a 3-day holiday for Eid El-Fitr and Eid Al-Adha.
If Friday or a public holiday falls on the same day as a statutory annual leave, the employee shall be granted a rest another day.
Vacation days: After one year of service, employees are usually entitled to 30 days of paid annual leave. All employees are eligible for accrued vacation during their first year of employment, accruing at two and a half days per month.
Employees must take six vacation days in a row. For ex-pats, employers usually pay for their flight home for vacation.
Employees who provide a copy of their marriage certificate are also entitled to three days of paid leave for marriage. Muslim employees are entitled to 14 days of paid leave for a pilgrimage to Mecca once during their employment if their tenure at the company is at least five years.
Maternity leave: Women can enjoy a 75-day maternity leave. They are paid for the first 60 days of their maternity leave and 15 days of unpaid leave. According to Bahrain’s paid maternity leave policy, women are not supposed to work for the next 40 days after delivering their baby.
Per Bahrain working hours law, the workweek is typically 40 – 48 hours long, with eight hours per day, with Muslim workers’ daily hours limited to six hours during Ramadan.
Weekends are Friday and Saturday; the workweek is Sunday through Thursday. The 48 hours does not include the lunch break those employees take to have their meals.
During Ramadan, the hours get lowered to 36 hours per week, implying that the employees should not work more than 6 hours a day. They are also entitled to breaks while working during the month of Ramadan.
If the circumstances of the job warrant it, the employer may hire the employee for extended hours beyond usual working hours. Overtime must not exceed 2 hours per day.
For each additional working hour, the employee is entitled to compensation equal to his expected salary plus at least 25% for hours worked during the day and at least 50% for hours worked at night, according to Article 54.
Moreover, if the job demands, an employer may ask employees to work on their weekly rest day. The employee is entitled to a wage equal to his regular salary + 50% for hours worked on a day of leave or another day of rest.
Unless an employee gives written approval, the employer cannot ask them to work on the weekly rest day more than twice in succession.
According to Article 36 of Bahrain’s labor law, anyone who violates any of the provisions of the Penal Code or any other law shall face a penalty of imprisonment between three months to one year. They may also be fined BD1000 to BD 2000.
For a repeat, one will get a sentence of imprisonment of not less than six months and not more than two years and a fine of not less than BD 2000 and not more than BD 4000.
Expats who violate the provisions of Article (23), paragraph (a) may be fined not more than one hundred Bahraini Dinars. In case of conviction, the Bahraini court may expel the ex-pat from the country, barring them from permanently or temporarily entering Bahrain for at least three years.
Compliance Strategies for Employers
Employers must stay informed about the numerous guidelines established by HR to comply with Bahrain’s Federal Labor Regulations and employment legislation. Managerial training can help a company’s staff stay updated with Bahrain’s labor legislation and regulations. Employers must also incorporate industry-standard HR practices to avoid and mitigate legal employment issues.
How Can Multiplier Help?
Setting up a team of experts to understand and explain local labor regulations will help firms comply with all standards since Bahrain has strict labor laws. Establishing standard employment contracts is an excellent strategy for protecting the firm and its employees.
In only a few clicks, Multiplier can help automate employment contract generation. Our professionals are well-versed in Bahrain labor law, so rest assured your Bahrainian subsidiary will always stay compliant with the country’s labor laws.