Employer of Record in Bahrain

Hiring in Bahrain for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success. Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Bahrain in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Bahrain.
• Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Bahrain’s labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Businesses can only operate smoothly in Bahrain if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Bahrain below, to avoid any compliance issues.

Employment Contract Requirements

When recruiting in Bahrain, employers must provide two copies of the contract in Arabic, allocating one for the employer and another for the employee. If the contract is in a language other than Arabic, a translated copy must also be included. The contract should include details such as:

• Identification of both parties
• Job responsibilities and duties
• Location of job
• Employee's compensation and other benefits

Onboarding Process

We can help you get a new employee started in Bahrain quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Bahrain

In Bahrain, the standard workweek is 40 to 48 hours. During Ramadan, working hours reduce to six per day. Fridays are typically the Muslim rest day, but some businesses may opt for Thursday or Saturday off based on global operations or local school weekends.

Overtime in Bahrain

In Bahrain, workers can do overtime up to two hours per day, with compensation of at least 25% extra for daytime hours and 50% for nighttime hours. Overtime pay is separate from the annual salary specified in the contract, and senior managers are not eligible for it.

Probation Period in Bahrain

In Bahrain, a customary probation period of three months is typically observed, though some roles may extend to six months. Termination during this period requires a one-week notice.

Fiscal Year in Bahrain

January 1st - December 31st is the 12-month accounting period that businesses in Bahrain use for financial and tax reporting purposes.

Payroll Cycle in Bahrain

The payroll cycle in Bahrain is usually Monthly, with employees being paid by the end of the month.

Minimum Wage in Bahrain

Bonus Payments in Bahrain

There's no legal obligation to provide a 13th or 14th-month salary in Bahrain.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 17.00% + Healthcare fee on top of the employee salary in Bahrain.

Employee Payroll Tax Contributions

In Bahrain , the typical estimation for employee payroll contributions cost is around 9%.

Individual Income Tax Contributions

Bahrain does not impose individual income tax.

Pension in Bahrain

Bahrain is reforming its pension and retirement system, including increasing employer contributions, revising pension calculations, and raising the retirement age for women. Other changes involve linking pension increases to the social security fund's financial status and requiring employers to fund end-of-service benefits

Mandatory Leave Entitlement in Bahrain

The annual leave entitlement in Bahrain is 30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Bahrain

Bahrain observes 8 national holidays in a year.

Paid Time Off in Bahrain

Following one year of service, employees commonly receive 30 days of paid annual leave. Typically, employers cover air travel expenses for expatriate employees during their vacations. Muslim employees with a minimum of 5 years of service are entitled to 14 days of paid leave for a pilgrimage to Mecca once during their tenure.

Maternity Leave In Bahrain

Female employees in Bahrain are eligible for 60 days of paid maternity leave, subject to the following terms:

• Employees need to provide a medical certificate from a government health center or an approved clinic, indicating the expected date of confinement.
• Following confinement, employees are restricted from working for a period of 40 days.
• Employees have the option to take an additional 15 days off without pay after childbirth.

Paternity Leave In Bahrain

Fathers are granted one day off with full pay following the birth of their child.

Sick Leave In Bahrain

In Bahrain, after three consecutive months of service, an employee with a certified illness from a government health center or clinic is entitled to annual paid sick leave as follows:

• Up to 15 days of fully paid sick leave
• 20 days of sick leave on half-pay
• More than 20 days of sick leave without pay

Parental Leave In Bahrain

In Bahrain, there are provisions for only maternity and paternity leave.

Termination Process in Bahrain

In Bahrain, terminating an employee requires valid reasons and a notice period, with office closures needing notification to the Ministry of Labor. Bahraini nationals usually receive more protection and higher compensation. Valid reasons for termination include:

• Contract expiration
• Failure to improve after 60 days
• Redundancy
• Resignation

Notice Period in Bahrain

Both the employer and employee can end the contract with a 30-day notice. The contract stays valid during this period, with both parties fulfilling their obligations. If there's no notice, payment instead is necessary. During probation, only a week's notice is required.

Severance in Bahrain

In Bahrain, termination entitles employees to salary and benefits until termination, notice or payment instead, payment for unused leave, reimbursement of unpaid business expenses, and an end-of-service gratuity payment (EOSG). If terminated by the employer, EOSG typically equals 50% of monthly salary for each year up to three years, then 100% thereafter, pro-rated for incomplete years of service.