Payroll and Benefits Guide Bahrain
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
| 16% (reduced to 3% for expatriate workers) | Social Insurance (GOSI), includes coverage towards medical, retirement and disability. |
| 4.2% (increasing to 8.4% from year 4 of service) | End of Service Gratuity (EOSG). |
| Cost varies depending on number of workers and industry. | Nationalization Fee, only charged on employers when hiring expatriate workers. |
| BHD 10.00 | Labor Market Regulatory Authority (LMRA) for the issuing of work permits, only charged for expatriate workers. |
| 20.2% | Total Employment Cost |
| Employee Payroll Contributions | |
| 8% Local workers/1% Expat workers | Social Insurance (GOSI), includes coverage towards medical, retirement and disability. |
| 8% | Total Employee Cost |
| Employee Income Tax | |
| There is no individual income tax in Bahrain |
Employer taxes
Employee taxes
Minimum Wage
General
There is no minimum wage in Bahrain.
Payroll
Payroll Cycle
Salaried employees are paid at least once a month, generally at the end of the month.
13th Salary
There is no requirement for a 13th salary payment in Bahrain.
Working Hours
General
The working week in Bahrain tends to vary between 40 and 48 hours depending on company policy. In the month of Ramadan, the working day is reduced to six hours and legally this should apply to all staff, but many companies only apply it to Muslims who fast during daylight hours.
Friday is the Muslim rest day, but some companies with a five-day workweek give off either Thursday or Saturday. Saturday is often the most popular choice for international companies as taking Thursday off would mean a reduction in the number of operational days in common with much of the rest of the world. Conversely, other companies insist on Thursday, as the school ‘weekend’ is Thursday and Friday.
Workers are not to be present at the workplace for more than 11 hours per day. This includes working hours plus rest breaks.
Private sector companies can decide whether or not to grant time off during public holidays. If employees work, they have the choice of having another day off in lieu or receiving a payment of 150% salary in addition to their regular salary.
If a public holiday falls on a weekend (i.e. Friday or Saturday) an employer is obliged to provide employees with a day off in lieu.
Overtime
- Maximum Ordinary Hours (Article 51): The standard work limit is 8 hours per day or 48 hours per week.
- Ramadan Reduction: For Muslim employees during the holy month of Ramadan, the maximum working hours are reduced to 6 hours per day or 36 hours per week.
- Daily Maximum Overtime: Overtime work generally cannot exceed 2 hours per day, unless deemed urgent by business conditions.
- Exemptions: Employees in senior managerial or supervisory roles who have the authority to make decisions on behalf of the organization are typically exempt from the overtime provisions.
- Waiver: The right to receive statutory overtime pay is mandated by law and cannot be waived by the employee.
Mandatory Overtime Pay Rates (Article 54, 57)
Overtime compensation is mandatory and is calculated as a minimum premium percentage of the employee’s regular hourly wage.
| Day/Condition | Minimum Compensation Rate (Statutory) | Total Pay Rate | Notes |
| Daytime Overtime (Working Days) | +25% of the regular hourly wage. | 125% | Applies to hours worked beyond 8/day or 48/week (or 6/day or 36/week in Ramadan). |
| Nighttime Overtime (7:00 PM to 7:00 AM) | +50% of the regular hourly wage. | 150% | This premium applies if overtime is performed during the designated night period. |
| Weekly Rest Day (Typically Friday) | +50% of the regular hourly wage. | 150% | Applies to all hours worked on the designated rest day. |
| Public Holiday Work | +50% of the regular hourly wage. | 150% | Applies to all hours worked on an official public holiday. |
Note on Rest Day/Holiday Work:
When an employee works on their weekly rest day or a public holiday, the employer has a choice:
- Pay the employee the 150% premium for the hours worked.
- Grant the employee an additional rest day instead of the premium payment (with employee consent).
Leave
Annual Leave (vacation)
An employee with at least one year of service is entitled to paid annual leave at the regular salary of no less than 30 working paid days at the rate of 2.5 days for each month.
Under the labor law, an employee cannot lose his/her annual leave entitlement as this is a statutory benefit. Accrued but untaken leave must either be carried forward to the next leave year or paid out every two years or upon the termination of employment.
Paid Time off
Under Bahrain’s Labour Law (Law No. 36 of 2012), employees accrue paid annual leave (typically 30 days after one year of service) and unused annual leave can be carried over into the next period by agreement between the employer and employee. There is no legal basis for a blanket “use-it-or-lose-it” policy that cancels accrued statutory annual leave just because a year ends. However, the law suggests that leave balances should ideally be settled within two years (either by taking the leave or by payment on termination), and employers must compensate employees for unused accrued leave if the employment ends.
Sick Days
Workers are entitled to sick leave after completing three continuous months of service with their employer. Sick leave must be certified by a government health center or a clinic recognized by the employer.
Workers can take up to 55 days of sick leave per year, paid as follows:
- The first 15 days of sick paid at full pay
- The subsequent 20 days of sick paid at half pay
- The next 20 days of sick unpaid
Sick leave on full or half pay can be accumulated for a period not exceeding 240 days. If there is any disagreement regarding the duration of medical treatment, the Medical Commission specified in the labor law will determine the appropriate duration.
Workers can use their annual leave balance in addition to the sick leaves they are entitled to.
Public Holidays
The local government decides each year if holidays falling on the weekend are lost or moved to a working day in lieu.
The religious holidays are determined by the lunar cycle and will be confirmed nearer the date of the holiday.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 20 March 2026 | Friday | Eid al-Fitr (End of Ramadan) | Standard holiday |
| 21 March 2026 | Saturday | Eid al-Fitr Holiday | Standard holiday |
| 22 March 2026 | Sunday | Eid al-Fitr Holiday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 26 May 2026 | Tuesday | Arafat Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid al-Adha (Feast of Sacrifice) | Standard holiday |
| 28 May 2026 | Thursday | Eid al-Adha Holiday | Standard holiday |
| 29 May 2026 | Friday | Eid al-Adha Holiday | Standard holiday |
| 17 June 2026 | Wednesday | Hijri New Year (Islamic New Year) | Standard holiday |
| 26 June 2026 | Friday | Ashura | Standard holiday |
| 27 June 2026 | Saturday | Ashura Holiday | Standard holiday |
| 26 August 2026 | Wednesday | Prophet Muhammad’s Birthday (Mawlid) | Standard holiday |
| 16 December 2026 | Wednesday | National Day | Standard holiday |
| 17 December 2026 | Thursday | National Day Holiday | Standard holiday |
Maternity Leave
Pregnant employees receive 75 days of maternity leave. The first 60 days are fully paid and the last 15 days are unpaid.
On her return, the employee will be entitled to an additional two hours each day for nursing until the child reaches six months of age. Then, women receive two breastfeeding periods of no less than 1 hour each.
Paternity Leave
Paternity leave entitlement is up to 5 days after the birth, but generally companies offer 1 day of paid paternity leave.
Parental Leave
Only maternity and paternity leave entitlements are available in Bahrain.
Other Leave
Pilgrimage leave: a Muslim employee with 5 years of consecutive service in employment is entitled to a leave of 14 working days with full pay to perform Hajj once during the period of service provided that the employee has not availed of this leave in any previous employment.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
To terminate an employee, an employer must have sufficient grounds for the termination as well as provide a notice period. Reasons for termination often occur:
- during the probationary period
- on the expiry of a fixed-term contract
- dismissal with notice provided it is for a valid reason
- failure to improve performance after reasonable opportunity (i.e., 60 days)
- resignation, incapacity or death, redundancy, retirement (age 60)
- dismissal by reason of any of the grounds listed in Article 107 of the Labor Law
Should an office need to close, this must be reported to the Ministry of Labor and Social Development. Bahrain nationals are generally entitled to higher protection from dismissal in such circumstances and may accordingly be awarded higher compensation payments by the authorities.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| The law does not specify a single fixed date each month. Payment frequency must be at intervals agreed in the contract; common practice is monthly for salaried staff. | On termination, the employer must pay all wages due, unused leave, and statutory end-of-service benefits (gratuity). For example, gratuity is calculated as 15 days’ wages for each of the first 3 years, then one month’s wage for each subsequent year. | Salaries must be paid through the Wages Protection System (WPS), which uses bank or authorized financial institution transfers. Employers must submit wage details including employee bank account numbers. |
Notice Period
Either the employer or employee may terminate the contract following the official notification at least 30 days before the date of the termination. The labor contract remains in force during the notice period and its parties shall execute all the obligations arising from it.
If notice is not given, payment in lieu must be made. During the probation period the notice period is one day.
Severance Pay
Unless terminated under Article 107 of the Labor Law, employees may be entitled to salary and benefits up to the termination date, notice (or payment in lieu), payment in lieu of accrued but untaken annual leave, 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 based on the length of service generally calculated at:
- Up to three years’ service at 50% of the regular monthly salary for each year of service
- More than three years’ service at 100% of regular monthly salary for each year of service after three years
The calculation is pro-rated for any fractions of a year of service that have not been completed. The calculations above are for the period before March 2024.
Since March 2024, Indemnity for EOSG is now paid per month, in the following rates:
In the first 3 years of service, the rate is 4.2% of the worker’s monthly salary, on a monthly basis.
After 3 years of service, the rate is 8.4% of the worker’s monthly salary, on monthly basis.
Probation Period
Three months of probation period is common practice, however, this can be increased up to a maximum of six months in respect of certain occupations. During the probation period, one day notice is required.
Setting Up a Business
Setting up a legal entity
The process of registering an entity in Bahrain can vary depending on the type of entity you wish to establish. However, here are the general steps involved in registering a business entity in Bahrain:
Decide on the type of entity. The first step is to determine the type of business entity you want to establish in Bahrain. The options available include sole proprietorships, partnerships, limited liability companies, and joint ventures.
Choose a business name. Once you have decided on the type of entity, you need to choose a name for your business. Make sure the name you choose is not already taken and complies with Bahrain’s naming conventions.
Reserve the business name. Once you have chosen a name, you need to reserve it with the Ministry of Industry, Commerce and Tourism.
Prepare the necessary documents. The next step is to prepare the necessary documents for registration. This includes the memorandum and articles of association, certificate of incorporation, and other required documentation.
Submit the application. Once the necessary documents are prepared, you can submit your application for registration to the Ministry of Industry, Commerce and Tourism. You will need to pay the applicable fees at this stage.
Obtain the necessary approvals. Your application will be reviewed by the relevant authorities, and you may need to obtain additional approvals or permits depending on the nature of your business.
Register for taxes. Once you have obtained all the necessary approvals, you need to register for taxes with the National Bureau for Revenue.
Obtain a commercial registration certificate. Finally, you will receive a commercial registration certificate from the Ministry of Industry, Commerce and Tourism, which officially registers your business entity in Bahrain.
It is worth noting that the specific requirements and procedures for registering a business entity in Bahrain may vary depending on the nature of your business and other factors. Therefore, it is advisable to seek professional guidance to ensure that you comply with all relevant laws and regulations.
Registration as an employer
Registration as an employer is done with the LMRA. All contracts between the employer and employee must be registered with the LMRA in order to obtain the employee’s work permit and residence visa. Under the Labor Law, the contract should be in Arabic, but in practice, where contracts are drafted in another language, an Arabic-translated version may be attached to fulfill this requirement. Employees should be provided with any relevant staff handbook and the employer’s policies, if applicable, upon commencement of employment. Labor Law specifies that company policies and internal regulations must be openly accessible to employees.
Employers must also register their employees in the Kingdom of Bahrain with the Ministry of Labor and Social Affairs, and receive a certificate of registration.
New employee registration
The employer must register its employees with the Social Insurance Organization (SIO) and contributions must be paid monthly for compulsory insurances against old age, disability, and death (for Bahraini employees only), and against work-related injuries including death (for all employees).
All foreign and local staff are required to be registered with the Social Insurance Organization (SIO). The documents required for registration are: copy of employer’s Central Population Registry (CPR), copy of the Certificate of Registration (CR), and a copy of the company contract.
Usually, all registrations related to the SIO and employment contracts are made online, but it is necessary to be physically present to get a username and a password (admin access). All other tasks can be done online from the admin account. After completing the first step, the proceeding formalities can be carried out online (i.e., registering local employees, expats are registered at the LMRA and not the SIO, annual update of salaries, payment of health insurance, payment of monthly social insurance or contributions). Social insurance must be paid in local currency. There is no charge to register employees in the database.
When an employee is hired, the employer must register with the Pension Authority. This is generally managed by the legal firm and/or representative that are responsible for the legal registration of the company. Each legal entity has guidelines stating the deadlines for registrations.
Immigration
In order to live and work in Bahrain, all foreigners must have an employment residency visa issued by the immigration authorities together with a work permit from the Labor Market Regulatory Authority (“LMRA”). Gulf Cooperation Council nationals do not require residency visas but must be registered with the LMRA for work permit purposes.
An employer or Bahraini national needs to sponsor anyone looking to obtain a Bahrain working visa. The number of visas each company can sponsor depends on the size of the company and foreign quotas as stated by national regulations.
The employer will need to manage the application process on behalf of the employee and must provide evidence of requirement including: a letter of employment, commercial registration number, the employee’s capacity, the contract duration, completed visa application form, the employee’s passport, and health record from an authorized clinic.
If the employee is in Bahrain at the time of application (on an arrival or business visa), the employment contract must be signed by both parties and stamped by the employer/sponsor. In cases where the employee is outside of Bahrain, there is a requirement for a medical report to be sent over from an LMRA-approved health center in the employee’s home country in addition to the employment contract. A work permit is valid for one to two years.
Effective from 17 February 2023, ‘flexi work permits’ are to be canceled and replaced with professional permits. Employers may no longer engage individuals holding flexi work permits and any such individuals must alternatively register themselves with the new professional permits/labor registration program.
Employers should be diligent in ensuring that they do not engage any individuals holding flexi work permits and ensure that any such individuals who are under their employ have registered onto the new professional permits/labor registration program as applicable.
In those countries where people are prohibited from entering the Kingdom of Bahrain, the LMRA regulates and controls work permits.
VAT
The standard rate of VAT in Bahrain is 10%.
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Payroll and Benefits Guide
in Bahrain
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 20 March 2026 | Friday | Eid al-Fitr (End of Ramadan) | Standard holiday |
| 21 March 2026 | Saturday | Eid al-Fitr Holiday | Standard holiday |
| 22 March 2026 | Sunday | Eid al-Fitr Holiday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 26 May 2026 | Tuesday | Arafat Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid al-Adha (Feast of Sacrifice) | Standard holiday |
| 28 May 2026 | Thursday | Eid al-Adha Holiday | Standard holiday |
| 29 May 2026 | Friday | Eid al-Adha Holiday | Standard holiday |
| 17 June 2026 | Wednesday | Hijri New Year (Islamic New Year) | Standard holiday |
| 26 June 2026 | Friday | Ashura | Standard holiday |
| 27 June 2026 | Saturday | Ashura Holiday | Standard holiday |
| 26 August 2026 | Wednesday | Prophet Muhammad’s Birthday (Mawlid) | Standard holiday |
| 16 December 2026 | Wednesday | National Day | Standard holiday |
| 17 December 2026 | Thursday | National Day Holiday | Standard holiday |
How many days can employee miss without permission?
During a year, if an employee misses fifteen days of work continuously or thirty days in total, they are considered to have resigned.
my husband passed away last week his 68years pls egyptian nationality his paying monthly for social insurance amount of BHD 22,i can get his insurance?i dont have idea how many years his paying,can you please help me,what i will do?
Hello, this is not something we can advise on; we recommend reaching out to a local lawyer to understand your rights.
Hi, i need a clarification on the below,
Is there any conditions if the employee is staying or completing 10 years in same company, Like in Saudi there is a law if employee is staying in same company for more than 10 years there is a payment like Bonus of their 6 months salary.
Do the above scheme is available in bahrain.
There is no specific legal requirement or provision to give long service awards for employees who have worked for more than 10 years in the same company. However, Bahrain’s labor law does provide certain rights and benefits for employees, but these are typically related to termination or severance pay rather than a specific bonus for long-term service.