Any business operating in Kingdom of Bahrain which employs staff, need to be aware of and abide by the latest labour rules, and of the statutory responsibilities and obligations pertaining to recruitment, employment terms and termination. Even the employees need to be aware of the Labor Law of the place they work in.

The Labour Law for the Private Sector (Law No.36 of 2012, known as New Labour Law), is now effective and replaces the old Labour Law for the Private Sector (No.23 of 1976).

The New Labour Law has introduced several positives into the market, and has worked positively on certain issues such as women’s rights, recognition of domestic staff rights, non-discriminatory practices and speedy resolution of labour disputes, which otherwise took up to five years to resolve through courts.

The New Labour Law is in-line with international standards as it aligns domestic law with majority of Arab and international labour treaties. Aiming to introduce more cost-effective and efficient employment regulations, fewer disputes are expected, and it will be processed through the courts, which will also in-turn reduce the number of frivolous cases.

Recruitment and Registration

The employer should register all expatriates in the Kingdom of Bahrain with Labour Market Regulatory Authority (LMRA) and receive a valid residence permit and work permit. Expatriate employees are prohibited from involving in any work in the Kingdom of Bahrain, and employers are prohibited from employing foreigners without a valid work permit. To work in Bahrain, foreign employees should be medically fit, should have entered the country lawfully, and possess a valid passport, and retain a residence permit and work permit.

During the process of recruitment, an employer should give priority to employment of Bahraini nationals, followed by Arab nationals, if they are available and possess requisite skills and competence for the role. Some businesses require the mandatory minimum ratio of Bahraini nationals to number of non-Bahraini nationals. Employers by law are not allowed to discriminate between Bahraini and non-Bahraini nationals particularly with regard to pay or subject any employee to any other form of detrimental treatment.

Employment Contract

The employment contract should include the terms of employment agreed by the parties, and may be entered into for a fixed term, or for an indefinite duration, which can be terminated on notice, or for execution of a specific project.

The employment contract outlines that the terms and conditions of employment should be in writing. It should comply with the Bahrain Labour Law for Private Sector, and any term or contract that does not abide by the law will be considered null and void, except that it is more favourable to the employee.

The employment contract shall be in writing and will be written in both Arabic and English, and each party will be given a copy. The employment contract will include these essential data of both parties, and in particular, the following details:

Employer’s name, address and trade register number.

Worker’s name, date of birth, qualifications, occupation, residential address, nationality and personal identification documents.

Nature, type and duration of the contract, if for a definite period.

The wage agreed upon, the time and method of payment, and all of the benefits in cash or in kind as agreed upon.

Other data determined by virtue of the Minister’s decision.

Probation

A worker may be employed under a probation period, if expressly specified in the labour contract, provided, the period does not exceed three months. The period of probation may be increased in certain occupations, as determined by virtue of Minister’s decision, but does not exceed six months.

Either party may terminate a labour contract during period of probation, if said party finds that its continuance is not appropriate, provided, the party terminating the contract notifies the other party at least a day before the date of termination.

The employer cannot employ any worker under probation more than once.

Insurance

Employers should register their employees in the Kingdom of Bahrain with Ministry of Labour and Social Affairs, and receive certificate of registration. It should also register its employees with General Organization for Social Insurance (GOSI) and contribution should be paid monthly for compulsory insurance against old age, death and disability, and against work-related injuries including death (for all employees).

Employers can also consider non-compulsory insurances such as private medical or life insurance.

Wages

Wages are considered to be the total remuneration payable in cash or in kind to an employee under an employment contract, and is inclusive of additional increments, gratuity payments and allowances, if any (such as commissions, bonuses, transport allowance, accommodation etc.)

An employer should not exclude specific payments from calculation of wages in the contract, and any such exclusion will be violation of law. However, the employer has the right to decide on inclusion of certain payments such as phone bills, company car costs and rent (if paid directly to the Landlord rather than to the employee) and may be excluded from wages.

There is no national minimum wage and orders are issued from time to time setting up minimum wages in particular industry sectors. Wages may be calculated by the hour, day, week, or month, on a piece-rate or per production. Wages should never be based on country of origin, sex, language, religion or ideology, and such a practice is prohibited.

Wages will be paid in Bahrain currency and an agreement may be concluded for payment in a legal tender currency.

The calculation of compensation to an employee in the event of his or her unfair dismissal or unjustified termination by the employer is clearly mentioned in the New Labour Law, and it offers clear mechanism for calculation of such compensation.

On termination of employment, a worker shall be immediately paid his wages and all amounts due to him. But, if the employee terminates his employment on his/her own accord, the employer is required to pay the worker’s wage and all his entitlements within seven days as of date on which the worker leaves his work.

An employee’s entitlement pertaining to calculation of his leaving indemnity payment should be calculated based on the most recent basic wage and social allowance if any, drawn by the employee.

If the employer shows delay in disbursement of worker’s wage, employer shall pay the employee an annual compensation equivalent to 6 percent of the wage in respect of which, a delay was shown during the six months or less of the date of payment of the wage. This rate will be increased by 1% for each month of delay, after the said period, not exceeding 12% of the wage per year.

If the circumstances so require, an employer can employ the employee for additional hours of work, provided, the employee is given a wage equivalent to his due wage plus 25% for hours worked during the day, and atleast 50% for hours worked at night.

Work hours / leaves

An employee cannot be required to work for more than six days in any given week. Fridays are deemed to be the weekly day of rest on full pay. The employee is also eligible to leave for official public holidays. In case such public holidays occur on a Friday, the employer should compensate the employee with one further day of rest.

The employer may sometimes require the employee to work on public holidays, or on Fridays, subject to provisions of local law. Except for cases specified in the law, a Muslim worker should not be employed during the month of Ramadan for more than six hours a day, or thirty six hours a week.

The Minister may issue a decision regarding increasing minimum work hours for certain category of workers or for certain industries, in case the circumstances and nature of the work so require.

Annual Leave: All employees are eligible for a 30day paid annual leave on completion of at least one year of service, accruing at the rate of two and a half days for every month (earlier annual leave was granted only after five years of service for up to 28 days maximum).

If the period spent in service is less than a year, the worker shall be entitled to leave corresponding to period of his work. But, the new Labour Law states that the worker cannot waive his right to leave and receive monetary compensation in return for the said leave.

Sick Leave: During an illness, an employee is eligible for 15 days of sick leave on full pay, 20 days on half pay and 20 further days without pay. Entitlements to sick leave on full or half pay may be accumulated for up to 240 days (was 182 days earlier) during the employee’s service.

Pilgrimage leave: In case of Muslim employees who are employed in the same company for five consecutive years, they are eligible to leave on two weeks of full pay once during his/her employment to perform his/her ‘Haj’.

Maternity Leave: A female employee is eligible to maternity leave of forty-five days on full pay and this period may be extended by another fifteen days without pay. On returning, the employee will be eligible for an additional hour each day for nursing for a period of two years from the date of having given birth.

Contingency Leave: The New Labour Law has introduced a new provision wherein the employee has the right to take leave on a last minute basis in case of an emergency, calling for their urgent need to remain off duty. Such contingency leave shall not be taken for a period not exceeding six days during the year, with maximum of two days in each case, and this is set off against the employee’s annual leave.

Educational Leave: As An employee is given the right under the new law to schedule his leave in the event that he has to sit for an examination at any educational level, provided, that the notice of the same is given to the employer at least thirty days ahead of the date of taking such leave.

Idda Period: In case of Muslim female worker, she shall be entitled to one month paid leave in the event of death of her spouse. She is also entitled to complete the ‘Idda period’ of three months and ten days from her annual leave, and in case the balance of her annual leave is insufficient, she may take unpaid leave.

Dispute Resolution / Disciplinary action

Any employer with ten or more workers should establish rules in respect of workplace and a disciplinary procedure, approved by the Labour Ministry of Social Affairs should be displayed and undertaken.

If the employer wants to take disciplinary action or dismiss an employee, he should go by the provisions of the law. The disciplinary measures that can be undertaken against an employee include fines, suspension, warnings and dismissal.

If an employer / employee intend to make a complaint, he should first follow the statutory procedure applicable to all labour disputes. A claim must be presented to the Labour Ministry, which in-turn will refer the dispute to the court.

The New Labour Law aims to minimize the settlement of cases going through courts. Therefore, all claims are now filed with Labour Case Administration Office, wherein, the Labour Case Administration Judge will hear the case and prepare a report, aiming to reach an amicable settlement.

However, if the parties do not reach an amicable settlement, the Labour Case Admin judge passes on the matter to the High Civil Court, who will then hear the labour dispute on an urgent basis within two months from date of filing the case, and the judgement should be rendered within 30 days from the date of its first hearing. The decision of the high court judge is final and the parties may appeal to Court of Cassation only on matters of law.

Usually, the settlement of disputes between workers and employers turns out to be a tardy and time consuming procedure as the sponsors do not often turn up for hearing, and when there is a case pending, the workers are not permitted to work outside Bahrain. But, the worker can authorize lawyers in Bahrain to continue the case in Court on his behalf. For those who are not under the purview of Labour Laws, such as housemaids, the Interior Ministry is the agency to be approached for dispute settlement.

Termination of employment contract

If the employer terminates an employment contract within the first three months from its effective date, the employee will not be eligible for compensation. However, in case it has been established that the employee has been met with an unfair dismissal from the employer, the Articles 104 and 105 of New Labour Law permits the employee to receive compensation equivalent to one month’s wages.

If the contract entered into is for a definite period, it automatically terminates at the end of prescribed period, unless the parties decide to abide by its terms even after expiry of the contract.

A contract entered into for an indefinite duration can be terminated by either party given no less than thirty days of notice, unless a longer notice period is openly agreed between the parties.

Employers need to be cautious and take advice on the possible rights and remedy before dismissal of an employee whom he wishes to dismiss, as the employee may have a potential statutory claim for compensation based on termination on unlawful grounds.

If the employer terminates an employment contract for an indefinite duration within the first three months from effective date of the contract, the employee will not be eligible for any compensation. However, in the event that the dismissal is unfair, based on definition of unfair (Articles 104 and 105 of New Labour Law), then the employee will be eligible for equivalent of one month’s wages.

If the employee terminates a contract of employment for an indefinite duration without cause or for an unlawful cause after first three months following the commencement of contract, the employee will be entitled for two day’s wages for every month of service.

In the event of unfair dismissal, the employee would be eligible for another one half of the compensation determined for unjustified termination of aforementioned. It has to be noted that when calculating the amount of compensation, due fractions of a month are considered as complete month.

In case of employment contract with definite duration, if the dismissal was for an unlawful cause, the compensation amount will be equivalent of wages for remaining period of the fixed term. But, the parties can also agree for a lesser amount mutually, but, the compensation should not be less than three month’s wages, or rest of the contract, whichever is less.

If the employment contract is only for completion of specific work and the contract was terminated without cause prior to its completion, the employee would be eligible for the wage for remaining period required for completion of the agreed work,

Some unjustified terminations are:

1.Termination by reason of redundancy is potentially lawful.

2.Termination of a female employee on grounds of marriage, pregnancy or maternity.

3.Termination without applying lawful disciplinary rules and measures.

4.Termination during sick leave or any other lawful leave

5.Refusing to reinstate employees who have been suspended pending investigation.

Some justified terminations include:

a.The New Labour Law grants the employer the right to terminate an employee in the event of poor performance. The right to terminate the employee is subject to employer giving the employee a minimum notice period of sixty days in case of poor performance or inefficiency, to allow the employee reasonable time to improve performance, and failure of which, would justify the termination of the employee and not entitle the employee to any compensation.

b.The New Labour Law allows an employer to terminate an employee in the event of total or partial closure of their establishment, its scaling down, or replacement of the production system, which in-turn would affect the size of the workforce. But, a notice and reason for such a termination should be produced to Ministry of Labour, 30 days prior to serving notice of termination to the employee. The amount of compensation in such events would also be fixed by the law.

c.The labour contract for a definite period automatically expires after its term, and unless renewed for another term, it automatically ends the term of the employee in the company.

d.An employer may terminate the employee if the latter has submitted false identity or fake certificates or recommendations.

e.If the employee has committed a mistake that caused serious material loss to the employer, provided, the employer reports such a matter to the competent authorities within two working days as of the date on which the occurrence of this serious material loss was brought to his knowledge.

f.If the employee, despite warnings, fails to comply with written instructions required to be observed for safety of workers and establishment.

g.If the employee is absent without reasonable cause for more than twenty non-consecutive days or for more than ten consecutive days in a year, provided that such termination shall be preceded by a written warning by the employer to the employee after an absence of ten days in the former case and five days in the latter case.

h.If the employee does not perform his obligations by virtue of labour contract, and/or if the employee discloses the work related secrets without written authorization by the employer.

i.The labour contract shall be terminated due to worker’s total disability to execute duties of his work, irrespective of cause of said disability.

j.In the event of death of the employee, the labour contract will be deemed terminated. However, in the event of death of employer the contract shall not be deemed as terminated unless, the contract is concluded for considerations pertaining to employer’s person or his occupational activity which automatically stops by his death.

k.The employee may terminate the labour contract without notification due to any two of the events such as employer assaulting the employee during or as a result of the work, either verbally or physically, or if the employer or his representatives commit an act prejudicing ethics against the employee or any of his family members.

Employment of minors

As per the provisions of the law, a minor shall be a person who is of fifteen years of age, but who has not yet attained the age of eighteen years. It shall be prohibited to employ any minor who has not yet attained the age of fifteen years.

Minors are not to be employed for a period exceeding six hours a day, and shall not be permitted to remain in the workplaces for more than seven consecutive hours.

They should be given one or more intervals during work hours, the total of which shall not be less than hour, for rest and a meal. The intervals should be so arranged that a minor shall not work for more than four consecutive hours.

It is against law to occupy minors during the night period or on weekly rest days or official holidays.

Employment of women

The New Labouur Law in Bahrain is more favourable to women, and does not impose too many restrictions, unless prohibited pursuant to a resolution of the Labour Minister.

A non-discrimination clause has also been inserted in the new law, which emphasizes that female employees shall be subject to all provisions governing the employment of employees without discrimination between male and female employees, when the employment conditions are similar.

Other privileges for women employees are increased period of maternity leave of 60 days and nursing hours (two nursing periods of not less than one hour each) on full pay. Female employees have also been given the right to take up to six months leave without pay up to three times throughout her period of service with the employer for purposes such as caring for her child who is less than six years of age.

However, there are certain cases, works and occasions, in which women may not be employed at night, and the Ministry will make a decision in such matters after determining the case.

Employers should not terminate the labour contract of a female worker on reasons such as her marriage or during her maternity leave.

Retirement age

As per the New Labour Law, the retirement age in Bahrain is 60 years for both male and female employees.

Leaving Indemnity

Employees who are not subject to Bahrain Social Insurance Laws (expat employees and Bahraini employees whose salaries exceed BD4000) the calculation of leaving indemnity under the New Labour Law would be same as that during old law irrespective of who terminated or why the employment relationship was terminated. The leaving indemnity is payable on termination of employment of a non-Bahraini national, which is calculated based on a statutory formula which takes into account the employee’s length of service and whether the employment has been terminated by the employer or the employee.

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