Bahrain Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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BAHRAIN
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Bahrain Payroll and EOR: Employment Contracts
- 72-hour and seven-day visas: These visas are available at the point of entry for short-term business travellers. It is necessary to have an onward ticket and a valid passport.
- A business visa is required for anyone staying in Bahrain for more than a week on business. This visa is valid for up to four weeks, with the length varying according to the nature of the trip.
- Work visas: If the workers are going to work in any capacity, they will all require work visas. This permit is good for one to two years and grants your employees residence. You will handle the majority of the paperwork.
- Family visa: Any immediate family members of the worker will require a family visa, also known as a residency permit, in order to dwell in Bahrain throughout the job time. They are unable to work unless they get a separate work visa.
PAID TIME OFF
Annual Vacation
After one year of work, employees are normally entitled to 30 days of paid annual leave. During the first year of work, the employee is eligible to take accumulated vacation, which accrues at the rate of 2 1/2 days per month for all employees. Six days of leave must be taken consecutively. Employers generally pay for expatriate workers’ flight travel home on their holiday.
Sick
Employees are generally entitled to 55 days of sick leave each year:
- 15 days paid in full
- 20 days at 50% pay
- 20 days of unpaid leave
Maternity
Maternity leave is often granted to women for 75 days:
- Paid vacation for 60 days
- Unpaid leave for 15 days
- Women in Bahrain are not permitted to work for 40 days after giving birth
Paternity
Fathers are only entitled to one day of paid leave after the birth of their kid.
Family
Female employees are entitled to unpaid childcare leave over the course of their job to care for their children under the age of six. By virtue of Article 34 of the Labour Law, such leave shall not exceed six months in duration and shall be restricted to three times over the course of their employment.
National Holidays
There are in total 9 paid public holidays.
Other Paid Time Off
Employees are also entitled to three days of paid leave for marriage provided a copy of the marriage certificate is shown. Muslim workers who have worked for the business for at least 5 years are entitled for 14 days of paid leave for a trip to Mecca once during their employment.
STATUTORY EMPLOYEE BENEFITS
Unemployment
In 2007, the Bahraini government established a nationwide Unemployment Insurance Scheme (UIS). The UIS is a required contribution program that covers all Bahrainis and foreign nationals working in the official and informal sectors of Bahrain. Contributions of 3% of employee salaries are split equally between the employee, the employer, and the government to fund the system. The Compensation Payment is offered to jobless people and consists of a monthly benefit computed at 60% of the insured wage, up to a minimum of BHD 150 and a maximum of BHD 500, or USD 1,326, payable for up to 6 months.
Workers Compensation
Disability / Work Injury Benefit
During the course of his therapy, a wounded worker gets paid his regular salary. If the duration of treatment exceeds six months, the employer pays half of the worker’s salary until he recovers or his inability to work is confirmed. A worker who is injured on the job has the right to be compensated for his or her injuries in accordance with the schedule to be set by an order of the Minister. However, no compensation or medical care is provided if the injury is self-inflicted; the injury occurs as a result of the worker’s gross and deliberate misbehaviour, which includes any act performed by an injured worker while under the influence of intoxicating materials or narcotic drugs; or the worker violates the employer’s instructions concerning occupational safety and health. If a worker dies as a consequence of an occupational accident, compensation will be distributed in line with Sharia inheritance regulations.
Social Security
In most cases, the pensionable age cannot be set higher than 65 years of age. If the retirement age is raised to over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay. Invalidity benefits are paid when a protected person is unable to work for a living before reaching the regular retirement age owing to a nonoccupational chronic condition that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
Retirement
Employed Bahraini citizens who work in establishments with at least one employee or in one of the Gulf Cooperation Council nations (Kuwait, Oman, Qatar, Saudi Arabia, or the United Arab Emirates) are covered by the Act. Voluntary coverage is also available for those with at least five years of previous obligatory social security coverage, self-employed individuals, and other Bahraini citizens working abroad. However, the legislation excludes home workers, some types of agricultural laborers, casual workers, temporary noncitizen workers, and other groups defined by law. The Act provides for a range of sources of funding for pensions. The insured individual contributes 6% of total monthly earnings, whereas the voluntarily insured contribute 15% of disclosed monthly income. The employer contributes 9% of the employee’s monthly salary. The maximum monthly earnings for contribution purposes are 4,000 dinars.
Health
N/A
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
There is private workers compensation available in Bahrain.
Retirement
There are private retirement schemes available in Bahrain.
Health
Private healthcare is available in Bahrain.
Insurance
Private life insurance is available in Bahrain.
PERSONAL INCOME TAX
Tax Year
The tax year in Bahrain is a calendar year from 1st January to the 31st December.
Tax Tables
Bahrain has no personal income tax (PIT) regime. Individuals employed by a natural person, a legal company, or a business in the Kingdom of Bahrain, on the other hand, are subject to Social Insurance Organization (SIO) laws in Bahrain.
Taxation Method
N/A
Double Taxation
Bahrain has multiple double tax agreements (DTA) with other countries.
Residence Requirements
N/A
Payroll Calendars
Employees who are paid on a salary are paid at least once a month.
Rebates & Tax Credits
N/A
Health Insurance
N/A
Unemployment
In 2007, the Bahraini government established a nationwide Unemployment Insurance Scheme (UIS). The UIS is a required contribution program that covers all Bahrainis and foreign nationals working in the official and informal sectors of Bahrain. Contributions of 3% of employee salaries are split equally between the employee, the employer, and the government to fund the system. The Compensation Payment is offered to jobless people and consists of a monthly benefit computed at 60% of the insured wage, up to a minimum of BHD 150 and a maximum of BHD 500, or USD 1,326, payable for up to 6 months.
Social Security
In most cases, the pensionable age cannot be set higher than 65 years of age. If the retirement age is raised over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay. Invalidity benefits are paid when a protected person is unable to work for a living before reaching the regular retirement age owing to a nonoccupational chronic condition that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
PAYROLL ELEMENTS
Income
Salaries, wages, and allowances received by working persons are not subject to income tax.
Bonuses
13-month payments are not required by law. Employers have the option to give out incentives at their discretion.
Allowances
- Transport allowance
- Utility allowance
- Housing allowance
Benefits in Kind
Benefits in kind are simple payments in kind and company subsidies offered for workers’ personal or social needs. Also, depending on its purpose, money provided to employees may be considered a kind benefit and may be excluded from tax and premium contributions.
Investment Income
Capital gains and income of citizens and non-residents who are not paid in Bahrain are not subject to Bahraini taxation or social insurance requirements.
Retirement Funding
Employed Bahraini citizens who work in establishments with at least one employee or in one of the Gulf Cooperation Council nations (Kuwait, Oman, Qatar, Saudi Arabia, or the United Arab Emirates) are covered by the Act. Voluntary coverage is also available for those with at least five years of previous obligatory social security coverage, self-employed individuals, and other Bahraini citizens working abroad. However, the legislation excludes home workers, some types of agricultural laborers, casual workers, temporary noncitizen workers, and other groups defined by law. The Act provides for a range of sources of funding for pensions. The insured individual contributes 6% of total monthly earnings, whereas the voluntarily insured contribute 15% of disclosed monthly income. The employer contributes 9% of the employee’s monthly salary. The maximum monthly earnings for contribution purposes are 4,000 dinars.
Health Insurance
N/A
Risk Insurance
N/A
Taxable Income
Salaries, wages, and allowances received by working persons are not subject to income tax.
Allowable Deductions
N/A
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
N/A
Unemployment
In 2007, the Bahraini government established a nationwide Unemployment Insurance Scheme (UIS). The UIS is a required contribution program that covers all Bahrainis and foreign nationals working in the official and informal sectors of Bahrain. Contributions of 3% of employee salaries are split equally between the employee, the employer, and the government to fund the system. The Compensation Payment is offered to jobless people and consists of a monthly benefit computed at 60% of the insured wage, up to a minimum of BHD 150 and a maximum of BHD 500, or USD 1,326, payable for up to 6 months.
Social Security
In most cases, the pensionable age cannot be set higher than 65 years of age. If the retirement age is raised to over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay. Invalidity benefits are paid when a protected person is unable to work for a living before reaching the regular retirement age owing to a nonoccupational chronic condition that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
Workers Compensation
Disability / Work Injury Benefit
During the course of his therapy, a wounded worker gets paid his regular salary. If the duration of treatment exceeds six months, the employer pays half of the worker’s salary until he recovers or his inability to work is confirmed. A worker who is injured on the job has the right to be compensated for his or her injuries in accordance with the schedule to be set by an order of the Minister. However, no compensation or medical care is provided if the injury is self-inflicted; the injury occurs as a result of the worker’s gross and deliberate misbehaviour, which includes any act performed by an injured worker while under the influence of intoxicating materials or narcotic drugs; or the worker violates the employer’s instructions concerning occupational safety and health. If a worker dies as a consequence of an occupational accident, compensation will be distributed in line with Sharia inheritance regulations.
ADMINISTRATION
Income
Salaries, wages, and allowances received by working persons are not subject to income tax.
Payroll Taxes
N/A
Unemployment
In 2007, the Bahraini government established a nationwide Unemployment Insurance Scheme (UIS). The UIS is a required contribution program that covers all Bahrainis and foreign nationals working in the official and informal sectors of Bahrain. Contributions of 3% of employee salaries are split equally between the employee, the employer, and the government to fund the system. The Compensation Payment is offered to jobless people and consists of a monthly benefit computed at 60% of the insured wage, up to a minimum of BHD 150 and a maximum of BHD 500, or USD 1,326, payable for up to 6 months.
Social Security
In most cases, the pensionable age cannot be set higher than 65 years of age. If the retirement age is raised to over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay. Invalidity benefits are paid when a protected person is unable to work for a living before reaching the regular retirement age owing to a nonoccupational chronic condition that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
Workers Compensation
Disability / Work Injury Benefit
During the course of his therapy, a wounded worker gets paid his regular salary. If the duration of treatment exceeds six months, the employer pays half of the worker’s salary until he recovers or his inability to work is confirmed. A worker who is injured on the job has the right to be compensated for his or her injuries in accordance with the schedule to be set by an order of the Minister. However, no compensation or medical care is provided if the injury is self-inflicted; the injury occurs as a result of the worker’s gross and deliberate misbehaviour, which includes any act performed by an injured worker while under the influence of intoxicating materials or narcotic drugs; or the worker violates the employer’s instructions concerning occupational safety and health. If a worker dies as a consequence of an occupational accident, compensation will be distributed in line with Sharia inheritance regulations.
Statutory Benefits
Statutory benefits in Bahrain include time off for the nine national holidays, as well as a minimum of 30 working days of paid annual vacation While the regular workweek is from Sunday to Thursday, anyone who works on weekends or holidays should be paid an additional 25%. Healthcare is another unavoidable advantage. Bahrain has a public/private healthcare system in place, with residents receiving either free or significantly subsidized treatment. Foreign nationals can use the same schemes, but they must pay for their own care and often obtain their own health insurance.
Employee Benefits
Bahrain provides extensive welfare to its citizens without levying any taxes. Medical care, sickness and maternity benefits, child care, pensions, and unemployment benefits are all included. Foreign workers are not permitted.
LEGISLATION
- Constitution of the State of Bahrain 1973
- Private Sector Labour Law 2012
- Ministerial Order No. 8 of 2013 Regulating Occupational Safety and Health in Establishments
- Decree No. 2 of 1994 to provide for the accession of the State of Bahrain to Arab Labour Convention No. 7 of 1977 and Recommendation number 1 of 1977 concerning occupational safety and health
- Ministerial Order No. 74 of 2007 with respect to inspection on entities subject to the provisions of the Law Regulating the Labour Market
- Act of Social Insurance 1976
- Legislative Decree no. (78) Of the Year 2006 with respect to Insurance against Unemployment
- Bahrain Penal Code 1976
- Education Act 2005
- Ministerial Order No. 19 of 2013 concerning the Collective Labour Agreement
- Legislative Decree No. 33 of 2002 with respect to Trade Unions as amended by Law No. 49 of 2006
STATUTORY BODIES
Bahrain National Bureau for Revenue.
