Bahrain: Changes Implemented to the End-of-Service Gratuity System for Foreign Employees

Effective immediately, employers are now required to send the monthly end-of-service contributions for their foreign national employees to Bahrain’s Social Insurance Organisation (SIO) electronic portal within the first 15 days of each month. Previously, employers would set aside monthly contributions internally and provide a lump sum payment to employees at the end of their tenure. Therefore, the SIO, instead of the employer, is now responsible for disbursing the end-of-service gratuities accumulated by employees at the end of the employee’s employment. According to the new procedures related to the new process, employers must now provide up-to-date salary information for their foreign national employees via the SIO portal and must update employee information in the event of any remuneration adjustments. Gratuity is still calculated at 4.2% of the employee's monthly salary for the first three years, increasing to 8.4% for the following years until the end of employment. For employees with over three years of service before the effective date, the employer's contributions will be 8.4%. Employers must continue to cover their employees’ end-of-service contributions even when their employees are temporarily seconded to other employers. Additionally, the employer remains responsible for paying the gratuity to the employee for any years of service prior to the effective date of the new system (March 1, 2024). Employers who fail to comply with these rules will be subject to fines. These changes aim to protect employees from the risk of employers failing to pay out their end-of-service entitlements upon termination or resignation.