What is gratuity in Bahrain?
Gratuity, or end of service benefit, is the lump sum an expat worker in Bahrain receives when a job ends. The Labour Law calls it the "leaving indemnity". It is a legal right. An employer cannot remove it through a contract clause, because the law sets the minimum.
Bahrain made a big change in 2024. Before then, the employer kept the money and paid it at the end of the job. Since 1 March 2024, employers pay a monthly contribution for each expat worker to the Social Insurance Organization (SIO), and the SIO pays the benefit for that period when the job ends. The aim is to protect workers when a company closes or refuses to pay.
The formula itself did not change. So most expats who joined before March 2024 will receive their end of service money from two places: the employer for the old years, and the SIO for the new years. The Bahrain gratuity calculator above shows both parts.
The legal basis: Labour Law 36/2012, Article 116
The main law is the Labour Law for the Private Sector, Law No. 36 of 2012. Article 116 says that a worker who is not covered by the Social Insurance Law's pension rules is entitled to a leaving indemnity at these rates:
- Half a month's wage for each of the first three years of service;
- One month's wage for each year after the third;
- fractions of a year are paid in proportion to the time worked.
In practice this applies to non-Bahraini workers. Bahraini nationals, and GCC nationals covered by the unified GCC insurance scheme, have pension insurance instead.
Unlike the laws of some neighbours, Article 116 has no maximum cap and no minimum service period. It also has no reduction for resignation. This is very different from Kuwait, where resignation can cut the indemnity (compare our Kuwait Indemnity Calculator).
Other useful articles
| Article | What it covers |
|---|---|
| Article 1 | Definitions of "basic wage" and "wage". |
| Article 2 | Scope. Domestic workers are excluded from most of the law, but Article 116 does apply to them. |
| Article 40 | Final dues must be paid immediately when the job ends, or within 7 days if the worker resigned. |
| Article 47 | The leaving indemnity is calculated on the most recent basic wage plus any social allowance. |
| Article 107 | Cases where the employer may end the contract without notice or compensation. |
| Article 111 | Compensation for unfair dismissal (separate from gratuity). |
| Article 118 | Back-to-back contracts with less than 30 days' gap count as one contract. |
The SIO end of service system since March 2024
The new system was created by Prime Minister's Decision No. 109 of 2023, issued on 12 December 2023, under the Social Insurance Law as amended by Law No. 14 of 2022. It took effect on 1 March 2024. Here is how it works, based on the decision and guidance from the SIO and law firms:
Who pays and how much
| Service with the same employer | Monthly employer contribution to SIO | Matches |
|---|---|---|
| First 3 years | 4.2% of monthly wage | Half a month per year |
| After 3 years | 8.4% of monthly wage | One month per year |
The numbers are easy to check: 4.2% × 12 months = 50.4% of a month's wage, which is about half a month per year. 8.4% × 12 = 100.8%, about one month per year. Workers who had already served more than three years with the same employer before March 2024 are charged at 8.4% from the start.
The worker pays nothing for this benefit. If your employer deducts end of service contributions from your salary, that is wrong and you should raise it.
What the SIO pays you
- The SIO award follows the Article 116 formula for your service from 1 March 2024, based on your last wage.
- Only months with paid contributions count with the SIO.
- If your wage went up, the contributions paid may be a little lower than the final award. The employer must cover the shortfall. If your wage went down, the employer may get back the extra.
- If the worker dies, the award goes to the heirs.
What the employer still pays you
Service before 1 March 2024 is still the employer's responsibility under Article 116. The employer pays it directly when your job ends, calculated on your last wage. The SIO does not pay this part.
Unemployment insurance is separate
Do not confuse the end of service system with unemployment insurance. Payroll guides report that 1% of the expat worker's wage is deducted for unemployment insurance. Employers also pay the work injury contribution for expats, commonly reported as 3% of wage. In early 2024 the SIO split the unemployment insurance bill from the other monthly bills, so employers now see each item separately. These contributions do not change your gratuity. Rates can change, so check them with the SIO.
Which wage is used: basic or total?
Article 47 is clear: the leaving indemnity is calculated on the worker's most recent basic wage, plus the social allowance if one is paid. For workers paid by piece or commission, the average of the last three months is used.
Article 1 defines the basic wage as the amount fixed in the contract and paid regularly, with any increases. The wider "wage" includes allowances, bonuses and commissions, but that wider figure is not used for the indemnity.
For the SIO system, contributions are based on the wage in your contract, plus increases and the social allowance where paid. Employers must keep your wage up to date on the SIO portal. If your employer reports a lower wage than the real one, your SIO award may be lower than it should be. Ask your employer what wage is registered for you.
How to calculate gratuity in Bahrain: step by step
Step 1: Find your wage for gratuity
Step 2: Count your total service
Count from your first day to your last working day. The calculator counts whole years and then adds the extra days divided by 365.
Step 3: Apply Article 116
Step 4: Split between employer and SIO
SIO part = Total gratuity − Employer part
The split is done this way because your first three years carry the lower rate. If you joined in 2020, the half-month years fall mostly in the employer's period, and the SIO period carries the full-month rate. That matches how the SIO charges 8.4% for workers already past three years.
Quick reference
| Years of service | Gratuity in months of wage |
|---|---|
| 1 year | 0.5 |
| 2 years | 1.0 |
| 3 years | 1.5 |
| 5 years | 3.5 |
| 10 years | 8.5 |
| 15 years | 13.5 |
Worked examples
Enter the same values into the calculator and you will see the same figures.
Example 1: Joined 2020, left 2026
Anil worked from 1 March 2020 to 28 February 2026, exactly 6 years. His basic wage is BHD 500 and he has no social allowance.
- Total gratuity: 500 × (0.5 × 3 + 1 × 3) = 500 × 4.5 = BHD 2,250.000
- Service before 1 March 2024: 4 years = 1.5 + 1 = 2.5 months. Employer pays BHD 1,250.000.
- Service from 1 March 2024: 2 years at one month each. SIO pays BHD 1,000.000.
Because Anil was past three years when the system began, his employer paid 8.4% a month to the SIO: 500 × 8.4% × 24 = BHD 1,008, a little more than the award.
Example 2: Joined after the change
Rosa started on 1 March 2024 and left on 31 August 2026, about 2.504 years. Her basic wage is BHD 400.
- Gratuity: 400 × 0.5 × 2.504 = BHD 500.822
- Employer part: BHD 0.000. All of it is paid by the SIO.
Example 3: Long service with a social allowance
Khalid joined on 1 May 2016 and leaves on 31 October 2026, about 10.504 years. His basic wage is BHD 750 and he gets a social allowance of BHD 50, so his gratuity wage is BHD 800.
- Total: 800 × (1.5 + 7.504) = BHD 7,203.288
- Before 1 March 2024 (about 7.836 years): 800 × (1.5 + 4.836) = BHD 5,068.493 from the employer
- From 1 March 2024 (about 2.668 years): BHD 2,134.795 from the SIO
Example 4: A short contract
Mei worked from 1 January 2025 to 30 June 2025 (about 0.496 years) on BHD 300. There is no minimum period, so she earns 300 × 0.5 × 0.496 = BHD 74.384, paid by the SIO.
Special cases
Resignation
Resigning does not reduce your gratuity in Bahrain. You must give the notice in your contract (the law sets a minimum of 30 days for unlimited contracts). If you leave without notice, the employer may claim notice pay from you, but the gratuity itself stays.
Dismissal without compensation (Article 107)
Article 107 lists cases where the employer can end the contract without notice or compensation, such as serious misconduct, forged documents or causing serious financial loss. Article 116 itself does not say the gratuity is lost in these cases, and guides disagree on how this interacts with the SIO award. Our calculator shows the full Article 116 amount with a warning if you choose this option. If you were dismissed this way, ask the Ministry of Labour or a lawyer about your gratuity.
Unfair dismissal
If an employer ends an unlimited contract without a lawful reason after the first three months, Article 111 gives compensation of two days' wage for each month of service, with a minimum of one month's and a maximum of twelve months' wage. This is on top of your gratuity.
Renewed contracts
Under Article 118, if a new contract with the same employer starts less than 30 days after the old one ended, both are treated as one contract. Your service is counted as one continuous period.
Secondment and change of owner
If you are seconded to another company, your original employer keeps paying SIO contributions. If the business is sold, the new owner continues the contributions. A move inside the same company is not an end of service.
Flexi permit holders
Workers on Bahrain's flexible work arrangements have a different relationship with employers. Check with the LMRA and SIO how end of service applies to you.
Domestic workers
Article 2 of the Labour Law excludes domestic workers from most of its rules, but it names Article 116 among the articles that still apply. So house maids, drivers, cooks and similar workers are entitled to the leaving indemnity at the same rate. Ask the SIO or the Ministry of Labour whether your employer must register you in the SIO system.
Bahraini and GCC nationals
This calculator is for expats. Bahrainis and covered GCC nationals receive pension benefits instead of a leaving indemnity.
Gratuity and your other final dues
Your gratuity is only one part of your final settlement in Bahrain. When the job ends, check that you also receive each of these items, shown as separate lines:
- Salary for days worked in your last month.
- Unused annual leave. Leave you earned and did not take is paid in cash, unless you refused scheduled leave in writing.
- Notice pay, if the employer ended your contract without giving the notice period.
- Unfair dismissal compensation under Article 111, if it applies.
- Return ticket, if your contract includes one.
Remember that the SIO part of your gratuity does not appear on the employer's settlement sheet at all. You claim it separately. So when you compare your settlement with this calculator, compare the employer line with the "Paid by employer" figure, not with the total.
Common mistakes
- Expecting the employer to pay everything. Since March 2024 the SIO pays the newer part. Plan for two payments.
- Expecting the SIO to pay everything. The SIO does not pay for service before March 2024. That is still the employer's job.
- Using total salary. Only basic wage plus any social allowance is used.
- Using one month per year from the start. The first three years earn half a month each.
- Thinking resignation cancels gratuity. It does not in Bahrain.
- Mixing up unemployment insurance and gratuity. The 1% deducted from your pay is for unemployment insurance, not end of service.
- Not checking the wage on the SIO portal. A wrong wage means a wrong award.
How to claim your gratuity and what to do if unpaid
The employer part
Article 40 says the employer must pay all dues immediately when the job ends, or within seven days if you resigned. If the employer is late, the law allows extra compensation for delay. Ask for a written final settlement that shows the gratuity for service before 1 March 2024 as a separate line.
The SIO part
- Make sure your employer has reported the end of your employment, and that your status is updated with the Labour Market Regulatory Authority (LMRA).
- Log in to the SIO electronic services and submit the end of service request.
- Upload proof of your bank account IBAN as asked. The SIO publishes a step-by-step guide on its website.
- Keep the reference number and follow up if payment is delayed.
If you are not paid
The Ministry of Labour runs an individual labour dispute settlement e-service. You log in with your electronic key, enter your job details, attach your contract and other papers, and submit. The ministry then contacts both sides to try to settle. There is no fee. If the dispute is not settled, you can take the case to the labour court. For SIO payment problems, contact the SIO directly. Your embassy can also help.
Practical tips
- Ask HR for a statement of your gratuity earned up to 29 February 2024. That is the amount your employer will owe you.
- Check every year that the SIO has your correct wage.
- Keep copies of your contract, salary letters and payslips.
- Moving to another Gulf country? Compare with our Saudi End of Service Calculator, Oman End of Service Calculator or UAE Gratuity Calculator.
Frequently asked questions
How is gratuity calculated in Bahrain?
Article 116 of Labour Law 36/2012 gives half a month's wage for each of the first three years of service and one month's wage for each year after that. Part years are paid pro rata, and the last basic wage plus any social allowance is used.
Who pays my gratuity in Bahrain now, the employer or the SIO?
Since 1 March 2024, the Social Insurance Organization (SIO) pays expats the end of service benefit for service from that date, funded by monthly employer contributions. For service before 1 March 2024, your employer still pays you directly.
What are the SIO end of service contribution rates for expats?
The employer pays 4.2 percent of the monthly wage during the first three years of service and 8.4 percent after that. Nothing is deducted from the worker's salary for this benefit.
Do I lose gratuity in Bahrain if I resign?
No. Bahrain's Labour Law does not reduce the leaving indemnity for resignation, and the SIO system does not reduce it either. You must still give the notice your contract requires.
Is there a minimum service period for gratuity in Bahrain?
Article 116 does not set one. Fractions of a year are paid in proportion to the time worked, so even a short period of service earns a small amount.
Is Bahrain gratuity based on basic salary or total salary?
Article 47 says entitlements such as the leaving indemnity are based on the most recent basic wage plus any social allowance. Other allowances, such as housing or transport, are not included unless they are part of the basic wage.
How do I claim my end of service from the SIO in Bahrain?
After your job ends and your status is updated with the LMRA, apply through the SIO electronic services. You will usually need to upload proof of your bank IBAN. The employer pays any amount for service before March 2024 separately.
Is unemployment insurance deducted from expat salaries in Bahrain?
Yes. Payroll guides report that 1 percent of the expat worker's wage is deducted for unemployment insurance. This is separate from the end of service system, which is paid by the employer only. Check the current rates with the SIO.
Do domestic workers in Bahrain get gratuity?
Yes. Article 2 of the Labour Law applies Article 116 to domestic workers, so they are entitled to the leaving indemnity at the same rate. Check with the SIO or the Ministry of Labour how it is paid in your case.
Where can I complain if my gratuity is not paid in Bahrain?
Use the Ministry of Labour's individual labour dispute settlement e-service. The ministry tries to settle the case and, if that fails, the worker can go to the labour court. For the SIO part, contact the SIO directly.
Disclaimer and sources
Disclaimer: This Bahrain gratuity calculator gives an estimate only and is not legal advice. The SIO applies its own records of your wage and contribution months, so its figure may differ slightly. Always confirm your entitlement with your employer, the SIO or the Ministry of Labour.
Sources / references: Bahrain Labour Law for the Private Sector, Law No. 36 of 2012 (Articles 1, 2, 40, 47, 107, 111, 116 and 118), Prime Minister's Decision No. 109 of 2023 on the end of service benefit for non-Bahraini workers, Law No. 14 of 2022 amending the Social Insurance Law, and SIO circulars issued in 2024. Official texts: Labour Law (LMRA English translation) and Ministry of Labour individual dispute service.