Employee benefits are a common element of Bahrain’s work culture and are provided to ensure security, job satisfaction, and a positive work environment. To ensure everyone gets the right employee benefits in Bahrain, the government has shaped the laws fairly. This includes major employee benefits like medical benefits, social insurance & leave entitlements. However, there can be extra benefits from housing allowance to even retirement plans.
Along with these offerings, one of the major benefits of working in Bahrain is the tax rule. Bahrain does not impose tax on personal income. This makes employee benefits management super easy as it cuts down the hassles of deductions.
However, employers may find it hard to administrate all these employee benefits. In that case, HR software comes in handy. It can automatically update employee benefits law and automate calculations to ensure compliance.Â
What Are Employee Benefits?
Employee benefits are the special perks given to employees beyond their regular salaries or wages. This practice started at the very beginning of the Industrial Revolution. And now it is an undeniable aspect of the working environment. This prioritizes employees’ well-being, helping them retain satisfaction in the company.Â
Being a country that puts working-class people first, Bahrain provides promising employee benefits. The country’s labor law itself mandated special employee benefits. Specific leave entitlements like annual, maternity, sick, and holiday leave are provided. Apart from that, the SIO also ensures the end-of-service gratuity. The employee benefits plans in Bahrain are quite less complicated compared to other countries. Due to the tax-free nature, employers have more flexibility in designing employee benefits in Bahrain. They can give workers a high net value of attractive compensation.Â
What Are the Compensation Laws in Bahrain?
According to Article 38 of the compensation laws, wages are calculated hourly, weekly, monthly and even by production. However, the law does not standardize any minimum wage criteria for the employees. It totally depends on the employer. However, it is preferred that the employees are provided with industry-standard wages. Despite giving so much flexibility, the law of Article 40 orders that the salary be paid on at least a monthly basis if not less than that.
There are no restrictions, and usually, the workers there earn at the lowest 396 BHD to 1,513 BHD highest average. But, the actual salary can be even higher than this. Again, the law of overtime is present there. Which dictates the individual can work the highest 2 hours extra per day. The compensation is also a lump sum – 125% to 150%.
Lastly, the government also includes end-of-service indemnity in the compensation package along with mandatory health benefits. As the employees are free from income taxes, they can earn more and save more.Â
What Mandatory Employee Benefits Must Employers Provide in Bahrain?
Bahrain employee benefits are diverse, prioritizing workers’ betterment. Besides the company’s policies, some employee benefits are mandated by law. These are the mandatory benefits that employers must provide to their employees.Â
Annual Leave and Public Holidays
Every worker in Bahrain is entitled to 30 days of annual leave every year along with public holidays. That means the workers can get paid leave of 2.5 days per month. However, employers set the policy for yearly leaves and their frequency. This is to ensure that all the annual leaves are not taken consecutively.
The working hours are fixed for 8 hours daily. With one weekly holiday (Friday) and other occasional public holidays. No worker should work on these holidays except in extreme conditions. If done so, they must be compensated with overtime of 150% of the regular wage.Â
Sick Leave
Emphasizing employee well-being, the government has mandated sick leave laws under Article 65. Any worker who has been suffering from illness and has proper medical documentation is eligible for sick leave. These documents need to be certified by the government medical centers for eligibility.
The employers are required to provide the following sick leaves.
- Fifteen days with full pay
- Twenty days with half-pay
- Twenty days with no pay
Maternity leave (For Women)
Bahrain’s government ensures a women-friendly workplace, debunking gender discrimination. Especially for maternity, the government has stated specific laws under Article 32. According to the law, women are obliged to get at least 60 days of maternity leave with full payment. Also, if needed, she may get an extra 15 days unpaid leave after this confinement. And the employer can’t terminate her from the job for this. But, of course, to get all these benefits, a medical certificate attested by the government should be provided.
Healthcare Support
Under the labor law of section 172, every employer is subjected to providing health benefits. Following the Ministry of Health regulations, healthcare support needs to be provided regardless of the employee number. It totally depends on the company how much support they can afford to provide.Â
The government also has subsidized healthcare services for the citizens. However, there are also healthcare benefits for foreigners. For example, there is medical insurance for expats in Bahrain, which helps them to access the same plans.
End-of-Service Benefits
End-of-service benefits or indemnity is a common practice in Bahrain. All the companies in the private sector are required to provide their workers with indemnity. This is provided when they are terminated from their jobs. This amount is usually given to the workers depending on the last basic pay.Â
The recent rate change has enabled the employees to get 4.25% of the monthly wage for the first three years. In later years, this rate increases to 8.4%. This is transferred to every worker by the government regardless of nationality. No wonder it is one of the best employee benefits in Bahrain for expats.
Social Security Program
Every employee is enrolled in the Social Insurance Organization with job onboarding. The SIO scheme ensures the employee’s salary portion is contributed and saved. This contribution amount is usually 14% (subject to change by 1% each year) for employer contribution. On the other hand, the employee contribution is 7%. This is capped at a monthly wage of 4000 BHD.Â
This contributed amount is saved up in one individual account and governed by the Bahrain government. This can be used as a pension after retirement or for sudden emergencies. After retirement, it is provided monthly, depending on the average salary and the contribution period.
What Employee Benefits Are Provided for Expatriates?
The tax-free environment and huge employee benefits in Bahrain for foreigners are the center of attraction. The government provides generous benefits not only to local citizens but also to expatriate employees.
Expatriate workers get all the benefits like annual, sick & maternity leave, and overtime pay. But expats are not included in the Social Insurance Program and receive no free healthcare benefits. However, they are provided with medical insurance, ESOG, and social insurance with minimal compensation rates.Â
What Are the Employee Benefits in Bahrain for Indians?
The Indians working in Bahrain are categorized as expatriates. Therefore, the employee benefits in Bahrain for Indians are the same as those for expat workers. Under the expatriate law, these benefits are as follows.
- Paid LeavesÂ
- Sick LeavesÂ
- Maternity Leave (For foreign female workers)
- Overtime compensation of 125% hourly rate at day time and 150% at night time
- Social insurance covers all work injuriesÂ
- Social Security program with 4% contribution (3% from employer, 1% from employee)
- EOSG (End-of-Service Gratuity) of 4.2% for the first three years of service and 8.4% for the following years
What Are the Employment Benefits in Bahrain for Bangladeshis?
Similar to the Indians, the employee benefits in Bahrain for Bangladeshis workers are no different. They are also included in the expatriate law and enjoy the same benefits as any other expat. They are entitled to paid leave along with annual leave, sick leave, and maternity leave. Bangladeshi workers are also provided with overtime facilities. Which are compensated at 125% and 150% of the regular rate.Â
Workers from Bangladesh can also get social insurance covering work injury with a social security contribution of 4%. Lastly, like other citizens, they are also eligible for indemnity with the same policies.
What Supplemental Benefits Are Available for Employees in Bahrain?
Besides the major benefits the government provides, there are also some extra benefits. It is usually offered by employers to get a market advantage over other companies and ensure employee satisfaction.Â
Most of the common supplementary employee benefits in Bahrain are as follows.
- Housing Allowance: Most companies provide housing allowance to their workers. The policies and the allowance depend on the company.
- Transport Allowance: For some localities, and based on job roles, many employees are provided with transport allowances. Some are also given transportation facilities.
- Saving Plan: Some employers are generous enough to provide saving plans to workers. The worker might need to contribute a specific portion of the salary and can save it for future purposes under the company’s supervision.Â
- Retirement Plan: Many companies can provide individual retirement plans besides social security laws. This also works like a savings plan, but the employee can use it only after retirement. Â
- Employee Assistance Program: This employee assistance program aims to provide workers with financial help in any need.Â
- Disability Income Protection: This scheme is presented to help employees who are unable to work due to illness or injury. The contribution for this comes from their income for a specified period. And it is used to maintain financial stability during their recovery.
- Life Insurance: Though rare, many companies are ready to provide their workers with life insurance. Of course, these benefits are unlocked when your job ranking exceeds specific criteria.
- Death Grants: Death grants are usually provided if the employee suddenly dies of any unforeseen event. Therefore, the amount is given to the worker’s family as a token of sorrow and compensation.
Besides the major benefits the government provides, there are also some extra benefits. It is usually offered by employers to get a market advantage over other companies and ensure employee satisfaction.Â
How Are Employee Benefits Taxed in Bahrain?
Bahrain has no income tax and thus no tax deductions. As a result, the employers are free from subtracting any withholding tax from the compensation benefits. Also, the employees get the complete advantage of these benefit packages.Â
However, every employee has to contribute to the Social Security program, which is deducted from the salary. For the citizens, the amount is 14% for employers and 7% for employees and is subject to change each year up to 2028. The contribution rates vary for expatriate workers. They only need to contribute 4%, of which 3% is provided by the employer and 1% by the employee.Â
What Are the Restrictions on Benefits and Compensation in Bahrain?
To offer employee benefits seamlessly in Bahrain, a company needs to set up a subsidiary. Without the subsidiary, employers can’t provide benefits packages to their employees. The lack of a subsidiary can be the biggest restriction, especially if you are a foreign employer.
So, owners interested in expanding their business in Bahrain need to set up subsidiaries. For that, they need to complete the formalities and prepare some documents. Setting up this will provide taxation, financial, and other benefits.Â
To establish a subsidiary, you can follow the below steps.
- Register your company name in the e-Government authority.
- Provide the information of owners, shareholders, and investors.
- Fill out the form and submit the required documents.
- Get a commercial registration certificate.
- Open a Bahraini bank account.
- Lease office space suitable for your needs.
- Start hiring.
How Can HR Software Help With Employee Benefits Management in Bahrain?
Updating the employee benefits regularly and remaining compliant with the legal rules is not an easy task. The HR departments have to struggle daily for these meager tasks. Still, the errors are what the data speaks of. Â
Using HR software can help here to manage employee benefits in Bahrain efficiently. HR solutions can change your entire administration and ensure faster workflow. It automates benefits administration tasks such as tracking leaves, overtime, and end-of-service benefits. With HR software, all employee data is centralized in a single platform. This way, employers or HR teams can manage health benefits, contracts, and payroll seamlessly. The self-service portal of HR software allows workers to manage their benefits, apply for leave, and access support independently. Also, employers can customize the software to address the needs of both Bahraini and expatriate workers. And Huduri HR software can be your perfect choice here. The software is designed to adhere to Bahraini regulations including social insurance and leave policies.Â
Final Words
Known to provide employee-friendly work culture, employee benefits in Bahrain are quite common. It is the reward that the government stipulated to provide the workers for their service. The mandatory benefits like annual, sick, and maternity leave are governed by the Bahrain labor laws. Besides, extra benefits like housing allowance and employee assistance programs vary from company to company. Along with the citizens, the Bahrain government offers generous service benefits to expatriates like Indian and Bangladeshi workers. Due to its tax-free rule, workers can use the entire benefit terms for their betterment and secured future.
