How leaving indemnity works in Bahrain
Leaving indemnity is the Labour Law's term; the SIO calls the same payment end-of-service gratuity, and most people just say gratuity or end-of-service benefits. Bahrain changed its system on 1 March 2024, and if your service spans that date your money now comes from two separate places. This is the single most important thing to understand about a Bahraini settlement, and almost no calculator online accounts for it.
Before 1 March 2024: your employer pays
Article 116 of Labour Law No. 36 of 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, paid as a lump sum by the employer. For any service before 1 March 2024, that remains your employer's direct responsibility and you claim it from them.
| Period of service | Rate per year | Paid by |
|---|---|---|
| Before 1 Mar 2024, first 3 years | 15 days' wage | Employer |
| Before 1 Mar 2024, year 4 onward | One month's wage | Employer |
| From 1 Mar 2024, first 3 years | 15 days' wage | SIO, funded by 4.2% employer contributions |
| From 1 Mar 2024, year 4 onward | One month's wage | SIO, funded by 8.4% employer contributions |
From 1 March 2024: the SIO pays
Under Resolution No. 109 of 2023, employers now make monthly contributions to the Social Insurance Organisation for expatriate workers: 4.2% of the monthly wage for the first three years of service, then 8.4%. The three-year mark counts from your original joining date, so anyone with more than three years' service on 1 March 2024 went straight onto the higher rate.
The SIO works out the award on the same formula as Article 116 — 15 days' wage a year for the first three years, one month a year after — on your last wage (Resolution 109 of 2023, Articles 9 and 10). That is what this page calculates for the SIO portion. When your job ends, you apply to the SIO rather than your employer, at no fee. The SIO says it pays within five working days of the application; a Labour Market Regulatory Authority guide for workers says ten. You can claim for a previous employer's period even if you have moved to another company in Bahrain.
Two limits in the Resolution decide what you actually receive. Only months for which your employer paid contributions count as service (Article 8). And the award cannot be more than the contributions paid for you (Article 10) — which is why the same article makes the employer pay the difference in contributions when your wage goes up. When every month has been paid on your real wage, the cap does not bite: twelve months at 4.2% is slightly more than half a month's wage, and twelve at 8.4% slightly more than a month. When months are missing or your wage was under-declared, the SIO payment is smaller, and the shortfall becomes a claim against your employer. So check your wage record on the SIO portal before your last day, while a correction is still a conversation rather than a complaint.
Which wage counts is not fully settled. The Resolution defines it as the periodic wage in your contract plus increases and social allowance. The SIO's published guidance says basic salary plus social allowance; at an SIO workshop employers were told to declare every element, including housing, transport, bonuses and commission. This page uses whatever wage you enter, so enter the figure your employer declared.
Resignation carries no penalty
Unlike Saudi Arabia and Kuwait, a resigning worker in Bahrain receives the full Article 116 indemnity with no reduction. It is forfeited only in the gross-misconduct cases listed in Article 107 — fraud, serious breach of duty, assault. Ordinary resignation, redundancy and contract expiry never forfeit it.
Bahraini nationals are covered by the SIO pension scheme rather than the expatriate indemnity contributions.
Questions people ask
Who do I claim my indemnity from?
Both, if your service spans 1 March 2024. Service before that date is claimed from your employer as a lump sum. Service after it is claimed from the SIO, which holds the monthly contributions. Two applications, two payments.
What if my employer never registered me with the SIO?
Then contributions may be missing from your account. Check your SIO statement. Employers who fail to submit wage data face penalties, and the obligation to ensure the indemnity is paid still rests with them.
Does resigning reduce my indemnity?
No. Bahrain applies no resignation penalty.
Do I get the contributions, or the formula?
The formula, capped at the contributions. The SIO calculates the award at 15 days' wage a year for the first three years and one month a year after, on your last wage, but it cannot pay more than the contributions paid for you (Resolution 109 of 2023, Article 10), and only months that were paid for count (Article 8). If every month was paid on your real wage, the contributions slightly exceed the formula and you get the full formula. If months are missing or under-declared, you get less from the SIO and the difference is your employer's to make good.
Does this apply to domestic workers?
Domestic workers are covered by the same Article 116 formula under the main Labour Law, though their indemnity is not universally routed through the SIO. Check your specific arrangement.
Where these rules come from
Labour Law for the Private Sector No. 36 of 2012, Articles 47, 99, 107 and 116 · Prime Minister's Resolution No. 109 of 2023 issuing the end-of-service system for non-Bahrainis in the private sector, effective 1 March 2024 (Article 1 defines the wage, Article 5 sets the contribution rates, Article 8 counts only paid-for service, Articles 9 and 10 set the award and cap it at the contributions paid, Article 14 keeps earlier service under the Labour Law), as published by the Legislation and Legal Opinion Commission · Social Insurance Law, Decree-Law No. 24 of 1976, Articles 29 and 31 (late and unpaid contributions) · Social Insurance Organisation guidance, End of Service Gratuity for non-Bahrainis · LMRA, Wages and Indemnity: a guide for all expatriate workers and employers.
Where sources genuinely disagree, this page says so rather than picking a number quietly.