Payroll and HR in Bahrain

Payroll and HR in Bahrain

Local Information

Local Time (LIVE):2:14 PM
Local Currency:$1 = BHD 0.38
Business Language(s):English and Arabic
Tax Year Dates:1st January – 31st December

 

The Bahraini Dinar is the second highest valued currency worldwide, after the Kuwait Dinar. This is because of Bahrain’s prosperity in the oil industry; refined petroleum remains its chief export. After oil, its aluminium products make up a significant proportion of exports too. The affluence of the Kingdom of Bahrain is one of the principle reasons why many businesses choose to expand there; that and the fact that both businesses and individuals are exempt from tax – apart from in the oil and gas sector. The country’s government have taken steps in welcoming foreign businesses over recent years, making Bahrain more attractive.

Bahrain Island Airport (BAH) offers direct flights to 63 destinations in 31 countries across Europe, the Middle East, and Asia. There are also several non-stop flights to African capitals. From a business perspective, this makes it easy to get from Bahrain to business hub cities such as London, Manila, Paris and Moscow. Bahrain itself offers public transport in the form of buses and taxies, from capital Manama to major cities such as Riffa and Muharraq.

It is imperative that any business owners considering expanding to this part of the world are familiar with local law concerning all aspects of HR and payroll. Navigating this legislation in Bahrain can be no mean feat, but fortunately the team at FMP are well-equipped to offer advice and support.

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Details correct at time of publication. You should not rely on these details without first seeking professional international advice.

Employer Must-Dos

In Bahrain, the following is due for submission:

  • Certified, audited financial statements
  • Employee sponsorship forms for expats

Payroll in Bahrain

What tax considerations are there?

Personal Income Tax

In Bahrain, individual income derived from salaries/wages is not taxed.

Individuals are asked to pay Social Security contributions, however. For residents this is at a rate of 19% (7% from the employee and 12% from the employer), and 4% for non-resident employees (1% from employee and 3% from employer). The contributions should be withheld by employers at the time of salary/wage payment.

Corporate Income Tax (CIT)

Apart from businesses dealing in the fuel and gas sector, which are taxed at a rate of 46%, all companies operating in Bahrain are exempt from tax.

All companies are required to keep accurate financial records, and submit an estimated income tax statement by the 15th of the third month of the taxable year. Tax returns must be certified by an approved accountant.

Businesses that are required to pay tax can do so across the year in 12 monthly instalments. These are due from the 15th of the fourth month of the taxable year, using the calculations of the estimated income tax statement. Any overpayment will be credited and used against future tax.

HR in Bahrain

What are the regular working hours in Bahrain?

Office hours in Bahrain are usually between 8.30am and 6pm, and the average working week is between 40 and 48 hours. Most people work a five day week, and because Bahrain is a predominantly Muslim country (70% of inhabitants) – the official day of rest is Friday. The additional day will usually be Thursday or Saturday – the former of which applies for schools. Many companies choose Saturday as the additional rest day, however, so as to avoid any loss of international business communication.

During Ramadan, the working day is reduced to six hours. This should legally apply to all employees, however a number of companies only extend this to Muslim employees.

Vacation, maternity and sickness

There are nine public holidays in Bahrain, during which employees are not expected to work. As well as this, employees are entitled to 30 days of annual leave. In the first year this is accrued at a rate of 2½ days each month. At least six days of the leave must be taken consecutively, and in the case of expat employees, employers conventionally pay for their airfare to travel home.

Additional paid leave includes three days in the event of marriage, as long as they present a marriage certificate. Muslim employees who have given at least five years service can also take 14 days of paid leave to pilgrimage to Mecca.

Female employees in Bahrain are entitled to 75 days of maternity leave. 60 days of this is paid and 15 unpaid. The law states that women are not allowed to work during the 40 days following the birth of a child. In order to qualify for maternity leave before the birth, a pregnant employee must provide a medical certificate detailing her due date. In addition to maternity leave, women are entitled to two periods of an hour each during the working day, to breastfeed her child until the child is six months old, and two periods of 30 minutes per day after this until the child is one year old.

As long as they provide a certificate from a medical professional, employees are entitled to up to 55 days of sick leave annually. 15 days are fully paid, 20 days at half pay, and 20 days with no pay.

Termination

Employees in Bahrain must provide at least 30 days notice before terminating their contract. Apart from in cases where an employee has broken the law, they are entitled to three written warnings before being dismissed, and at least 30 days of notice. With regards to severance pay, employees on an indefinite contract are entitled to two days of wages for every month they have worked – with a minimum of one and maximum of twelve months worth of salary.

Get to Know Global HR & Payroll Law

Find out about employment law across the world with our downloadable guide. We cover everything from international personal and corporate income tax, to maternity leave and pensions.

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FMP’s Bahraini Payroll and HR Solutions

Before expanding to Manama, Riffa, Muharraq, or another of Bahrain’s big cities, business owners need to familiarise themselves with the country’s employment law. HR and payroll considerations in this part of the world can be complex and require a lot of care and attention. This is where FMP come in. We have experience in navigating the world of international employment law, and can guide you through the process to ensure you remain compliant. Our services include:

  • Payroll processing
  • Multi-currency payroll
  • Translation services
  • Emailed payslips
  • Tax deductions
  • Pension payments
  • Sick leave and maternity pay
  • Annual leave management
  • Sick leave management
  • HR auditing and consultancy
  • Local law consultation
  • Employment contracts
  • Payroll auditing
  • End-of-year tax reconciliation

Stay Compliant with Bahrain Employment Law with FMP

With the help of our experts, you can be confident that you fully comply with the HR and payroll law in Bahrain. Get in touch to let us help you achieve seamless business expansion.

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