How Bahrain gratuity is calculated
Article 116 of Law No. 36 of 2012 provides a leaving indemnity for workers not covered by the social insurance pension of half a month's wage for each of the first three years of service and one month's wage for each subsequent year, with fractions of a year paid pro-rata. Wage means the last wage including regular allowances.
2024 change: from 1 March 2024 employers must pay a monthly contribution to the SIO for each expatriate worker (4.2% of wage during the first three years, 8.4% thereafter). The SIO then pays the indemnity for service after that date directly to the worker when employment ends; the employer still pays the lump sum for service before 1 March 2024. The total you receive is designed to equal the Article 116 formula.
Resignation does not reduce the entitlement, and there is no cap.
Formula
Worked example
Wage BHD 600, 5 years: years 1–3 = 3 × 300 = 900; years 4–5 = 2 × 600 = 1,200. Total BHD 2,100.
Legal basis: Law No. 36 of 2012 (Labour Law), Article 116.
Frequently asked questions
How is Bahrain gratuity calculated?
Half a month's wage for each of the first three years and one month for each year after, based on the last wage, pro-rata for part years.
What changed with the SIO in March 2024?
Employers now pay monthly contributions (4.2% then 8.4% of wage) to the Social Insurance Organisation for expatriates. The SIO pays your indemnity for service from 1 March 2024; your employer pays the lump sum for service before that date.
Is Bahrain gratuity paid on basic or gross?
On the wage as defined by the Labour Law — basic plus regular allowances such as housing — unless your contract specifies basic only.
Do I lose gratuity if I resign in Bahrain?
No. The full accrued indemnity is payable on resignation.
Is there a minimum service period?
No minimum is specified in Article 116; entitlement accrues pro-rata from day one, although in practice short service produces small amounts.
Do Bahraini employees get gratuity?
No. Bahrainis are covered by the SIO pension scheme instead.