Employer of Record in Bahrain

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Bahrain if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Bahrain below, to avoid any compliance issues.

Employment Contract Requirements

When recruiting in Bahrain, employers must provide two copies of the contract in Arabic, allocating one for the employer and another for the employee. If the contract is in a language other than Arabic, a translated copy must also be included. The contract should include details such as:

• Identification of both parties
• Job responsibilities and duties
• Location of job
• Employee's compensation and other benefits

Onboarding Process

We can help you get a new employee started in Bahrain quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Bahrain

In Bahrain, the standard workweek is 40 to 48 hours. During Ramadan, working hours reduce to six per day. Fridays are typically the Muslim rest day, but some businesses may opt for Thursday or Saturday off based on global operations or local school weekends.

Overtime in Bahrain

In Bahrain, workers can do overtime up to two hours per day, with compensation of at least 25% extra for daytime hours and 50% for nighttime hours. Overtime pay is separate from the annual salary specified in the contract, and senior managers are not eligible for it.

Probation Period in Bahrain

In Bahrain, a customary probation period of three months is typically observed, though some roles may extend to six months. Termination during this period requires a one-week notice.

In Bahrain, you must comply with working hour and overtime laws – including daily limits, overtime thresholds, and rest requirements – to stay compliant and build a strong employee experience. In 2026, you should expect continued enforcement focus on correct overtime premiums, especially for night hours and weekly rest days.

• Standard Working Hours: Standard working time is commonly 8 hours per day, with weekly limits depending on work pattern and sector.
• Overtime Thresholds: Overtime generally begins once employees exceed their regular working hours as set by schedule and the Labour Law framework.
• Overtime Pay Rates: Overtime premiums commonly include +25% for extra hours worked during the day, +50% for extra hours worked at night, and 150% for work performed on the weekly rest day.
• Daily And Weekly Rest Requirements: Weekly rest-day protections apply and should be reflected clearly in shift patterns, approvals, and payroll calculations.
• Night Work Restrictions: Night overtime attracts a higher premium than day overtime, so you should define night hours in policy and align payroll coding accordingly.
• Penalties For Non-Compliance: Non-compliance can expose you to wage claims, back pay, and enforcement action where overtime is unpaid or miscalculated.

Growing your team in Bahrain is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Running payroll in Bahrain is refreshingly simple in some ways — there’s no personal income tax, which means employees take home most of what they earn. However, employers still have a few important responsibilities. The main costs come from social insurance contributions to the Social Insurance Organization (SIO), which cover pensions, unemployment benefits, and work injury insurance. These payments are due monthly by the 15th of the following month, and missing them can lead to fines or compliance headaches.

For Bahraini nationals, the social insurance contribution is quite substantial — employers pay 17% of the employee’s gross salary, and employees contribute 8%. For expatriates, it’s much lower at 3% for employers and 1% for employees, covering basic protections like work injury insurance. On top of that, there’s an unemployment insurance contribution of 1% each from both employer and employee, applying to everyone regardless of nationality.

Salaries in Bahrain are generally paid monthly in Bahraini Dinars (BHD) via bank transfer, with payslips showing gross pay, deductions, and net pay. Foreign employers who don’t have a local entity can use an Employer of Record (EOR) or payroll provider to handle compliance. To get started, companies need to register with the SIO, define their payroll policies, and ensure accurate reporting. In short, while there’s no income tax burden, employers must stay diligent about social insurance filings and on-time contributions to keep things smooth and compliant.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Bahrain, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Bahrain:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

Bahrain requires most foreign nationals to obtain a work permit (often called a work visa or employment visa) and a corresponding residence permit before they can live and work in the Kingdom. In practice, the employer in Bahrain sponsors the worker and applies through the Labour Market Regulatory Authority (LMRA) for a work permit, which is then linked to an entry visa and a Central Population Registry (CPR) card for residence.

Common routes include the LMRA Work Permit for employees, the Residence Permit for dependents, and short-term Visit Visas for business meetings or short assignments. Employers must demonstrate that their business is properly registered and compliant, while employees must meet qualification, health, and security requirements. Timelines are generally measured in weeks, but can be longer if documents are incomplete or additional checks are needed.

Mandatory Leave Entitlement in Bahrain

The annual leave entitlement in Bahrain is 30 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Bahrain

Bahrain observes 8 national holidays in a year.

Paid Time Off in Bahrain

Following one year of service, employees commonly receive 30 days of paid annual leave. Typically, employers cover air travel expenses for expatriate employees during their vacations. Muslim employees with a minimum of 5 years of service are entitled to 14 days of paid leave for a pilgrimage to Mecca once during their tenure.

Maternity Leave In Bahrain

Female employees in Bahrain are eligible for 60 days of paid maternity leave, subject to the following terms:

1. Employees need to provide a medical certificate from a government health center or an approved clinic, indicating the expected date of confinement.
2. Following confinement, employees are restricted from working for a period of 40 days.
3. Employees have the option to take an additional 15 days off without pay after childbirth.

Paternity Leave In Bahrain

Fathers are granted one day off with full pay following the birth of their child.

Sick Leave In Bahrain

In Bahrain, after three consecutive months of service, an employee with a certified illness from a government health center or clinic is entitled to annual paid sick leave as follows:

1. Up to 15 days of fully paid sick leave
2. 20 days of sick leave on half-pay
3. More than 20 days of sick leave without pay

Parental Leave In Bahrain

In Bahrain, there are provisions for only maternity and paternity leave.

In Bahrain, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Bahrain is running as it should.

Termination Process in Bahrain

In Bahrain, terminating an employee requires valid reasons and a notice period, with office closures needing notification to the Ministry of Labor. Bahraini nationals usually receive more protection and higher compensation. Valid reasons for termination include:

• Contract expiration
• Failure to improve after 60 days
• Redundancy
• Resignation
• Reorganisation
• Partial or total closure of the entity

Notice Period in Bahrain

Both the employer and employee can end the contract with a 30-day notice. The contract stays valid during this period, with both parties fulfilling their obligations. If there's no notice, payment instead is necessary. During probation, only a week's notice is required.

Severance in Bahrain

In Bahrain, termination entitles employees to salary and benefits until termination, notice or payment instead, payment for unused leave, reimbursement of unpaid business expenses, and an end-of-service gratuity payment (EOSG). As of March 2024, employers must contribute monthly to the Social Insurance Organisation (SIO) to pay end-of-service benefits, rather than making direct payments to employees at termination. The contribution rate is 4.2% of the employee's monthly wage for the first three years of service, increasing to 8.4% yearly thereafter. Employers are still responsible for paying any end-of-service benefits earned before March 2024 under the previous system.