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.

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.

Fiscal Year in Bahrain

January 1st - December 31st is the 12-month accounting period that businesses in Bahrain use for financial and tax reporting purposes.

Payroll Cycle in Bahrain

The payroll cycle in Bahrain is usually Monthly, with employees being paid by the end of the month.

Minimum Wage in Bahrain

As of January 1, 2025, Bahrain's minimum wage is set at BHD 300 per month for public sector workers. There is no private sector minimum wage.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 17.00% + Healthcare fee on top of the employee salary in Bahrain.

Employee Payroll Tax Contributions

In Bahrain , the typical estimation for employee payroll contributions cost is around 9%.

Individual Income Tax Contributions

Bahrain does not impose individual income tax.

Pension in Bahrain

Bahrain has reformed its pension and retirement system, including increasing employer contributions (from 14% to 17% as of 2025, with annual 1% increases until reaching 20% by 2028), revising pension calculations, and equalizing service contribution entitlements between male and female workers. Other changes involve linking pension increases to the social security fund's financial status, requiring employers to fund end-of-service benefits, and implementing pension reductions for early retirement based on age brackets.

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.

In Bahrain, work permits and visas are crucial for employers hiring foreign workers. The process involves submitting applications through the Labour Market Regulatory Authority (LMRA), paying fees, and ensuring compliance with specific eligibility criteria. The key visa types include the Work Visa, which is valid for 1-2 years and allows residency; the Business Visa, suitable for short-term business activities; and the Family Visa (Residence Permit), which permits family members to reside in Bahrain. Employers must act as official sponsors for their international employees and follow a structured application process to secure legal employment status. Additionally, understanding renewal processes, digital nomad options, and labor law compliance is essential for successful integration of expatriate workers. While Bahrain doesn't have a specific digital nomad visa as of 2025, remote workers can consider alternatives such as Investor Visas, Partner Visas, or visitor visas valid for six months. For long-term residency, Bahrain now offers a ten-year residence permit (Golden Visa) through an online application platform, which has gained popularity with over 10,000 applicants in 2024 alone. As of October 2023, employers can now digitally renew work visas and residence permits of expatriate employees and their dependents while they are outside of Bahrain through the Expatriate Management System on the LMRA website.

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.