Bahrain end-of-service rules: the old formula and the new SIO system
How end-of-service works in Bahrain after the 2024 change — in plain English, with the article behind each rule. Want the number? The calculator splits it by period for you.
The old formula (Article 116)
Bahrain's Article 116 sets the traditional leaving indemnity: 15 days of wage for each of the first three years of service, then one month's wage for each year after. It's calculated on the basic wage plus social allowance, and you qualify after one continuous year. For service earned before 1 March 2024, this is what applies, and your employer pays it directly when you leave.
The new SIO system (Edict 109 of 2023)
From 1 March 2024, end-of-service for expatriate workers shifted to a funded model. Rather than save up a lump sum, the employer pays a monthly contribution to the Social Insurance Organisation: 4.2% of the monthly wage for the first three years of service and 8.4% afterwards. Those percentages are designed to match the old rates — 4.2% a month works out to about half a month a year, and 8.4% to a full month a year — so the benefit you accrue is effectively the same, just held and paid by the SIO instead of your employer.
How the two periods combine
If you were employed before the change and stayed past it, your gratuity has two parts:
- Pre-March-2024 service — the old formula, paid by your employer.
- Post-March-2024 service — funded by the SIO from the monthly contributions.
The three-year threshold that lifts the rate from half a month to a full month is based on your total continuous service, so it carries across the cutoff. Our calculator handles that split automatically once you enter your dates.
No cap, no resignation cut
There's no maximum on Bahrain gratuity, and resignation doesn't reduce it — you keep the full amount whether you resign, are terminated, or your contract ends. The exception is a dismissal for misconduct.
Worked example
Wage BHD 1,000, employed 1 March 2022 to 1 March 2026:
| Period | Accrual | Amount |
|---|---|---|
| Mar 2022 – Mar 2024 (employer) | 2 years × ½ month | BHD 1,000 |
| Mar 2024 – Mar 2026 (SIO) | year 3 (½) + year 4 (1 month) | BHD 1,500 |
| Total | BHD 2,500 |
When to get advice
This is a confident, law-based estimate. Wages can change over time and individual cases vary, so for a binding figure confirm with the SIO or a qualified advisor.
Based on Bahrain Labour Law (Law 36 of 2012), Article 116, with Edict 109 of 2023 — last verified 14 June 2026.
Frequently asked
What changed for Bahrain end-of-service in 2024?
From 1 March 2024, gratuity for expatriate private-sector workers is no longer paid as a lump sum by the employer at the end. The employer now pays monthly into the Social Insurance Organisation (SIO), which holds and pays the post-2024 portion. Service before that date is still settled by the employer directly.
What are the SIO contribution rates?
4.2% of the employee's monthly wage for the first three years of service, then 8.4% — which match the old half-month and full-month accrual rates.
Is gratuity based on basic or total salary?
On the basic wage plus social allowance, if any.
Does resignation reduce Bahrain gratuity?
No. Under Article 116 you keep your full gratuity whether you resign, are terminated, or your contract ends — except for a dismissal for misconduct.
Is there a cap?
No statutory cap on the gratuity.