The formula in Article 116
Under Article 116 of the Labour Law for the Private Sector (Law No. 36 of 2012), a non-Bahraini worker is entitled at the end of the contract to an indemnity equal to half a month’s wage for each of the first three years of service and one month’s wage for each year after that. Part years count in proportion to the time worked.
The wage used is your last basic wage plus the social allowance, if you receive one (Article 47). Housing, transport and other allowances are not included. Resigning does not reduce the indemnity under the current law.
Daily wage: BHD 3.333 (monthly ÷ 30)
- 3 yrs × 15 days/yrBHD 150.000
- 3.16 yrs × 30 days/yrBHD 316.438
- 1.84 yrs × 30 days/yrBHD 183.562
- Paid by employerBHD 466.438
- Paid through SIOBHD 183.562
- Estimated entitlementBHD 650.000
That is 3 years × half a month (BHD 150) plus 5 years × one month (BHD 500) = BHD 650.
What changed on 1 March 2024
Since 1 March 2024, employers no longer build up the indemnity for non-Bahraini workers on their own books. Instead, they pay a monthly end-of-service contribution to the Social Insurance Organization (SIO):
| Service with the employer | Monthly contribution |
|---|---|
| First three years | 4.2% of the monthly wage |
| After three years | 8.4% of the monthly wage |
These rates mirror the Article 116 formula: half a month per year is about 4.2% of each month’s wage, and a full month per year is about 8.4%. Service length is counted from the original hiring date, so a worker who had already passed three years by March 2024 went straight to the 8.4% rate.
Who pays which part
- Service before 1 March 2024: the employer pays this part directly at the end of the contract, under Article 116.
- Service from 1 March 2024: SIO pays this part, from the contributions the employer has made.
Our calculator splits the result into these two parts automatically.
Daily wage: BHD 20.000 (monthly ÷ 30)
- 3 yrs × 15 days/yrBHD 900.000
- 1.16 yrs × 30 days/yrBHD 698.630
- 1.84 yrs × 30 days/yrBHD 1,101.370
- Paid by employerBHD 1,598.630
- Paid through SIOBHD 1,101.370
- Estimated entitlementBHD 2,700.000
Why the SIO part can differ
The SIO payment is based on contributions actually paid. If an employer did not register a worker, registered them late or paid contributions on a lower wage, the SIO part may be less than the calculator shows. You can check your registration and contributions through SIO’s online services, and raise missing contributions with your employer and SIO.
Domestic workers
Domestic workers are partly covered by the Labour Law, and Article 116 is one of the provisions applied to them. It has not been confirmed whether the 2024 SIO scheme covers domestic workers, so our domestic calculator assumes the employer pays the full amount. Check with the Labour Market Regulatory Authority (LMRA) or SIO for your case.
Bahraini nationals and government employees
Bahraini workers are covered by the social insurance pension rather than this indemnity. Non-Bahrainis in the civil service are employed on contracts, and their end-of-service terms come from those contracts and Civil Service Bureau rules.
Checklist when leaving a job in Bahrain
- Confirm your start date – it decides which rate applies and how the amount is split.
- Ask your employer for the pre-March-2024 indemnity in writing as part of your final settlement.
- Check your SIO record to confirm contributions from March 2024 onwards.
- Unused leave and the last salary are separate from the indemnity.
Calculate your Bahrain indemnity →
Questions
Does SIO pay all of my end-of-service in Bahrain?
Only the part earned from 1 March 2024. The employer pays the part earned before that date.
Does resigning reduce my indemnity in Bahrain?
No. The current law does not reduce the indemnity on resignation.