Bahrain's gratuity formula hasn't changed, but since March 2024 who pays it has. For most expatriate employees, part of the entitlement now comes from the employer and part from the Social Insurance Organisation. Here's how the two fit together.
Article 116 of Labour Law No. 36 of 2012 sets the leaving indemnity at half a month's wage for each of the first three years of service and a full month's wage for each year after that. Bahrain's step up comes at year three, earlier than the five year point used in Saudi Arabia and the UAE. Parts of a year are paid in proportion.
Resolution No. 109 of 2023 changed how the indemnity is funded for non Bahraini private sector employees from 1 March 2024. Instead of the employer paying one lump sum when employment ends, the employer now pays a monthly contribution to the Social Insurance Organisation (SIO) for each expatriate employee. The contribution is 4.2% of wage during the first three years of service and 8.4% after that, mirroring the half month and full month rates in Article 116.
The reform isn't retrospective. Service before 1 March 2024 remains the employer's direct responsibility.
If you started before March 2024 and are still employed, your indemnity comes from two sources:
| Service period | Who pays | How it's calculated |
|---|---|---|
| Before 1 March 2024 | Your employer, directly | Article 116 formula on your service up to that date |
| From 1 March 2024 | SIO | The contributions your employer paid into the SIO system |
Our calculator shows the total Article 116 entitlement for your whole service, which is the right figure to compare against the combined amount. When you check your settlement, ask your employer for their calculation of the pre March 2024 portion, and check the SIO portal to confirm contributions have been paid each month since March 2024. If contributions are missing, raise it with the employer and SIO before you leave, not after.
The current law doesn't reduce the indemnity when an employee resigns. This differs from Bahrain's older labour law, which did reduce the amount for resignations, so older articles online can be misleading. An employee who resigns receives the same indemnity as one whose contract is ended by the employer, subject to any dismissal for misconduct under the law's specific grounds.
The indemnity is based on the last wage. In practice, employers use basic salary plus any fixed social allowance, and exclude variable pay such as bonuses and overtime. That's also the basis our calculator uses. The monthly SIO contributions are calculated on the wage your employer registers with SIO, so it's worth checking that the registered figure matches your contract.
Bahraini nationals are covered by the SIO pension scheme rather than the Article 116 leaving indemnity, so this guide applies to expatriate employees in the private sector.
Calculate your gratuityChecked against the published labour law text for each country. Where the law is unclear or interpretations differ, we say so. Last verified 5 October 2026.