Hiring Employees in Bahrain

In this article, we will discuss the basics of entering into an employment relationship in Bahrain. Understanding the key elements of an employment contract and the rights and responsibilities of both employers and employees is essential for a smooth and mutually beneficial working relationship.?

I. Employment Relationship

According to Labour Law, an employment relationship refers to an agreement between an employer and an employee, wherein the employee agrees to work under the direction or supervision of the employer in exchange for a wage. A contract of employment can be either written or oral. However, it is recommended to have a written contract for clarity and to avoid any misunderstandings.

A contract of employment should be executed in two copies, written in Arabic, and signed by both parties. An Arabic translation must be attached if the contract is written in another language. It should include essential information about both the employer and the employee, such as their names, addresses, qualifications, occupations, duration of the contract, wage details, and any additional benefits agreed upon.

1. Definite Period

A contract is considered to be for a definite term when it is entered into for a fixed period or for performing a specific job. Such contracts automatically terminate upon the expiry date mentioned in the contract. However, they may be renewed through explicit mutual agreement.

2. Indefinite Period

An employment contract is considered valid for an indefinite period under certain circumstances:

• If the contract is for an unspecified term.
• If the agreed contract exceeds five years in duration, including the original contract and any subsequent renewals.
• If both parties continue to work after the expiry of a contract for a definite period without explicit renewal.
• If the contract relates to specific work that takes more than five years to complete.
• If a contract relating to specific work has expired, but both parties continue to work without explicit renewal.

II. Entitlements and Benefits

Employees in Bahrain are entitled to various benefits and entitlements as per the Labour Law. Let's explore some of the key ones:

1. Salaries and Wages

Bahrain does not have a minimum wage requirement. However, employers must ensure that wages are paid to employees. To discharge their liability, employers can maintain a register or payroll for recording wage payments. Alternatively, wages can be transferred to an employee's bank account upon request.

2. Allowances and Salary Increases

Allowances and salary increases are subject to the employer's internal policies and the terms agreed upon in the employment contract.

3. Public Holidays

Employees in Bahrain are entitled to several public holidays, including New Year's Day, Islamic New Year, Prophet's Birthday, Eid Al Fitr, Eid Al Adha, Ashoora, and National Day. If a public holiday falls on a Friday or another public holiday, the employee should be compensated with an additional day off.

4. Annual Leave

Employees are entitled to a minimum of 30 calendar days of annual leave per annum. During the first year of employment, leave accrues at a rate of 2.5 calendar days per month. Employers must settle the leave balance and provide equivalent payment every two years at most. If the employment contract is terminated before the employee utilizes their annual leave, they must be paid the equivalent wages for the remaining balance.

III. Probationary Periods

An employee may be subject to a probationary period if explicitly stated in the employment contract. The duration of the probationary period must not exceed three months, except for certain occupations specified by the Minister of Labour, where it can be extended to a maximum of six months. During this period, either party can terminate the contract by providing one day's notice. An employee cannot be placed under probation more than once by the same employer.

IV. Establishing a Legal Presence

To hire employees in Bahrain, an employer must incorporate a legal entity and have a physical presence in the country. The contract of employment should include the employer's name, the address of the business premises, and the commercial registration number.

For foreign nationals to be employed by a company in Bahrain, both a work permit and a residence permit must be obtained for each expatriate employee. The issuance of work permits for expatriate employees falls under the authority of the Labour Market Regulatory Authority (LMRA). The LMRA regulates the labour market, issues work permits and controls the practices of recruitment agencies, employment offices, and self-sponsored expatriates.

It is important to note that hiring staff indirectly through a local entity, although a common practice, is considered an illegal arrangement and should be avoided.

Entering into an employment relationship involves several important considerations for both employers and employees. Understanding the key elements of an employment contract, entitlements, probationary periods, and the process of establishing a presence is crucial to ensure a fair and compliant working environment. By adhering to the legal requirements and respecting the rights of all parties, employers and employees can establish a strong and productive relationship.

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