The Bahraini government recently introduced legislation (Edict 109 of 2023) requiring private sector employers to participate in a government program to fund and deliver the mandatory End of Service Gratuity (EOSG) payments for expatriate (non-Bahraini) employees.

The new system, effective from 1 March 2024, requires monthly electronic contributions to the EOSG via the Bahrain Social Insurance Organization (SIO) portal by the employer. As a result, EOSG benefits accrued by an employee after 1 March 2024 will be paid by SIO, not the employer, at the end of the employee’s service period.

Employers must register and submit their non-Bahraini employees’ salary data through the SIO portal before 1 April 2024.


In Bahrain, employers are not legally obligated to provide expatriates with a pension or savings funds. Employers are, however, mandated to provide expatriate employees with a lump-sum EOSG at termination calculated on specified accrual rates, salary and years of service. While minimum accrual rates were stipulated, employers were under no mandate to fund gratuity liabilities.  As a result, employees faced the risk of an incomplete payment upon termination and employers faced the risk of litigation over gratuity claims and breach of Director’s duties. Moving to the new system places Bahrain on par with global best practices.

Key details

Under SIO guidelines, employers must submit salary data for their expatriate employees via the SIO portal. Data submitted must incorporate all components of remuneration, including basic salary, commissions, percentage of sales or revenue, annual bonus, and applicable allowances (housing, car, telephone allowances etc.). Employers are also required to update employee data in the case of any remuneration changes.

The rate of EOSG accruals remains the same and so monthly contributions will equal 4.2% of the employee’s monthly salary for each of the first three years of service, and 8.4% of the employee’s monthly salary for subsequent years until the end of employment. Any employee with greater than 3 years of service as of 1 March 2024 will automatically have their contribution level set at 8.4%.

The employer remains responsible to directly pay the gratuity to the employee for any years of service prior to the effective date of the new system, i.e., 1 March 2024. 


EOSG monthly contributions must be paid within the first fifteen days of each month. Any delay in payment will result in interest being accrued at a rate of 5% of the contributions that were delayed. Failure to pay the monthly contribution will result in a penalty equal to 20% of the unpaid contributions during the unpaid period.

Failure to comply with any provision of the legislation and its implementing regulations will result in the payment of a fine ranging from BHD 100 to BHD 500, depending on the gravity of the offence. The fine amount will be doubled if the offence is repeated.

Next steps

Employers should ensure their non-Bahraini employees’ salary data are recorded in the SIO portal by 1 April 2024.