The Employment Law Review: Bahrain

Introduction

The Labour Law for the private sector (the Labour Law) came into force on 1 September 2021 under Legislative Decree Law No. 36 of 2012, thereby replacing the previously enacted legislation issued in 1976. Bahrain adopts a civil legal system (i.e., the courts are required to abide by the laws issued by the legislature).

The Labour Law generally favours the employee, whom it perceives as being the weaker party in the employment relationship; it therefore sets out the minimum applicable benefits for employees. Accordingly, Article 4 of the Law states that 'every condition or agreement that contravenes the provisions of this Law shall be unlawful even though it is precedent to the effective date thereof where it involves undermining the prescribed worker's rights'.

Other employment-related laws are:

  1. Social Insurance Law No. 24 of 1976 and its amendments;
  2. Legislative Decree No. 19 of 2006 with regard to the Regulation of the Labour Market; and
  3. Legislative Decree No. 33 of 2003 promulgating the Law of Labour Unions.

Pursuant to Article 119 of the Labour Law, the employee and employer are provided with an option to seek an amicable settlement before the Registry of Individual Employment Dispute Resolution Authority at the Ministry of Labour prior to resorting to court proceedings. When a settlement is reached, minutes shall be prepared and the document shall be signed by both parties or their respective representatives.

i Stages of a labour dispute

Case administration stage

Each case is managed by a judge once a week (i.e., there is a weekly meeting or hearing). Each party will present their defence statements and corresponding responses, noting that they can put forth witnesses' testimonies to further support their claims.2 The process may take approximately two to four months.

If the time limit for hearing a case before a judge has lapsed without reaching a settlement, the judge will refer the case to the High Labour Court.3

High Labour Court

The estimated duration of cases heard in the High Labour Court is six months, though this may vary depending on the court's discretion and the number of cases. The parties will further be able to submit the plea and defence once more; parties cannot submit any new claims save where the plea relates to public order.4 A judgment issued by the High Labour Court shall be considered final.

Court of Cassation

Although judgments of the High Labour Court are final, they may be contested before the Court of Cassation. The typical duration of this process is about one year; however, this may vary according to the number of appeals being heard.

ii Competent agencies

The government agencies competent to enforce employment law are the Ministry of Labour, the Labour Market Regulatory Authority (LMRA) and the Social Insurance Organisation (SIO, also known as GOSI).

Year in review

The Ministry of Labour has issued a resolution in relation to the stages of implementing a wages protection scheme.5 The resolution involves three stages pursuant to the Central Bank of Bahrain and will commence depending on the number of employees.

Significant cases

Arbitration clause in an employment contract

An employee challenged the ruling of the High Labour Court whereby his claim was dismissed owing to an arbitration clause within the employment contract. The employee challenged the ruling before the Court of Cassation, which disregarded the arbitration clause. The Court of Cassation explained that having such a clause prevents the employee, being the weaker party, from access to justice, taking into consideration that arbitration proceedings are complicated and costly for an employee.

Basics of entering an employment relationship

i Employment relationship

A contract of employment is an agreement (written or oral) between an employer and an employee by virtue of which an employee undertakes, in consideration of a wage, to work under the direction or supervision of an employer.6 Accordingly, any contractual relationship whereby a party undertakes to work under the direction or supervision of an employer, in consideration of a wage or salary, shall be deemed to be an employment contract and hence fall under the provisions of the Labour Law.

A contract of employment shall be confirmed in writing in Arabic and prepared in duplicate, of which one copy shall be retained by the employee and the other by the employer. If a contract is written in another language, an Arabic translation must be attached, and if the contract referred to any internal regulations, a copy of the relevant regulations must be attached and signed by both parties. The contract must be prepared in duplicate, of which one copy shall be retained by the employee and the other by the employer.7

A contract of employment shall include the essential information about both parties, in particular:

  1. the employer's name, the address of the business premises and the commercial registration number;
  2. the employee's name, date of birth, qualifications, nationality, occupation, marital status, residential address and the necessary personal identification details;
  3. the type and nature of employment;
  4. the duration of the contract (if it is for definite period);
  5. the wage, as mutually agreed, the method and date of payment, and all elements of the wage, such as any mutually agreed benefits in cash or in kind;
  6. a non-compete clause; and
  7. for Muslims, whether he or she performed pilgrimage (i.e., Hajj).8

Definite period

A contract shall be deemed to be for a definite term if it is entered into for a fixed period or for performing a specific job.9

An employment contract for a definite period terminates automatically on the expiry date.10 However, when an employment contract for a definite period has expired, it may be renewed by explicit mutual agreement.

Indefinite period

An employment contract shall be deemed to be valid for an indefinite period in the following instances:

  1. if the contract was for an unspecified term;
  2. if the agreed contract is concluded within a period exceeding five years;
  3. if the duration of the original contract and the renewed contract exceed five years;
  4. if both parties continued performance after expiry of a contract for a definite period without an explicit renewal agreement;
  5. if the contract of employment was signed to undertake specific work and took more than five years;
  6. if the contract of employment was renewed and where the period of completion of the original work and the work for which the contract is renewed subsist for more than five years; or
  7. if a contract of employment relating to specific work being undertaken has expired and both parties continued performance after the work has been completed, without an explicit renewal agreement.11

The table below sets out an employee's main entitlements and benefits:

EntitlementDetails
Salaries and wagesThere is no requirement of a minimum wage in Bahrain. However, an employer shall not be discharged from its liability to pay wages unless the employee signs a register maintained for recording the payment of wages, a payroll or a receipt prescribed for this purpose, or by procuring the transfer of wages to a bank at the employee's request12
Allowances and incrementsThese are subject to the employer, the employment contract and the employer's internal policies
Public holidaysNew Year's Day - 1 day
Labour Day - 1 day
Islamic New Year  - 1 day
Prophet's Birthday 1 day Eid Al Fitr (following Ramadan) - 3 days
Eid Al Adha (following Hajj)  - 3 days
Ashoora  - 2 days
National Day - 2 days

Total  - 14 days

If any of these days falls on a Friday (i.e., the weekly day of rest) or another public holiday, the employee shall be compensated by another day off
Annual leaveMinimum of 30 calendar days per annum. For the first year of employment, leave accrues at 2.5 calendar days per month.13
The employer shall settle the leave balance and its equivalent payment every two years at most. If the employment contract is terminated before the employee uses his or her annual leave entitlement, the employee must be paid the equivalent wages for the remaining balance14

There are no taxes implemented in relation to employment contracts.

ii Probationary periods

If explicitly stated in the contract of employment, an employee may be subject to a probationary period, which in any case must not exceed three months. Nevertheless, an employee may be employed under probation for a period not exceeding six months in certain occupations, as determined by an Order of the Minister for Labour. The probationary period clause or the period thereof shall not be evidenced unless recorded in the employment contract.15

Either party may terminate a contract of employment during the probationary period if it is found that continuance is not suitable, provided that the party terminating the contract provides the other party with notice of one day.16

No employee shall be employed under probation more than once by the same employer.17

iii Establishing a presence

An employer must incorporate a legal entity and have a presence in Bahrain, given that the contract of employment requires the employer's name, the address of the business premises and the commercial registration number.18

For a company to hire foreign nationals as employees, a work and residence permit must be obtained for each expatriate employee. Work permits for expatriate employees are issued by the LMRA, a government body with a corporate identity that is endowed with full financial and administrative independence, under the authority of a board of directors, duly chaired by the Minister of Labour. The LMRA's authority is to regulate the labour market, issue work visas and to regulate and control manpower licences, recruitment agencies, employment offices and the business practices of self-sponsored expatriates.

As a matter of practice, some foreign entities hire their staff indirectly through a local entity. However, this is an illegal arrangement.

Restrictive covenants

Restrictive covenants are generally enforceable in Bahrain. Under the Labour Law, the parties to an employment contract may agree that the employee may not compete with the employer or participate in a competitive project following the termination of the employment contract.

The agreement is rendered valid subject to the following conditions being satisfied:19

  1. At the time the contract was concluded, the worker must have been 18 years of age.
  2. The restriction must be limited to a period not exceeding one year after the termination of the employment contract and must be limited in terms of the place and type of work so as to protect the employer's legitimate interests.

However, an employer must not invoke such an agreement if the contract is terminated or if its renewal is rejected without any justifiable action on the employee's part. The employer cannot invoke such an agreement if the employee's termination of the contract is justifiable.20

The Law is silent on the non-solicitation clause. However, it may fall under the non-competition provisions as aforementioned. In all cases, the courts in Bahrain will consider the justiciability and reasonableness of this restriction or any other restriction.

Wages

i Working time

The maximum working time per week is 48 hours, except during the month of Ramadan, when Muslim employees are required to work no more than 36 hours per week or six hours per day.21 The actual working time should not exceed eight hours per day unless otherwise agreed, provided that it does not exceed 10 hours per day.22

The Labour Law stipulates that an employee is entitled to a time off (weekend) for no less than 24 hours. In Bahrain, Friday is deemed the weekly day of rest,23 since Friday includes prayer time for Muslims and is regarded as a family day. An employer may grant an employee a weekly paid day of rest of more than 24 consecutive hours provided that the working time per week does not exceed 48 hours.

In some sectors and businesses, Friday is the only day off granted, which is permissible. Substituting this day with another, for example Saturday instead of Friday, is also permissible provided it is in the interests of the business (note that the Law refers to certain employees and not all employees with regard to substituting the rest day). Therefore, it is recommended to not deviate from Friday unless there is supporting evidence that business interests would be at risk.

The weekend in Bahrain falls on Friday and Saturday. Therefore, most employers grant these two days off, in line with the government's working days.

Finally, an employee is entitled to receive half pay if he or she reports to the workplace but cannot perform his or her functions for reasons beyond the employer's control (force majeure).

ii Overtime

The Labour Law defines 'basic wage' and 'wage' as follows:

  1. A basic wage is the defined consideration in the employment contract payable to the employee periodically, together with increments (if any).24
  2. A wage is the total remuneration paid to the employee in consideration of his or her employment, whether it is fixed or variable, in cash or in kind. It includes the basic wage together and all additional allowances (payment in lieu, gratuities, bonuses, commission and other benefits).25

An employee may be employed for extra hours if it is required by business conditions.26

For each extra hour worked, the employee shall receive payment that is equivalent to the standard wage entitlement plus a minimum of 25 per cent thereof for hours worked during the day, or a minimum of 50 per cent thereof for hours worked during the night (deemed to be between 7pm and 7am),27 as illustrated in the following examples:

Example of daytime overtime: if the rate of pay is 10 dinars per hour, the payment for working one hour of overtime during daytime is 10 dinars + 25 per cent of 10 dinars (i.e., 10 dinars + 2.5 dinars) = 12.5 dinars
Example of night-time overtime: if the rate of pay is 10 dinars per hour, the payment for working one hour of overtime during night-time is 10 dinars + 50 per cent of 10 dinars (i.e., 10 dinars + 5 dinars) = 15 dinars

Working on a rest day

An employer is entitled to request that an employee works on his or her day off if the situation requires it. In this situation, the employee shall be entitled to the usual wage for that day and an overtime payment equivalent to 150 per cent of the usual wage, or shall be given another day off in lieu thereof. The employee can choose between the overtime wage or the day off in lieu. Given that the law provides the employer with a conditional discretion as to the day of rest granted, the 150 per cent overtime payment shall apply notwithstanding the elected day of rest (i.e., whether it is Friday or Saturday) if the employee is required to work on that day. However, an employee shall not be required to work on the weekly day of rest for more than two successive weeks unless written consent has been given by the employee.28

Example of rest day payment: if the rate of pay is 100 dinars per day, the payment for working on the weekly days of rest is 100 dinars + 150 per cent of 100 dinars (i.e., 100 dinars + 150 dinars) = 250 dinars

If an employee works overtime hours on a day of rest, then both the daytime and night- time overtime calculations shall apply.

In the event that an employer increases the percentages stated in the Labour Law then (should a court ever get involved) the court will require the employer to pay the increased percentage to the employee. However, if an employer applies a lower percentage, then the court will assume the percentage as stated by in the Labour Law.

Working on a public holiday

The same rate and method of calculation for working on a day of rest shall apply to working on a public holiday.29 An employer may require a worker to report for duty during Eid or any official occasion determined by an edict (as issued by the Council of Ministers) where it is required by the circumstances of the work. In this situation, the employee shall be paid 150 per cent of the usual wage in respect of the days worked or be granted days off in lieu, as elected by the employee. If any of the days worked is a Friday, the employee shall be compensated by being given another day off in lieu. For instance, if the National Day falls on Friday and Saturday, and the employee's weekly days of rest fall on the same days, then the employee is entitled to two days off.

Foreign workers

Ostensibly, the Labour Law does not distinguish between local and foreign employees given that they all enjoy equivalent rights. However, only foreign employees are entitled to leave indemnity considering that local employees are registered for pension funds.

The Social Insurance Organisation Law provides that, inter alia, an employee, regardless of nationality, must be registered under the SIO.30 An employer is further obliged to register all the entity's employees under the SIO and shall be fined, in accordance with Section 13 of the SIO Law, if the employer fails to do so.31

Foreign employees must acquire a work permit provided by the employer and issued by the LMRA to allow them to work in Bahrain. To obtain a work permit, the conditions put forth by the Ministry of Labour must be met, which include, but are not limited to, the following:32

  1. the employer should have settled all fees and accrued amounts due to the relevant authority in respect of work permits;
  2. the employer shall settle any charged penalties in accordance with final judgments pursuant to the provisions of the LMRA;
  3. the employee must be medically fit and must not be suffering from any contagious disease; and
  4. the foreign employee must not have been previously repatriated or banished from Bahrain as a result of a crime.

An employer may also issue a residency visa for an employee's spouse or children (or both) if they are available.33

Other than a working permit, no other permits are required for foreign employees. The work permit is usually valid for two years from the date of the foreign employee's arrival in Bahrain, but it can be renewed.34 The LMRA may issue a six-month temporary work permit from the date of the foreign employee's arrival in Bahrain.35 The permit is approved by both the LMRA and the Ministry of Interior Nationality, Passports and Residence Affairs.

These procedures are not stated in the laws of Bahrain but are based on general guidelines and regulations provided by the LMRA. These guidelines and regulations are subject to change; furthermore, the LMRA may enforce further requirements or permits at any time.

Notwithstanding the LMRA's authority and discretion in regulating the use of foreign workers, there are no legal provisions that require a specific percentage of Bahraini employees to be hired by local entities. Generally, the percentage depends on the entity's commercial activity and the number of employees. For example, if six to nine employees are working in an entity that undertakes oil industry services, 20 per cent of the employees must be Bahraini; if the establishment has hired between 20 and 99 employees, 30 per cent of the employees must be Bahraini.

Although the minimum percentage depends on the commercial activity, some activities do not require a certain number of Bahraini employees.

Pursuant to LMRA Resolution No. (79) of 2009, an employee is entitled to transfer its employment and enter into an employment contract with another employer based on the visa sponsored by its previous employer, subject to the following:

  1. Transfer without the consent of the employer:
    • The employee must complete one full year with the current employer prior to commencing the transfer process.
    • The employee must notify the current employer of the intent to transfer via a registered letter and retain the notification of its receipt from the post office within the time stated in the employment contract and not exceeding a three-month notice period.
    • The employer must follow up with the intended new employer regarding the application submission and the LMRA requirements to issue transferral.
  2. Transfer with the consent of the employer:
    • The second employer must ensure that all the applicable LMRA regulations previously stipulated for the previous employer are met.
    • Pursuant to the LMRA regulations, the previous employer shall allow the transfer of the employee. Once the transfer is completed, the second employer shall pay the necessary fees.
  3. Transfer in the event of an expired work permit or other reasons:
    • The employee seeking to transfer must notify the LMRA (by filing a form physically or electronically) not less than 30 days before expiry of the work permit or within five business days of the date of being notified of the cancellation of a work permit.
    • The employee is then given 30 days' grace to enable the arrangement for the transfer, during which he or she is not allowed to undertake any contractual work.
    • Note that there are no restrictions on the length of a foreign worker's assignment.

Global policies

The relevant policies include the following:

  1. An employer with 10 or more employees must post in a conspicuous place within its premises a copy of the basic regulations for the organisation of work and the disciplinary regulations.36
  2. To ensure the effectiveness of the aforementioned regulations, they must be approved by the Ministry of Labour.37
  3. Details of working hours, weekends and breaks must also be placed in a conspicuous location within the work premises.38
  4. The termination of a contract of employment by an employer shall be deemed unfair dismissal if it is found that the reason for dismissal is the gender, colour, religion, belief, social status or family responsibilities of the employee, or related to a female employee's pregnancy, her child's birth or breastfeeding her infant.39
  5. No distinction of gender, origin, language, religion or faith should be made when determining an employee's salary.40

Parental leave

i Maternity leave

A female employee is entitled to maternity leave for 60 days on full pay. However, she must provide a valid medical certificate that includes the date of her confinement period from either a government health centre or any clinic approved by the employer.41

An additional period of 15 days without pay may be granted.42

A female employee is further entitled to leave without pay to care for a child who is not more than six years old for a period not exceeding six months and three separate instances throughout her period of employment.43

ii Paternity leave

Fathers are entitled to one day of leave with pay following the birth of a child.

Translation

As previously mentioned, an employment contract must be written in Arabic. However, it is common practice for employees to draw up written contracts in English, especially when the employer or the employee is foreign. If there are any arising disputes as to the clauses within the contract, the courts will rely on the certified Arabic translation, given that it is a requirement for an employment contract to be in Arabic. Translation extends to any other relevant documents, such as human resources policies.

Employee representation

Workers in any firm, business sector or activity, industry or similar trade who are linked to each other have the right to form a trade union, provided that the establishment of the union is not based on social sectors, religion or ethnicity. Employees who are overseen by the civil service systems have the right to join a trade union.44

There is no public register for trade unions in Bahrain. However, most unions are formed in the industrial sector. There is also no legal obligation to provide space for the trade union and its activities on company premises (such as for meetings). However, we understand that, in practice, companies often do so to maintain good relationships with their unions. We believe that, with time, this practice may be considered a recognised custom.

Strike

The Bahrain laws grant and regulate employees' right to strike, pursuant to Law No. 33 of 2002 on Trade Unions. A strike is generally interpreted as a peaceful and lawful means to represent and defend employees' economic and social interests, which is organised by their trade unions.

The Labour Law further recognises the right to strike under Article 8, which states that employees shall have the right to strike in defence of their interests, according to the guidelines determined by the law. However, if an employee exercises this right, the contract of employment will be suspended during the strike period.

The Trade Union Law sets out the following conditions regarding the legitimate right to strike:45

  1. the approval of the majority of the General Assembly of the Trade Union in an exceptional meeting to commence the strike;
  2. the employer shall be provided with a notice period 15 days prior to the commencement of the strike. There is no requirement to notify the government. However, in practice, an employer must inform the Trade Unions Department at the Ministry of Labour;
  3. if the dispute was referred to conciliation and arbitration, then the strike shall be suspended;
  4. strikes shall be prohibited in vital and important facilities if the action would adversely affect national security or citizens' ordinary life. Those vital facilities include46 security, civil defence, airports, seaports, hospitals, healthcare centres and pharmacies, persons and goods transportation means, telecommunications, electricity, water, bakeries, educational institutes, oil and gas facilities; and
  5. in the case of collective arguments in vital and important facilities, it is mandatory to consider conciliation or arbitration where there is a failure to resolve or amicably settle the issue between the employer and employee.

Data protection

i Requirements for registration

In general, companies are not required to register with the Data Protection Authority (DPA). Data managers are required to register with the DPA and to notify it in certain cases, or for certain processing requirements, as dictated by law.

Generally, data owners must be provided with several pieces of information, including, among other things:

  1. the name of the data manager;
  2. the purpose of the processing;
  3. who will be receiving the data;
  4. a declaration of which data must be provided and what is optional;
  5. a declaration of the data owner's right to view his or her own data and to request corrections; and
  6. a declaration of use for marketing purposes.

The requirements also depend on whether the data manager receives the data directly from data owners or from another data manager.

Pursuant to Article 8 of the Personal Data Protection Law (PDPL), the data controller shall implement appropriate technical and organisational measures to guarantee protection of data against accidental or unauthorised destruction, accidental loss, alteration, or disclosure or access to any other unauthorised forms of processing. To further ensure that appropriate levels of security are taken into account, data controllers must consider the latest technological security measures, the associated costs, the nature of the data to be processed and the potential risks involved.47

ii Cross-border data transfers

The PDPL contains provisions to manage the transfer of personal data outside Bahrain except in certain cases. These cases are broken down broadly into two categories; transfers with, and transfers without approval of the DPA.

Transfers with DPA approval

Organisations can transfer personal data outside Bahrain by seeking the prior approval of the DPA. Approval will be granted only under the following conditions:48

  1. the intended country or region provides sufficient protection to personal data (the list of countries and regions is to be published in the Official Gazette by the DPA); and
  2. transfer approval is to be granted case by case, provided that the data will be afforded an adequate level of protection, and in particular:
    • the nature, purpose and duration of data and processing;
    • the country or territory of origin of the data, its final destination and the protections afforded in that country or territory; and
    • the relevant international agreements and legislations that are in force in the country or territory to which the data shall be transferred.

Approvals may be granted with additional conditions and for a specific period, as determined by the DPA. Note that, to date, the DPA has not published a list of acceptable countries.

Transfers without DPA approval

Organisations may transfer personal data outside Bahrain without DPA approval by procuring the consent of the respective data owner or if the transfer is of data obtained from a register compiled in accordance with the law to any person demonstrating a legitimate interest.

A transfer outside Bahrain is also permitted if deemed necessary for:

  1. giving effect to an agreement between the data owner and the data manager, or in preparation to enter into an agreement between the aforementioned parties;
  2. executing an agreement between the data manager and a third party for the benefit of the data owner;
  3. protecting the vital interests of the data owner;
  4. complying with an obligation prescribed in law or with an order from a competent court; or
  5. preparing or pursuing a legal claim or defence.

Transfers based on the above reasons are for an indefinite period and no additional conditions are required under the DPA.

iii Sensitive data

The PDPL recognises two types of data pertaining to an individual – personal data and sensitive personal data – and there are key distinctions in the processing of each type.

Personal data

The term 'personal data' includes any information in any form concerning an identified individual, or an individual who can, directly or indirectly, be identified by reference, in particular, to his or her personal identification number, or by reference to one or more factors specific to his or her physical, physiological, intellectual, cultural, economic or social identity.

Personal data can be processed:

  1. based on the data owner's consent;
  2. to execute a contract to which the data owner is a party;
  3. to conduct pre-agreement procedures based on the data owner's request;
  4. to carry out a non-contractual legal obligation or to comply with orders issued by a competent court of the public prosecution;
  5. to protect the vital interests of the data owner; or
  6. to pursue the legitimate interests of the data manager or a third party, so long as the processing does not conflict with the rights and primary liberties of the data owner.49

Sensitive personal data

The term 'sensitive personal data' relates to any personal information that reveals, directly or indirectly, a person's race, ethnicity, political views, philosophical views, religious beliefs, union association, criminal record or any information concerning a person's health or gender.

Sensitive personal data can be processed, among other reasons:

  1. based on the data owner's consent;
  2. by the data processor insofar as the data relates to the data processor's own employees for labour-related reasons;
  3. for reasons necessary to protect any human being;
  4. in respect of any data provided to the public by the data owner;
  5. for legal proceedings, including pretrial preparations;
  6. for the provision of preventive medicine, a diagnosis or medical care by authorised practitioners;
  7. for union-related reasons insofar as the data relates to union or association members;
  8. for public interest reasons as performed by public entities (i.e., the government); or
  9. for evaluating equality between ethnicities, genders, etc.50

iv Background checks

In practice, background checks (whether civil or criminal) are conducted unofficially. It is not officially permitted. However, an employee is normally required to provide a certificate of 'good conduct' issued by the Ministry of Interior prior to starting any job.

Discontinuing employment

i Dismissal

An employee may not be dismissed without cause. The following table sets out the different grounds for termination with cause and the applicable formalities under the Labour Law.51

Reason for dismissalApplicable articles under the Labour Law
Non-performanceArticle 109
An employer shall not terminate the employment contract because of the employee's poor performance or decline thereof except upon notifying the employee of the aspects of low or lack of efficiency and allowing an appropriate opportunity to reach to the required level of no fewer than 60 days. If the employee should still fail to comply, then the employer may terminate the contract of employment
Article 107(11)
The employer may terminate the employment contract without notice or compensation if the employee is no longer qualified to perform the work as described in the employment contract for a reason directly relating to the employee, such as cancelling a work permit or losing the qualifications that allow the employee to practise the agreed work
Article 114(A)
The employment contract is terminated because of the worker's total inability to perform his or her duties, irrespective of the cause of the disability
Article 114(B)
The employment contract shall not be terminated because of the employee's partial inability to perform his or her duties unless it is proven that there is no other suitable job that the employee may perform to the satisfaction of the employer. If such a job is available, the employer should notify the employee accordingly and arrange a transfer, at the employee's request, to the other job without prejudice to the Social Insurance Law.
MisconductArticle 107(2)
The employer may terminate the employment contract without notice or compensation if the employee has committed an act that caused serious material loss to the employer, provided that the employer has reported the accident to the competent authorities within two working days of being aware of the amount of material loss
Article 107(3)
The employer may terminate the employment contract without notice or compensation if the employee, despite a written warning, fails to comply with written instructions that are required to be observed for the health and safety of employees and the establishment, provided that the instructions are in writing and displayed in a prominent place
Article 107(5)
The employer may terminate the employment contract without notice or compensation if the employee fails to perform essential duties as stated in the employment contract
Frequent sick leaveArticle 117
An employer shall not terminate the contract of employment because of the worker's illness unless the worker exhausts the balance of his or her annual and sick leave entitlements
Expiry of contractArticle 96(A)
A contract of employment made for a definite duration shall automatically terminate at the end of its duration
Article 97(A)
A contract of employment concluded for the performance of a specific piece of work shall terminate on completion of the work as agreed
Other reasonsArticle 115
The employer may terminate the employment contract without compensation if the employee reaches the age of 60, unless the parties agree otherwise
Article 110
An employer may terminate the contract of employment because of the total or partial closure of the establishment, scaling down its business or replacement of the production system by another that may affect the size of the workforce, provided that termination of the contract shall not take place without notice having been given to the Ministry concerning the reason for termination 30 days before the date of giving the worker notice of termination. For events other than total closure of the organisation, the contract of a Bahraini employee who enjoys the same experience and competency as a foreign employee working with him or her in the organisation shall not be terminated
3. Article 107
The Labour Law provides that when terminating an employee's employment contract, the employer must do so for a legitimate reason or shall otherwise be liable to pay the employee compensation. The Law provides that an employer cannot dismiss an employee without notice or compensation except in the following situations:
  • The employee has assumed a false identity or submitted false certificates or testimonials.
  • The employee, despite a written warning, fails to comply with written instructions that are required to be observed for the safety of workers and the establishment, provided that the instructions are displayed in a prominent place.
  • The employee is absent from work, with reasonable reasons, for more than 20 days in one year or for more than 10 consecutive days, provided that dismissal is preceded by a written warning after an absence of 10 days in the former instance and an absence of five days in the latter.
  • The employee fails to perform his or her essential duties under the contract of employment.
  • The employee discloses trade secrets of the employer.
  • The employee has been sentenced for a crime or a misdemeanour involving dishonour, dishonesty or immorality.
  • The employee is found during the hours of work to be under the influence of alcohol or drugs, or has committed an immoral act at the place of work.
  • The employee assaults his employer or his responsible representative or commits a serious assault on any of his or her supervisors at work during the course of employment or for reasons connected therewith.
  • If the employee fails to comply with strike regulations.

Pursuant to Article 2 of the Social Insurance Law No. 24 of 1976, social insurance for old age, disability and death is mandatory for Bahraini employees. The employer must further pay for each Bahraini employee a contribution of 11 per cent of the employee's wage and shall deduct 7 per cent from the employee's wage.52 Accordingly, the total monthly contribution will be 18 per cent of the Bahraini employee's wage. The indemnity and end-of-service benefits are generally applicable to expatriates.

A social plan by the employer is not required. An employee does not enjoy rehire rights except in the event that he or she was accused of a crime relating to work, and was acquitted in accordance with Article 81 of the Labour Law. Offers of suitable alternative employment are not required in Bahrain; however, in practice, some employers do offer this option.

The parties to an employment contract may enter into a settlement agreement, prior to or following separation.

ii Redundancies

Article 110 of the Labour Law recognises that an employer may lay off an employee because of a reorganisation or restructuring scheme.

An employer may terminate a contract of employment because of the total or partial closure of the establishment, the scaling down of its business or replacement of the production system by another that may affect the size of the workforce, provided that termination of the contract takes place only after notice has been given to the Ministry, including the reason for termination, 30 days before the date on which the worker is given notice of termination. In the case of a non-total closure of the establishment, it shall be taken into consideration not to dismiss a Bahraini employee who has the same competence and experience as a foreign worker who works with that employee at the same establishment.

In this regard, the Court of Cassation, which is the highest civil court in Bahrain, has issued the following related judgments:

The employer is the master of his establishment. Meaning: He may release some of the employees if his interest requires so. Provided that his motive is based on legitimate reasons. In assessing such reasons, substantive matters considered of substantive matters subject to the court's discretion.

Appeal No. 27 of 2005 – Hearing of 27 November 2006

The employer's right to organise his establishment to achieve his interest is provided in the absence of any intention of abuse towards his employees.

Appeal No. 103 of 2002 – Hearing of 27 January 2003

Accordingly, the termination of employment contracts by reason of redundancy is not considered unfair dismissal as long as an employer (1) follows the necessary steps and requirements under the Law, (2) can establish that the redundancy has been based on real reasons and that (3) has acted in good faith towards the employee.

As required by Article 110 of the Labour Law, the employer must send a notice to the Ministry of Labour 30 days prior to any termination notice being sent to any affected employee. There is no requirement to notify the trade union (if any).

The notice to the Ministry of Labour must contain the following information:

  1. grounds for the redundancy (brief);
  2. the name of the employee whose position is being made redundant and the job title, starting date in the job, termination date, years of service and wage; and
  3. a copy of the employee's identity card and passport.

Once 30 days have elapsed after notifying the Ministry, the employer may issue a 30-day termination notice to each affected employee. A lawyer may assist in drafting the notice and in delivering it to the Ministry of Labour.

Failure to notify the Ministry is punishable under the Labour Law and will result in the imposition of a fine of between 500 dinars and 1,000 dinars on the employer. Moreover, the above penalty shall be multiplied according to the number of employees who were subject to the crime, and the penalty shall be doubled in case of recurrence.

A social plan by the employer is not required. There are no rehiring rights for employees except when an individual is accused of a crime relating to work and he or she has been acquitted in accordance with Article 81 of the Labour Law.

The parties to an employment contract may enter into a settlement agreement, prior to or following a separation.

Transfer of business

The corporate form of the company does not have any bearing on the process of employee transfer. Under the Labour Law, there are no specific provisions for the transfer of employees from one employer to another. The transfer process may be conducted in one of two ways.

One is the termination of existing employment contracts and the re-engagement of employees by the new employer or new entity. This entails the settlement of all previous or due entitlements and liabilities of existing employees upon termination. As such, this method of transfer will result in an immediate settlement cost on the existing employer. In practice, the termination of an employment contract and re-engagement with a different employer may be resisted by employees on several grounds. For example, termination may allow – among other things – the renegotiation of less favourable employment terms and benefits when re-engaging employees under new employment contracts.

The other transfer process is by assignment of employment contracts; in other words, the current employer may assign existing employee contracts to the new entity. This allows for the transfer of all existing or due entitlements and liabilities to the new company. In our experience, it is more usual in the case of inter-group transfers for accrued entitlements to be rolled over.

The most common way of achieving this is for a tripartite agreement (i.e., the existing employer, the new employer and the employee) to be reached with each employee, which should clearly set out the arrangements for the employee's accrued entitlements and other benefits to be carried forward from one employer to the next, without any discontinuance, and details of the arrangements for the transfer of visas and work permits.

In terms of carrying forward accrued entitlements from one employer to the next, the employees would have to agree to that approach being adopted since they would be entitled to payment on termination in accordance with the Labour Law. Generally, employees consent to the use of a tripartite agreement since it is likely to be in the employees' interests to consent to the transfer in order to roll over benefits and entitlements as a result of continuous service. In practice, a waiver of the notice period is often agreed with the employees.

Outlook

We do not foresee any potential or imminent amendments to the Labour Law. However, we anticipate that, as during the past year, global trends such as the increase of remote and hybrid working and the ever-growing use of technology will extend and apply to Bahrain's employment market. Given that the ramifications of the covid-19 pandemic continue to affect Bahrain's economic welfare and social well-being, these trends are vital, especially where the traditional face-to-face culture may significantly risk the health and safety of staff, workers, customers and consumers.

Footnotes

1 Saad Al Doseri is the founding partner at Al Doseri Law, Attorneys at Law and Legal Counsels.

2 Labour Law, Article 124.

3 ibid., Article 131.

4 ibid., Article 132.

5 Resolution No. 22 of 2021 regarding the Stages of Implementing the Wages Protection Scheme.

6 Labour Law, Article 1(7).

7 ibid., Article 19.

8 ibid., Article 20 and Resolution No. 22 of 2013 issued by the Minister of Labour.

9 Labour Law, Article 1(7).

10 ibid., Article 96.

11 ibid., Article 98.

12 ibid., Article 46.

13 ibid., Article 58.

14 ibid., Article 59.

15 ibid., Article 21(a).

16 ibid., Article 21(b).

17 ibid., Article 21(c).

18 ibid., Article 20.

19 ibid., Article 73.

20 id.

21 ibid., Article 51.

22 ibid., Article 53(a).

23 ibid., Article 57.

24 ibid., Article 1(5).

25 ibid., Article 1(6).

26 ibid., Article 54.

27 ibid., Articles 54 and 1(12).

28 id.

29 ibid., Article 64.

30 SIO Law, Article 2.

31 ibid., Article 5.

32 Decision No. (76) of 2008 with Regard to Regulations of Work Visas of Foreign Employees Except the Category of Domestic Servants, Article 2.

33 Decision No. 121 of 2007 Regarding the Entry Visa and Residence Permit for the Family Members of Foreign Workers and Employees, Article 2.

34 Decision No. (76) of 2008 with Regard to Regulations of Work Visas of Foreign Employees Except the Category of Domestic Servants, Article 10.

35 ibid., Article 15.

36 Labour Law, Article 74 (if the Ministry of Labour does not approve or object to the policies/regulations or disciplinary measures within 30 days of the date of submission, then the policies/regulations or disciplinary measures will be deemed enforceable).

37 id.

38 Labour Law, Article 55.

39 ibid., Article 104(1).

40 ibid., Article 39.

41 ibid., Article 32.

42 id.

43 ibid., Article 34.

44 Law No. (33) of 2002 with Respect to Promulgating the Workers Trade Union Law, amended Article 10.

45 ibid., Article 21.

46 Ministerial Decree No. (62) of 2006 with respect to Defining Vital Facilities Where Strike is Prohibited.

47 Law No. (3) of 2018 with Respect to Personal Data Protection Law.

48 Law No. (30) of 2018 with Respect to Personal Data Protection Law, Article 12.

49 ibid., Article 4.

50 ibid., Article 5.

51 Law No. (36) of 2012 Promulgating the Labour Law for the Private Sector.

52 Prime Ministerial Decree No. (29) of 2007 on the Increase of Contributions for Old Age, Disability and Death set forth in the Insurance Law.

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