Practice Area Articles
January 16, 2023
Gordon Barr and Malavika Vijayan
Back to International Employment Law
KEY DEVELOPMENTS FOR 2023
On 18 April 2022, Law No. 14 of 2022 (“2022 Law”) was passed by the Bahraini government which outlined amendments to Law No. 24 of 1976 on the Social Insurance Law (“SIO Law”). The 2022 Law increases the social insurance contribution percentages to be deducted and paid by employers.
Pursuant to the 2022 Law, the provisions under the SIO Law relating to old-age pensions have been amended to no longer differentiate between the service contribution entitlements of male and female workers. The 2022 Law also provides for the reduction of employees’ pension pay-outs in the event that an employee becomes eligible for such pensions without having to reach the age of sixty (60).
As of May 2022, a Bahraini employer’s contribution obligations have increased by two per cent (2%) due to the introduction of the 2022 Law, and shall continue to be subject to a subsequent annual one per cent (1%) increase at the start of each year from January 2023 to 2028. This brings the total percentage of a Bahraini employer’s contribution to twenty per cent (20%) by 2028. A Bahraini employee’s social contribution shall increase by one per cent (1%) as of January 2023. This brings the overall percentage of the employee’s share to eight per cent (8%). With regards to the old-age pensions, any reduction shall be based on the employee’s age at the time of requesting access to the pension. If an employee is less than forty-five (45) years old their pension shall be reduced by twenty per cent (20%). If an employee is between the ages of forty-five (45) and fifty (50) their pension shall be reduced by fifteen per cent (15%). If an employee is over fifty (50) but has not yet reached sixty (60) years of age, the pension shall be reduced by ten per cent (10%).
Employers in the private sector should be diligent in observing the new social insurance contribution rates and ensure timely payment of such contributions to the Social Insurance Organisation. Employees should ideally be notified of the additional 1% to be deducted from their gross monthly salaries commencing January 2023 for the purposes of the 2022 Law.
Flexible workers permit
On 16 October, Bahrain announced that effective from 17 February 2023, ‘flexi work permits’ are to be cancelled and replaced with professional permits. Employers may no longer engage individuals holding flexi work permits, and any such individuals must alternatively register themselves with the new professional permits / labour registration program. Employers should be diligent in ensuring that they do not engage any individuals holding flexi work permits and ensure that any such individuals who are under their employ have registered onto the new professional permits / labour registration program as applicable.
New personal data protection decisions
In March 2022, the Personal Data Protection Authority in Bahrain (“Authority”) issued ten (10) decisions relating to Bahrain’s data protection law (“Decisions”). The Decisions relate to:-
Transferring personal data outside the Kingdom of Bahrain;
The conditions to be met in the technical and organisational measures that guarantee protection of personal data;
The rules and procedures for submitting notifications and prior authorisation requests to the Authority;
The procedures for processing sensitive personal data;
Data Protection Guardians;
The registration / renewal fees and related exemptions for registering Data Protection Guardians in the Authority’s register;
The data subjects’ rights;
The rules and procedures governing the submission of complaints relating to personal data;
Processing personal data concerning pursuing criminal proceedings and their related judgments; and
Public registers of personal data.
The Decisions supplement and give effect to several provisions under Bahrain’s personal data protection law (Law No. 30 of 2018) (“PDPL”).
The Decisions became effective from the date following the date of publication, without stipulating for any grace periods for businesses.
Employers - as ‘data controllers’ - should undertake a health check on their existing data processing activities in Bahrain to ensure compliance with the PDPL and its Decisions. This includes, for example:-
Ensuring that any transfer of personal data relating to employees in Bahrain, to any party (including a group company) located outside Bahrain, is done in accordance with the PDPL and its Decisions;
Ensuring the existence of appropriate employee privacy notices; and
Providing periodic data protection-related training to employees that process personal data.
KEY DEVELOPMENTS FOR 2022
Introduction of preferential employment for nationals
In mid-2021, Bahrain’s Cabinet announced the adoption of the National Labour Market Plan for the years 2021 – 2023. The plan seeks to develop the labour market in accordance with the Bahrain Economic Vision 2030 with respect to sustainability, competitiveness and justice. One of the primary goals of the initiative is to create more job opportunities for Bahraini nationals through implementing the principle of preferential employment for Bahrainis.
Employers should be diligent in keeping in line with the Bahrainisation percentages announced to ensure that they remain compliant with their legal obligations. Employers may also wish to look out for any incentives aimed at encouraging employers to employ Bahraini nationals, as announced by the Bahrain Government from time to time.
Protection of pay
The following laws have been passed in respect of the protection of pay:
- In 2019, Resolution No. (68) of 2019 on the Wage Protection System (as amended) (“WPS Law”) was passed to ensure that employers commit to the payment of their employees’ wages, in accordance with the Wage Protection System (“WPS”).
- In 2020, a resolution (No. 52) was passed prohibiting wage discrimination between male and female workers.
- In 2021, the WPS Implementation Law was passed, supplementing the WPS Law and setting out the implementation phases for the WPS Law.
Phase 3 of the WPS Implementation Law (the final phase) is targeted towards employers employing 1-49 employees in Bahrain. Employers are to be provided a grace period of six months from the applicable implementation date to comply with the WPS. Employers are also prohibited from discriminating between men and women holding the same job when their working conditions are the same. Other requirements include ensuring that the payment of employees’ wages is done through any means of payment provided by a bank approved by the Central Bank of Bahrain, whether by way of transfer to bank accounts, pre-paid cards, or other means provided by such banks.
Increase to minimum notice period
Article 99 of the Bahrain Labour Law provides that either party to a contract of employment may terminate it by giving the other party thirty (30) days prior notice. In 2021, the Government of Bahrain approved a proposal to increase the minimum notice period for terminating employment contracts to four (4) months. This has yet to be implemented into the law but it is expected that this amendment to the Bahrain Labour Law will only apply to certain occupations. Until the Government draws up a law on the approved proposal, the exact impact is unclear. However, once the proposed amendment to the Bahrain Labour Law is finalised and issued in Bahrain’s Official Gazette, employers should obtain legal advice on how this will affect current/future employment.
Introduction of new Data Protection Law
In 2021, the Personal Data Protection Authority (currently, the Ministry of Justice) (“Authority”) publically consulted on eight draft orders (“Draft Orders”) to supplement the Personal Data Protection Law (Law No. 30 of 2018). This change is in its final revision phase following second consultation and has not yet promulgated into the law.
The Draft Orders will seek to regulate (inter alia):
- The processing of sensitive personal data;
- The technical and organisational measures to be implemented by entities for the purpose of ensuring the security;
- Confidentiality of personal data;
- Cross-border transfers of personal data; and
- The data subjects’ rights.
Once the Draft Orders are finalised and issued in Bahrain’s Official Gazette, entities in Bahrain may have to adhere to further obligations with respect to their employees’ personal data. Employers should obtain legal advice on how the Draft Orders will affect their ongoing business operations. Specifically, employers will need to consider how this affects their current/future processing of employee data (and any other personal data more generally), and whether its employment contracts / internal privacy policies and notices / HR Handbooks will need to be reviewed and amended to comply with the Draft Orders.
KEY DEVELOPMENTS FOR 2021
Reform of pension and retirement funds
Law No. (21) of 2020 was passed to consolidate the Government Employment Pension Fund and the Social Insurance Fund for the private sector into a single fund called 'The Pension and Social Insurance Fund' under the management of the Social Insurance Organisation. Additionally, the annual increase on all pensions was suspended and combining pensions under the various different funds is now prohibited. Further reforms to the pension and retirement laws can be expected as Bahrain grapples with the social insurance cost of the coronavirus pandemic.
Wage protection system likely to be implemented
The implementation of the Wage Protection System further to the Labour Market Regulatory Decision No. (1) of 2019 was expected in 2020 but failed to happen; it is expected that the Government will address this in the coming year.
Law No. (23) of 2018 promulgating the Health Insurance Law has still not been fully implemented and the Government is yet to identify the insurance providers who will be approved for employers. As such, health insurance coverage for employees is still not fully mandated. This is expected to be on the Government's agenda for 2022.
KEY DEVELOPMENTS FOR 2020
Changes to laws relating to foreign workers
Changes to existing laws have been passed in order to provide additional protections to foreign workers. For example, employers seeking a work permit for a foreign worker must not have abused their employees or otherwise failed to fulfil their rights, including payment of wages. In addition, employers are required to register and update their employees' data with the Labour Market Regulatory Authority on a regular basis and will be required to pay wages in accordance with the wage protection system (see below for further details). The fee imposed on foreign employers for issuing or renewing a permit to practice a professional activity has now also increased to 500 Bahraini Dinars.
Implementation of wage protection system
The implementation of the wage protection system had been the subject of much discussion in recent years. In accordance with Resolution No. 68 of 2019 on the Wage Protection System (which will be implemented in stages), employers are obliged to pay wages through providers authorised by the Central Bank of Bahrain. These authorised providers are required to disclose to the Labour Market Regulatory Authority certain information relating to an employer's workforce immediately after the deposit of wages, including employees' names, wages, dates of payment and employees' and employers' account numbers
Pregnant employees prohibited from working in hazardous environments
The Minister of Labour and Social Development issued Resolution No. 84 of 2019 prohibiting the employment of pregnant women in a number of hazardous conditions, including workplaces where there is exposure to extreme heat, continuous physical exertion, harmful vibrations and exposure to radiation, bacterial infection and certain other hazardous materials. It also obliges employers to take necessary measures to protect the health of pregnant women and the foetus more generally where there may be a danger to them as a result of the work performed by the employee.
KEY DEVELOPMENTS FOR 2019
New requirement for health insurance cover
The Health Insurance Law No. 23 of 2018 requires citizens, residents, and visitors to Bahrain to have health insurance cover from January 2019.
An insurance subscription will need to be taken out with approved health insurance providers for the appropriate level of cover for each category. This will be set out in a package relevant to each category of an insured person, e.g. a Citizens’ Package for a Citizen; a Residents’ Package for a Resident; and a Visitors’ Package for a Visitor. The government will pay the subscriptions for Bahraini citizens and employers are required to pay for the subscriptions for expatriate employees.
Criminalisation of sexual harassment in the workplace
In December 2018 the Bahrain Labour Law was amended making it unlawful for an employer or a worker to abuse or sexually harass a worker in the workplace by any means whatsoever, whether verbally or physically. The penalty for abusing or harassing a fellow worker is imprisonment for up to one year, or the payment of a fine of up to BHD 100. If the employer or its representative commits the harassment, the penalty is imprisonment for at least six months or payment of a fine of between BHD 500 and BHD 1,000.
The amendment stops short of imposing obligations on employers to take positive steps to prevent sexual harassment in the workplace. However, it is recommended that employers should have an anti-harassment policy in place and a robust complaints redress mechanism to avoid any suggestion that they endorsed or were even complicit in the harassment. Employers that have an existing policy framework and complaints mechanism should review this to ensure that it is sufficiently broad to cover the species of harassment conduct that could fall within the scope of the amendment.
KEY DEVELOPMENTS FOR 2018
New Flexi-Work Permit
On 7 July 2017, Decree No. 108 of 2017 introduced a Flexi-Work Permit for expatriates in Bahrain. The Flexi-Work Permit allows eligible expatriates to work and live in Bahrain without being sponsored for a work/residence permit by a local employer. Flexi-Work permits must be renewed every 2 years and cost BD 449 (approx. USD 1,190) per application/renewal plus a monthly fee of BD 30 (approx. USD 80).
There is no direct impact on employers. However, employers can engage expatriate workers who possess the permit on a flexible basis without having to sponsor them for employment.
Activities Forbidden to Foreign Employers
The Labour Market Regulatory Authority (“LMRA”) issued Resolution No. 17 of 2017 regarding occupational activities that foreign employers are prohibited from practicing without permission from the LMRA. Foreign employers are prohibited from engaging flexible hospitality employees and flexible employees in general.
KEY DEVELOPMENTS FOR 2017
Flexible work permit
The Bahrain cabinet announced in September 2016 a proposal for a new “flexible” work permit. This is expected to be launched in 2017, to allow workers who have overstayed their visa to legitimately work for multiple employers for up to two years. The permit would be limited to workers who have overstayed as a result of being exploited or abused by their employers. It will cost USD$80 (BD30) per month in addition to a one-time fee of USD$530 (BD200), but will not cover employees who fled from their employers or who are alleged to have committed serious offences. It also cannot be used by expats to leave their current employers. The permit will enable workers to take up temporary jobs in all sectors except those that require professional licenses (such as nursing and engineering). It is intended that the applicant for the permit will act as his own sponsor.
KEY DEVELOPMENTS FOR 2016
Granting Bahrain Electronic Visas to Nationals of Specified Countries
Appendix 1 of Ministerial Decision No. 197 of 2014 was amended by Ministerial Decision 15 of 2016 and came into effect on 4 January 2016. Previously, citizens of 102 countries were able to obtain Bahrain Electronic Visas. The new decision now allows for citizens of 113 countries to obtain Bahrain Electronic Visas to enter for tourist or business purposes only.
The additional countries are:
- Côte d’Ivoire;
- Mauritius; and
- The Seychelles.
This visa is separate from the requirement to have a work permit.
Additional fees when Bahrainisation percentages are not met
Resolution No. 27 of 2016 came into effect on 29 April 2016 and states that an employer who does not meet Bahrainisation quotas is now required to pay BHD300 (in addition to the regular fees for renewing or issuing a new visa). This additional fee will not apply to employers who comply with the Bahrainisation applicable percentage. The Labour Market Regulatory Authority (“LMRA”) will collect the fees in proportion to the required work permit / visa validity period. The fees will apply to the renewal of work permits from 30th April 2017.
Medical checks for expatriates
Resolution No. 12 of 2016 came into effect on 11 May 2016. Medical check certificates for working expatriates are issued by the private health institutions licensed by the National Health Regulatory Authority (“NHRA”). Private health institutions are required to notify the public health committees of the medical check results, who further notify the LMRA. The public health committees will observe and supervise the medical check results that are conducted by private health institutions and shall have the authority to request the files and medical records to ensure compliance with procedures stipulated by the Ministry of Health.
If the private health institutions decide that an expat is unfit to work, or that he is carrying an infectious disease, the private health institution is required to notify the public health committees within 24 hours from the results date. In such event, the employer must ensure that the employee is taken to the public health committees for re-examination.
Issuance of visit visas to GCC residents
Decree No. 61 of 2016 amends Decree No. 4 of 2010 and allows residents from other Gulf Co-Operation Council (“GCC”) countries to enter with residency validity of three months. Prior to this, the residency validity requirement was six months.
No deposit / personal guarantee requirement for foresign employees
Decree No. 117 of 2016 repeals Paragraphs 1(c) and 2(c) of Decree No. 74 of 2007 and effectively cancels the requirement for foreigners and retired foreigners who had previously worked in the government or private sectors in Bahrain or any other GCC country for 15 years to maintain a deposit.