Bahrain End of Service Gratuity Calculator

How is the gratuity calculated?

Article 116 of the Labour Law for the Private Sector (Law 36/2012) says that a worker not covered by the Social Insurance Law is entitled, when the contract ends, to half a month’s wage for each of the first three years of service and a month’s wage for each later year, and to a share for part of a year in proportion to the time served. Since 1 March 2024 the Social Insurance Organization pays the gratuity for service from that date, under Prime Minister’s Decision 109/2023. The calculator goes through these steps and shows them in the breakdown table under the result.

1. The wage used

The gratuity uses your last basic wage plus the social allowance, if you receive one (Article 47). Housing and transport allowances are left out even when they are paid every month. Enter the basic wage and the social allowance in their own boxes, and the calculator adds them.

2. Length of service

Service runs from your start date to your last working day, and that day counts. The calculator counts whole years and months, a month being 1/12 of a year as in the examples of the Labour Market Regulatory Authority (LMRA), and each extra day as 1/360 of a year. There is no minimum service and no cap on the gratuity.

3. The two rates

The first three years of your service earn half a month’s wage each, and every later year earns a full month’s wage. Five years on a wage of BHD 800 give 3 × 400 + 2 × 800 = BHD 2,800.

4. Who pays — the employer or the SIO?

The calculator works out the gratuity for your whole service, then splits it at 1 March 2024. The employer’s part is the gratuity for service before that date, and the SIO part is the rest. The first three years count from the day you started, not from 2024, and both parts use your last wage. Take a basic wage of BHD 500 with a social allowance of BHD 40, and service from 1 September 2019 to 31 August 2026 ending in resignation:

• Wage used: 500 + 40 = BHD 540, and the service is 7 years.
• Full gratuity: 3 × 270 + 4 × 540 = BHD 2,970.
• Employer’s part: four and a half years before 1 March 2024, so 3 × 270 + 1.5 × 540 = BHD 1,620.
• SIO part: 2,970 − 1,620 = BHD 1,350.

5. Why the contract ended

The gratuity is the same in every case: the employer ended the contract, the term ran out, you resigned, you left because of the employer, death or disability, and even dismissal without notice under Article 107. The reason only changes the notes under the result, such as the notice you owe when you resign.

6. Rounding

The Bahraini dinar has 1,000 fils, so the calculator rounds the gratuity once, to three decimal places. It rounds the employer’s part the same way and gives the SIO the rest, so the two lines always add up to the total.

Special cases

Resignation and notice

Resigning does not reduce the gratuity in Bahrain, because Article 116 pays it whenever the contract ends, whoever ends it. Article 99 does require whoever ends an open-ended contract to give the other side at least 30 days’ notice; without it, they owe the wage for the notice period or the part not worked. If you resign, the contract ends on the day you stop working.

Dismissal without notice under Article 107

Article 107 lets the employer end the contract without notice or compensation in eleven cases, such as forged documents, a fault causing serious financial loss, or unexcused absence of more than ten days in a row or twenty days in a year after a written warning. The article removes the notice and the compensation and says nothing about the gratuity. The 1976 law took the gratuity away in such cases, and the current law dropped that rule, so the calculator pays it in full. The worker can also challenge the dismissal.

Leaving because of the employer

A worker may leave without notice if the employer or someone acting for them assaults the worker or commits an indecent act against the worker or their family (Article 105). A worker may also leave after notice if the employer breaks an essential obligation or misled them about the job and does not put it right within 30 days of a written request (Article 106). The full gratuity is due, and the worker may also claim compensation for the termination under Article 111, which this calculator does not include.

Death, disability and age 60

The contract ends when the worker dies or becomes totally unable to work (Articles 113 and 114), and the full gratuity is due to those entitled. The family of a worker who dies after at least a year with the employer also receives two months’ full wages. The employer may end the contract without compensation when the worker turns 60 (Article 115), and the gratuity is still due.

The SIO part and contributions

Only the employer pays the SIO each month — 4.2% of the wage for the first three years of the worker’s employment and 8.4% after; for a worker with more than three years before 1 March 2024 the rate is 8.4% from the start. The SIO part cannot exceed the contributions paid for the worker (Article 10 of the regulation), and the employer must pay the difference when the wage rises. Check your contribution statement on the SIO website — if the employer declared a lower wage than you earn, your SIO part shrinks.

Domestic workers

Article 116 also covers domestic workers and those treated like them — house gardeners and guards, nannies, drivers and cooks working for the employer or the employer’s family (Article 2). They are outside the SIO scheme, so the employer pays the whole gratuity directly when the contract ends. Choose “Domestic worker” in the calculator.

Unpaid leave

The law does not mention unpaid leave in the gratuity, and the SIO counts only service for which contributions were paid (Article 8 of the regulation). If you enter unpaid leave days, the calculator takes them off the end of your service, so they reduce the SIO part first and then the employer’s part.

Piece rate or commission

If you are paid by the piece or by output, or receive a fixed wage plus a commission or percentage, the gratuity uses your average wage over the last three months (Article 47). Work out that average and enter it as the basic wage.

Successive contracts with the same employer

A new contract with the same employer signed less than 30 days after the previous one ended counts as one contract with it (Article 118), so enter your first start date. Moving to another branch of the same employer does not end your service (Article 6 of the regulation).

Who the calculator does not cover

Article 116 is for workers not covered by the Social Insurance Law, so Bahraini workers insured with the SIO receive a pension or lump sum from the SIO instead of this gratuity. GCC nationals are excluded from the SIO scheme because their own country’s insurance extension scheme covers them. The Labour Law does not apply to government employees under civil or military service rules (Article 2).