Amendments to Bahrain Labour Law

October 2012

2012 Grant Thornton Bahrain. All rights reserved.

Grant Thornton brings together deep industry and market perspective, and strong advisory experience. Our team has proven capabilities to develop comprehensive and customized solutions for our clients. This document provides a comparison of the old labour law (no.23 of 1976) and the amended labour law (No. 36 of 2012).

Jassim Abdulaal Managing Partner Grant Thornton Bahrain

2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

Applicability
Labour Law (No. 23 of 1976) Scope of the law Scope of application of law did not include: Civil Servants & employees of public corporate entities Domestic servants Temporary and Casual workers Marines ships, officers, engineers, seamen and others whose employment contract is subject to a special law Persons employed in agricultural work Members of employers family Labour Law (No. 36 of 2012) The revised law includes domestic staff such as gardeners, drivers and cooks Domestic staff will be employed under clear contractual terms in line with all private sector employees

2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

Employee Benefits
Labour Law (No. 23 of 1976) Annual leave provision Sick Leave entitlement 21 days for the first five years of service 28 days for every year after five years 45 days per year 15 days at full pay 15 days at half pay 15 days without pay 45 days paid leave 15 days unpaid leave Labour Law (No. 36 of 2012) All employees will be entitled to 30 days annually (i.e. 2 days per month) 55 days per year 15 days at full pay 20 days at half pay 20 days without pay 60 days paid leave 15 days unpaid leave Female employees with children below 6 years of age are entitled to leave without pay for up to 6 months. Such leave may be taken for 3 three children If employer terminates an employee who has an indefinite contract with /without reason after the end of three months from the date of joining, the employer is liable to compensate the worker with equivalent wage of two days of each month of service and at least one month pay and not more than twelve months pay. If the employer terminates a fixedterm employment contract with /without cause or for any reason, the employer is liable to compensate equivalent pay to the employee's salary for the remaining period of the contract. Unless the parties agree to indemnify less, provided that the agreed compensation is at least three months' pay or the remaining term of the contract, whichever is less.

Maternity Leave

Indemnity

If a contract of employment made for an indefinite period, is terminated by the employer without giving required notice; the employer is liable to pay the worker compensation equivalent to the amount of salaries payable to the worker for the period of such notice or unexpired portion thereof. If the employer terminates a fixed-term employment contract with /without cause or for any reason, the employer is liable to pay to the concerned worker compensation in respect of the damages incurred by him having due regard to custom, the nature of the work, the period of the contract and, generally all the circumstances in which damages might occur for certain.

2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

Employee Benefits (Continued)

Labour Law (No. 23 of 1976) Indemnity In respect of categories of workers to whom the provisions of the Social Insurance Law are not yet applicable, the employer concerned shall pay to such worker, upon termination of employment, a leaving indemnity for the period of his employment calculated on the basis of fifteen days' salaries for each year of the first three years of service and of one month's salaries for each year of service thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to the period of his service completed within a year. Upon termination of a contract of employment by such worker, he shall be entitled to the payment of one third of the leaving indemnity if the period of his service is not less than three consecutive years and not more than five years; and he shall be entitled to payment of the full leaving indemnity if he resigns after the completion of five years of service provided that such termination of a contract of service by the worker is not used by the worker as a means to avoid dismissal from employment and provided also, that he shall notify the employer concerned of his intention of leave his employment; the worker may, in lieu of such notice, pay to the employer an amount equivalent of the salaries payable for the required period of notice Labour Law (No. 36 of 2012) Workers who are not subject to the provisions of the Law on Social Insurance (GOSI) upon finishing there employment contract are entitled to indemnity calculated at half a month for each year of the first three years of work, and a month for each of the subsequent years. The worker is entitled to remuneration for fractions of a year for the number of years of service.

As per the provisions of the new law, expatriate workers can switch jobs without the need for prior employers consent
2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

Compliance & Penalties

Labour Law (No. 23 of 1976) Delay in salary payment Not applicable Labour Law (No. 36 of 2012) For any delays in payment of monthly salaries for 6 months or less, employees will be entitled to compensation at 6% per year for delayed salaries and at an increased rate of 1% for each month's delay up to a maximum of 12% per year. An employee who is terminated for cause (not entitled to notice or compensation) is entitled to leaving indemnity Discriminatory practices of whatever nature (i.e. discrimination in payment of salaries based on sex, ethnic origin, language, religion or beliefs is prohibited Non compliance of the provisions of the labour law is a punishable offence with a term of imprisonment up to 3 months and / or fines of BD 500 to BD 1000. In case of a repeat offence, the punishment will be doubled

Summary dismissal

Employees who are summarily dismissed were not entitled to claim indemnity

Non discriminatory practices

Not Applicable

Penalties

Non compliance of the provisions of the Labour Law is a punishable offence with a term of imprisonment of not less than 3 months and not exceeding 6 months and a fine of BD 200 to a maximum of BD 500

2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

Labour Disputes
Labour Law (No. 23 of 1976) Labour Disputes Labour related claims are filed with the Ministry of Labour and Social Affairs The Ministry will appoint a mediator to settle the dispute amicably In case there is no amicable settlement within 15 days of the date of receipt of application, a written record will be prepared including reasons for failure thereof Ministry of Labour and Social Affairs shall forward all documents to the Ministry of Justice and Islamic Affair for submission to an Arbitration Board The Board will deliver a decision on the dispute within one month of commencement of hearing Labour Law (No. 36 of 2012) All labour related claims must be filed with the Labour Office All cases will be heard before a labour administration judge and judge will propose a suitable amicable settlement In case no settlement is reached, the case will be referred to the High Civil Court High Civil Court will hear disputes on an urgent basis and must hand down decisions within 30 days of date of first hearing High Courts decision can only be appealed in Court of Cassation

2012 Grant Thornton Bahrain. All rights reserved.

Amendments to Bahrain Labour Law

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Amendments to Bahrain Labour Law

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For Further Information

If you would like to find out more about how Grant Thornton can assist you, please contact Jassim Abdulaal. Alternatively to find out more about us, please visit our website www.gtbahrain.com.

Jassim Abdulaal Managing Partner Grant Thornton Bahrain T: +973 39605262 E: jassim.abdulaal@bh.gt.com

Akash Agarwal Senior Manager, Risk Advisory Grant Thornton Bahrain T: +973 33793163 E: akash.agarwal@bh.gt.com

Chris Noguera Manager, Assurance Grant Thornton Bahrain T: +973 36549696 E: chris.noguera@bh.gt.com

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Maniza Dewan Manager, Advisory Grant Thornton Bahrain T: +973 36736863 E: maniza.dewan@bh.gt.com Taiseer Khalafalla Manager, Legal Grant Thornton Bahrain T: +973 39632865 E: taiseer.khalafalla@bh.gt.com

Mohammed Usman Baig Assistant Manager, Assurance Grant Thornton Bahrain T: +973 36737629 E: mohammed.usman@bh.gt.com Anandha Ramakrishnan Assistant Manager, Assurance Grant Thornton Bahrain T: +973 39342986 E: anand.rama@bh.gt.com

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