Changes to the end of service gratuity regime now in force for non-Bahrani employees

At a glance

• Employers are now required to remit end-of-service entitlement contributions for all eligible employees to the Social Insurance Organisation (SIO) on a monthly basis.
• Upon termination or resignation, employees will apply to the SIO for their end of service gratuity payment (EOSG), rather than payment being made by the employer as previously.

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The Bahrani government has made a change to its EOSG regime for non-Bahrani employees. Effective 1 March 2024, EOSG will no longer be paid by the employer to the employee; instead, employees must now apply to the SIO for their end-of-service entitlements. This does not apply to temporary secondments when employers will still be responsible for EOSG costs.

Employers have a one-month grace period from 1 March 2024 to submit the necessary wage data to the SIO for all eligible workers.

The gratuity calculation remains at 4.2% of an employee’s annual salary for the first three years of employment and increases to 8.4% for subsequent years until termination. Employers must pay relevant contributions into the system within the first 15 days of each month. 

Non-compliance may result in penalties and sanctions. If employers fail to pay within the specified period, interest will accrue at a rate of 5%. Additionally, employers who do not make the required leaving indemnity contributions for any given month may face an additional penalty equivalent to 20% of the unpaid contributions. A complete failure to comply with the new law may result in a penalty of BHD100-500 which will be doubled for repeated offences.