Bahrain end-of-service indemnity explained

By Zulu Calculator · Updated 19 October 2026 · Gulf jobs

In Bahrain, a non-Bahraini worker in the private sector gets a leaving indemnity of half a month's wage for each of the first three years of service, and one month's wage for each year after that, worked out on the last wage. Part years are paid in proportion. This is Article 116 of Labour Law No. 36 of 2012. Since 1 March 2024 the part you earn from that date is paid by the Social Insurance Organization (SIO) instead of your employer. On a wage of BHD 500 a month for 7 years, the total is BHD 2,750.000.

This guide explains how the sum is worked out, how the March 2024 change splits it between your employer and the SIO, what happens if you resign or are dismissed, and what else goes into your final settlement. To skip the maths, use the Bahrain end of service calculator with your own dates and wage.

Who gets end of service in Bahrain?

• Covered: non-Bahraini workers in the private sector under Labour Law No. 36 of 2012.
• Bahraini workers are covered by the social insurance pension scheme instead of the Article 116 indemnity.
• Domestic workers and government staff follow different rules.

It does not matter how the job ends. Resigning, being let go, a fixed-term contract running out, or even dismissal for misconduct all give the same indemnity under the 2012 law.

How is end of service calculated in Bahrain?

Count your years of service, split them into the first three and the rest, and multiply by your last monthly wage.

indemnity = ½ × monthly wage × first 3 years
+ monthly wage × years after 3
part years paid in proportion
employer pays the part earned before 1 March 2024
the SIO pays the part earned from 1 March 2024

There is no upper limit on the number of months. Service runs from your joining date to your last working day, both days counted. Whole months count as twelfths of a year and extra days are counted on a 365-day year. Days of unpaid leave do not count as service.

The calculator uses your last monthly wage: basic plus regular allowances, unless your contract says basic only. What counts as your wage can depend on your contract, so check it.

End of service by years of service, on BHD 500 a month

For any other wage, scale it: each year in the first three is worth half your monthly wage, and each year after is worth one full month.

What changed in March 2024?

From 1 March 2024 (Prime Minister's Decision No. 109 of 2023), employers no longer save up the indemnity for expat workers themselves. Instead they pay a monthly contribution for each expat worker to the SIO. Nothing is taken from your own pay for this.

When you leave, your end of service comes in two parts:

• Service before 1 March 2024 is paid by your employer under Article 116.
• Service from 1 March 2024 is paid by the SIO, on the same schedule and on your last wage, but not more than the contributions paid in.

As the scheme is widely described, the first three years here are your first three years of service with the employer, not the first three years after March 2024. Because 0.504 and 1.008 months a year are so close to half a month and a month, the two ways of counting give almost the same figure when your wage has been steady. If your wage rose recently, the contributions figure can be lower. These SIO details (the decision number, the 4.2% and 8.4% rates, the cap at contributions paid and how the first three years are counted) are widely quoted, but they are not yet checked on the SIO's own site, so confirm your figure with the Social Insurance Organization.

Do I lose my end of service if I resign or am dismissed?

• Resigning does not reduce the leaving indemnity under the 2012 law. The older 1976 law did cut it, so older guides may say otherwise. Resigning only affects other things, such as the notice you must give.
• Dismissed without a valid reason (a contract with no end date): Article 111 adds compensation of 2 days' wage for each month of service, at least one month's wage and at most 12 months' wage. This is on top of the indemnity.
• Dismissed for misconduct under Article 107: the contract ends without notice, so there is no notice pay, but the leaving indemnity is still worked out the same way.

Worked examples

Example 1: 7 years on BHD 500, split between employer and SIO

You worked from 1 January 2019 to 31 December 2025, exactly 7 years, on a last wage of BHD 500 a month.

• First 3 years: 3 × ½ × 500 = BHD 750.000
• Next 4 years: 4 × 500 = BHD 2,000.000
• End of service: 750 + 2,000 = BHD 2,750.000, or 5.5 months of wage

Now the split. From 1 January 2019 to 29 February 2024 is 5 years and 2 months. That is 3 years at ½ month plus 2⅙ years at 1 month = 3⅔ months, so your employer pays 3⅔ × 500 = BHD 1,833.333. The 1 year and 10 months from 1 March 2024 are all past year three: 1⅚ months × 500 = BHD 916.667 from the SIO. Together, 1,833.333 + 916.667 = BHD 2,750.000.

Counted from contributions instead, the SIO part is 22 months × 8.4% × 500 = 22 × 42 = BHD 924.000. And if you had taken 60 days of unpaid leave, your service would drop to 7 − 60 ÷ 365 = 6.836 years, and the total to BHD 2,667.808.

Example 2: joined after March 2024, 2 years on BHD 800

You worked from 1 June 2024 to 31 May 2026 on BHD 800 a month. All of it is after 1 March 2024, so the SIO pays the lot.

• 2 years × ½ × 800 = BHD 800.000, or 1 month of wage
• From contributions: 24 months × 4.2% × 800 = 24 × 33.6 = BHD 806.400
• Your employer's share: BHD 0.000

Example 3: 5 years on BHD 700, dismissed without a valid reason

You worked from 1 September 2021 to 31 August 2026 on BHD 700 a month (basic pay, with no other allowances), on a contract with no end date. You are let go without a valid reason and told not to work your notice. You have 20 days of unused leave.

• Before 1 March 2024: 2.5 years, all in the first three: 2.5 × ½ × 700 = BHD 875.000 from your employer
• From 1 March 2024: 0.5 year at ½ month + 2 years at 1 month = 2.25 months × 700 = BHD 1,575.000 from the SIO
• End of service: 875 + 1,575 = BHD 2,450.000 (3.5 months)
• Daily wage: 700 ÷ 30 = BHD 23.333 (the sums below use the unrounded figure)
• Article 111: 60 months × 2 days = 120 days × 23.333 = BHD 2,800.000 (4 months, between the 1 and 12 month limits)
• Notice: 30 days × 23.333 = BHD 700.000
• Unused leave: 20 days × 23.333 = BHD 466.667
• Final settlement: 2,450 + 2,800 + 700 + 466.667 = BHD 6,416.667

What else is in your final settlement?

• Unused annual leave. Article 58 gives at least 30 days of paid leave a year after one year of service, earned at 2.5 days a month; shorter service earns leave in proportion. Leave you have not used is paid when the contract ends (Article 59). Leave pay is worked out on your latest basic wage plus any social allowance (Article 47), usually ÷ 30 for a daily wage. For example, BHD 500 basic plus BHD 100 social allowance is BHD 20 a day, so 12 unused days is BHD 240.000. Your employer must settle your leave balance at least every two years, so no more than about 60 days should build up. The Bahrain leave salary calculator works it out.
• Notice pay. A contract with no end date needs at least 30 days' notice (Article 99). If you are not asked to work it, it is paid. There is no notice pay after dismissal for misconduct under Article 107.
• Unpaid overtime. Overtime is paid at the wage for the hour plus at least 25% by day, or plus at least 50% at night, which runs from 7 pm to 7 am (Articles 54 and 1). The hourly wage is usually monthly wage ÷ 30 ÷ 8. On BHD 400 a month that is BHD 1.667 an hour, so 10 day overtime hours are worth BHD 20.833. Check old claims with the Bahrain overtime calculator.
• Salary still owed for days worked in your last month, and any other money your contract promises.
• Minus loans or advances you still owe your employer.

Common mistakes

• Paying a full month for every year. The first three years earn only half a month each.
• Paying half a month for every year. From year four on, each year earns a full month.
• Thinking resigning cuts it. That was the 1976 law. Under the 2012 law resigning does not reduce it.
• Asking your employer for all of it. Since 1 March 2024 the SIO pays the part earned from that date. Your employer owes only the earlier part.
• Restarting the three years at March 2024. As the SIO scheme is widely described, the half-month years are your first three years of service with the employer, not the first three years in the SIO scheme, so in Example 1 all the SIO years are at one month. Confirm this with the SIO.
• Rounding down to whole years. Part years are paid in proportion.
• Forgetting unpaid leave. It comes off your service.
• Mixing up indemnity and leave pay. They are separate amounts, and one does not replace the other.

What if my employer pays less or disagrees?

1. Ask for the calculation in writing: your service dates, the wage used, the rate for each year and how much falls before and after 1 March 2024.
2. Check your contract. It decides whether allowances count in your wage, and it can give you more than the law.
3. Compare with the calculator using the same dates and wage. Most gaps come from the wage used, unpaid leave or the March 2024 split.
4. Ask the SIO about the part it pays, and the LMRA or the Ministry of Labour about the part your employer owes. Keep copies of your contract, payslips and messages.

Quick summary

• Half a month's wage a year for the first 3 years, a month a year after (Article 116, Labour Law No. 36 of 2012).
• Worked out on your last wage; part years paid in proportion; no upper limit.
• Unpaid leave does not count as service.
• Resigning does not reduce it under the 2012 law.
• Since 1 March 2024 your employer pays the part earned before that date and the SIO pays the rest.
• Dismissal without a valid reason adds 2 days' wage a month of service, 1 to 12 months (Article 111).

Working elsewhere in the Gulf? See Qatar gratuity explained, Kuwait indemnity explained or the UAE gratuity calculator.

Rules from Labour Law No. 36 of 2012 (Articles 1, 47, 54, 58, 59, 99, 107, 111 and 116), as used by our calculators (checked 11–12 October 2026 against the LMRA's English text of the law). The SIO contribution rates, the cap at contributions paid and how the first three years are counted for the SIO part are not yet checked against sio.gov.bh.

This guide explains the rules in plain English for planning. It is not legal, financial or flight-operations advice; check your contract, the official source linked above, your employer or your operator.