Indemnity Calculation of Employee in Bahrain
Hello iiQ8 Viewers Indemnity Calculation of Employee in Bahrain,
🧮 Indemnity Calculation for Employees in Bahrain (as per Bahrain Labour Law)
In Bahrain, end-of-service indemnity (gratuity) is payable to employees not covered under the Social Insurance Law (i.e., mostly expatriates in the private sector) unless terminated for gross misconduct. Here’s a breakdown of how to calculate it:
🇧🇭 Bahrain Labour Law – Indemnity Calculation
🧑💼 Who Is Eligible?
- Private sector employees not enrolled under the General Organization for Social Insurance (GOSI)
- Expatriate workers who receive no pension from Bahrain’s GOSI
- Completed at least 1 year of continuous service
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📐 Calculation Rules
- For the First 3 Years of Service:
- Half a month’s wage for each year of service
- Beyond 3 Years of Service:
- One month’s wage for each additional year
- If Terminated by Employee (Resignation):
- Less than 3 years: No indemnity
- 3 to 5 years: 50% of indemnity
- 5 to 10 years: 2/3 of indemnity
- 10+ years: Full indemnity
💵 What is Considered as “Wage”?
Includes:
- Basic Salary
- Regular Allowances (e.g., housing, transport)
- Excludes: Overtime, bonuses, and irregular benefits
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🧾 Example: Indemnity Calculation
Let’s assume:
- Employee: Expat working in Bahrain
- Monthly Wage: BHD 500
- Total Service: 7 years
- Termination Type: Terminated by employer (not resignation)
Calculation:
- First 3 years: 0.5 month per year × BHD 500 = BHD 250 × 3 = BHD 750
- Next 4 years: 1 month per year × BHD 500 = BHD 500 × 4 = BHD 2,000
👉 Total Indemnity = BHD 750 + BHD 2,000 = BHD 2,750
🔁 If the Employee Resigns (Same Details)
- Employee completed 7 years
- Eligible for 2/3 of total indemnity
👉 BHD 2,750 × 2/3 = BHD 1,833.33
📑 Important Notes
- Indemnity is calculated based on last drawn salary
- Partial years are calculated proportionally
- Paid in addition to any unused leave salary or end-of-service benefits
- No indemnity is paid if employee is terminated for gross misconduct under Article 107 of Bahrain Labour Law
✅ Final Tip
To get your accurate indemnity:
- Use your contracted monthly wage
- Count exact years and months of service
- Clarify termination type (resigned vs terminated)
- Confirm if you are covered under GOSI, as this affects your entitlement
1. A is working with B (employer) for a basic salary of 500 BD monthly. A’s contract is terminated after 5 years. What is the amount of indemnity he deserves?
First-year indemnity = half month salary (BD 250)
Second-year indemnity = half month salary (BD 250)
Third-year indemnity = half month salary (BD 250)
Fourth-year indemnity = full month salary (BD 500)
Fifth-year indemnity = full month salary (BD 500)
Total Indemnity to be paid = BD 1750
This is a very easy example because it was a case of a complete number of years. Now let’s see a case where the contract was terminated in the middle.
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2. A is working with B (employer) for a basic salary of 380 BD monthly. A’s contract is terminated after 4 years, 3 months and 11 days. What is the amount of indemnity he deserves?
Here, let’s first take the amount for the first 4 years since it’s easy.
First-year indemnity = half month salary (BD 190)
Second-year indemnity = half month salary (BD 190)
Third-year indemnity = half month salary (BD 190)
Fourth-year indemnity = full month salary (BD 380)
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Indemnity Calculation of Employee in Bahrain
3 months and 11 days = 380/365X101 days. Here we are calculating based on the number of days and presuming each month has 30 days. You need to see the month according to your employee’s case. So here we have divided 380 (i.e. salary) by 365 = 1.041 BD (ONE DAY SALARY). Now we multiply this with 101 days since employee worked for 101 days with a month being 30 days, so 3 month multiplied by 3 is 90 days plus 11 days amounting to 101 days. The indemnity for 101 days would be based on our estimate is 105.150 BD.
The total amount payable to the employee would be BD 1,055.150.
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