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  • Employer of record
  • Contractor management
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Mercans offers complete payroll, PEO and HR services in Bahrain

The most diversified economy in the GCC region, Bahrain offers investors a pro-innovation business and regulatory climate and minimal hurdles for creating and operating a company. The country’s growing economy is filled with many exciting investment opportunities which, paired with its strategic location, makes it an excellent environment to start a business. Further, Bahrain has invested in becoming a digital economy and the region’s FinTech hub.

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Doing Business in Bahrain

Bahrain represents an attractive avenue to explore. Over USD32 billion dollars have been invested in infrastructure, property and regulatory initiatives, which are in advanced stages of progress. Additionally, certain target sectors are prioritized to drive further foreign investment. Prime opportunities exist in the financial services, manufacturing, logistics, tourism, real estate, healthcare, education and technology. An added benefit to businesses is the fact that there are no restrictions on capital repatriation, currency exchange or transfer of dividends.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Bahrain is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.


Banking Hours: 7:30 am to 2:00 pm from Sunday to Thursday

Working Week

The standard working week is from Sunday to Thursday from 7:00 am - 2:00 pm

Labor Law

The LMRA (Labor Market Regulatory Authority) regulates the labor market and protects the rights of employers and expatriate workers. A new labor law was issued in 2012 replacing the older one. The new law revitalizes the private sector by improving work conditions, introducing clear terms for employing domestic staff, prohibiting discriminatory practises and including enhancements for leave and dispute resolution.

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Main Industries

Petroleum processing and refining, aluminum smelting, iron pelletization, fertilizers, Islamic and offshore banking, insurance, ship repair, tourism

GDP Growth


Dates & Numbers


Official State Name

The Kingdom of Bahrain


1.702 million



Major Languages



Bahraini dinar

Internet Domain


International Dialing Code


Manama, BH
10:28 am, June 14, 2024
temperature icon 42°C
few clouds
Humidity 12 %
Wind Gust: 0 mph


The Wages Protection System (which covers all sectors) requires the private sector employer to pay worker wages through banks and financial institutions licensees from the Central Bank according to specific dates.

It is acceptable to provide employees with online payslips


Payroll reports must be kept for 10 years


Employees are entitled to 30 days of paid annual leave

Annual Leave

Employees are entitled to 55 days of sick leave wherein only the first 15 days are fully paid

Sick Leave

75 days of maternity leave where only the first 60 days are fully paid. There is only one day of paid paternity leave

Maternity & Paternity Leave

Lawful termination requires one month notice

Employee Termination

Not mandated by law

13th month salary

Bahrain doesn’t have a statutory minimum wage

Minimum Wage

If an employee has worked over 40 hours, they must be compensated at an extra 25% (day shift) or 50% (night shift)


This is calculated at 15 days salary for each year for the first three years. From the 4th year, it is 30 days’ salary for each year

Severance Pay


Mercans’ Professional Employer Organization (PEO) services in Bahrain offer a legally compliant employment solution for companies seeking to hire staff without establishing a legal entity. We handle visas, payroll, HR, and tax compliance on your behalf, allowing you to expand your global team confidently. Benefit from our localized contracts, user-friendly invoicing system, and industry-leading compliance standards.


As a Professional Employer Organization in Bahrain (PEO in Bahrain), also known as an Employer of Record (EOR) in Bahrain, our services enable your company to recruit and onboard employees without the risks associated with local business setup. With our Global Employer of Record solutions, you can hire directly through our local legal entities in each country while we manage payroll, tax, benefits, and compliance, allowing you to concentrate on business growth.


Our integrated platform offers automated workflows, digital signatures, payroll management, contractor payouts, and comprehensive compliance solutions to ensure seamless operations within your organization.Mercans is recognized as a trusted, efficient, and leading provider of PEO services in Bahrain and other countries. Discover the requirements for hiring, employment, payroll, and benefits for workers in Bahrain and how our employer of record services, Professional Employer Organization (PEO) services, and local HR experts can assist you with your international employment needs.


Tax and Social Security

For companies which operate a multi-country payroll, it is important to note that the concept of tax residence is not recognised in Bahrain. Social insurance and pensions are paid in Bahrain, administered by the SIO (Social Insurance Organization)


The tax resident employee is not applicable in Bahrain. Non-tax resident employees pay no income tax in Bahrain.


Corporate Income Tax


Personal Income Tax


Sales Tax



Social Security

Non-Bahraini employees pay 1% of their salary as social security contributions. These payments are made by the employer, to the social security organization, on behalf of employees.


Social Security Rate


Social Security Rate for Employers


Social Security Rate for Employees


Employment Law

Labor law offers protection to all types of workers, whether they are part-time, full time, local or expatriate. Expatriate workers have the right to transfer to another employer but there are different rules in place depending on whether the transfer is with or without employer consent and when transfers occur in the case of an expired work permit.

Employment Agreement

The employment relationship is governed by the Labor Law for the Private Sector (Law No. 36 of 2012). It applies to Bahrainis and non-Bahrainis employed in Bahrain as well as Bahrainis working abroad (where the employment agreement is governed by Bahraini law). Employment contracts must be in writing, in Arabic.

Working condition

Post COVID-19, employers are free to set their rules to ensure the safety of the workplace. Where the employee does not abide by these rules, the employee may be dismissed according to labor law.


It is possible for an employer to request an employee to serve a period of garden leave. Female employees are entitled to maternity leave on full pay for 60 days. There are, however, no other parental leave rights that employers are required to observe. Employees are entitled to 30 days of annual leave and they are entitled to receive payment in lieu of the accrued leave days.

Employment termination

An employee may be dismissed without notice or compensation in certain situations, including where the employee has assumed a false identity, fails to comply with written instructions and does not attend the workplace without legitimate cause. Bahrain labor law stipulates that the notice period to terminate employment shall not be less than 30 days. However, where a much longer notice period was articulated in the employee’s contract, the employer is bound by that notice period.


1 month

Minimum notice period for terminating an employee


10 days

Total number of public holidays



Working hours per week


3 days

Total number of days for Compassionate & Bereavement Leave



Foreign nationals who wish to live and work in Bahrain must submit requests for appropriate visas and permits. The LMRA issues work permits and renewals, entry visas and residence permits. Where an expatriate worker has a multiple entry permit, the permit must be canceled prior to submitting a new work permit application (whether the expatriate is in Bahrain or abroad). Where the foreign employee fails the required medical examination, the employer must process the deportation of the foreign employee immediately.


Residency permits

The residency permit (family visa) must be submitted to the LMRA and is issued by the General Department for Nationality & Passport Residence. Relevant documents that must be submitted include the application form, the employee and their family’s passport copies, the employee’s sponsorship letter and employment contract as well as the family’s health records from an authorized clinic.

Work Permit validity

1 – 2 years

Required Documents

A completed visa application form

The employee’s passport

A passport-size photo

Copy of the contract with the employee’s name, birth date, and nationality

Health record from an authorized clinic

Proof of payment of BD 100 fee

Compliant, reliable, error-free and touchless payroll in Bahrain

Build the best team and hire top talent compliantly in Bahrain. Get in touch with Bahrain payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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