Employer of Record (EOR) Bahrain
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Navigating the intricacies of international employment in Bahrain is a complex endeavor. That’s where the expertise of an Employer of Record (EOR) in Bahrain becomes indispensable. As the legal employer, the Employer of Record takes charge of various employment facets, ensuring strict adherence to Bahrain’s labor laws and regulations.
Roles and Responsibilities of the Employer of Record in Bahrain:
- Legal Compliance: Ensure the worker’s employment aligns with Bahrain’s labor laws and regulations.
- Payroll Management: Oversee the local payroll process, ensuring accuracy and timeliness.
- Tax Filing: Handle the filing of employment-related taxes and necessary paperwork.
- Benefits Administration: Provide legally mandated benefits to employees as required by Bahraini law.
- Payslip Distribution: Furnish detailed payslips to employees, maintaining transparency in compensation.
In Bahrain, our Employer of Record services extend beyond mere legal compliance. By partnering with Mercans as your trusted Employer of Record in Bahrain, you gain a hassle-free solution without the need for entity setup. Our dedicated team manages tasks such as payroll, taxes, and the provision of legally mandated benefits, facilitating a seamless employment experience for your global workforce.
With Mercans as your Employer of Record in Bahrain, you can confidently navigate legal intricacies, ensuring your workers’ employment aligns with local laws. Our role extends to overseeing local payroll procedures, managing the submission of employment-related taxes and essential documentation, and providing workers with detailed payslips.
Count on Mercans, your dedicated Employer of Record in Bahrain, for a compliant and streamlined employment experience for your international workforce.
Employment Contracts in Bahrain
Employment contracts
In contrast to several other GCC nations, Bahrain doesn’t mandate a government contract. Nevertheless, to secure an employee’s work permit and residence visa, the employer-employee contract needs registration with the LMRA. According to Labor Law, contracts ought to be in Arabic. However, in cases where contracts are formulated in a different language, an Arabic-translated version might be appended to fulfill this mandate.
Contract Creation Process Using the Service Agreement Portal
Receive Enrollment Invitation:
After completing enrollment in the Registration Centre, the registered worker, such as Mohammed, will receive an SMS with the following details:
- Name: Mohammed
- Contact Number: 000000000
- LMRA ID: 00000000
- Portal Activation Code: xxxxxxxx
Activate Your Account:
- Visit https://sa.lmra.gov.bh/
- Click on “Sign In.”
- Enter the provided details (LMRA ID and activation code).
- Create a password for your account.
- Visit the Service Agreement Portal: Go to https://sa.lmra.gov.bh/
- Sign in using your account credentials.
Create a New Agreement
- Click on “Create a New Agreement.”
- Fill in the details of the agreement.
- Service: Living room painting
- Compensation: 250 BHD
- Agreement Dates: 01/25/2023 to 01/27/2023
Service Receiver Approval
- The service receiver (e.g., Mohammed) will receive an SMS to review the new agreement.
- Click on the link provided in the SMS to approve or reject the agreement: Link
Getting Paid
- Ensure that payments are received through bank transfer or Benefit to safeguard your rights.
- A reminder for registered workers: Document your services via the Service Agreement Portal for a seamless payment process.
Receive Enrollment Invitation:
After completing enrollment in the Registration Centre, the registered worker, such as Mohammed, will receive an SMS with the following details:
- Name: Mohammed
- Contact Number: 000000000
- LMRA ID: 00000000
- Portal Activation Code: xxxxxxxx
Activate Your Account:
- Visit https://sa.lmra.gov.bh/
- Click on “Sign In.”
- Enter the provided details (LMRA ID and activation code).
- Create a password for your account.
- Visit the Service Agreement Portal: Go to https://sa.lmra.gov.bh/
- Sign in using your account credentials.
Create a New Agreement
- Click on “Create a New Agreement.”
- Fill in the details of the agreement.
- Service: Living room painting
- Compensation: 250 BHD
- Agreement Dates: 01/25/2023 to 01/27/2023
Service Receiver Approval
- The service receiver (e.g., Mohammed) will receive an SMS to review the new agreement.
- Click on the link provided in the SMS to approve or reject the agreement: Link
Getting Paid
- Ensure that payments are received through bank transfer or Benefit to safeguard your rights.
- A reminder for registered workers: Document your services via the Service Agreement Portal for a seamless payment process.
Probation Period
A probationary period is allowed for a maximum duration of three months. Within this period, either the employer or the employee can conclude the contract by providing a notice period of at least one day to the other party. Upon completion, the time spent in the probationary period contributes to the employee’s total period of service.
Working Hours
The typical workweek in Bahrain ranges from 40 to 48 hours, contingent on company policies. Standard office hours typically span from 08:30 or 09:00 to 17:30 or 18:00, and this schedule remains consistent throughout the year without variations between summer and winter. During the month of Ramadan, working hours are legally reduced to six hours for all staff, although some companies may only implement this reduction for fasting Muslims.
Friday serves as the designated rest day in adherence to Muslim practices. In companies with a five-day workweek, the additional day off may fall on either Thursday or Saturday. International companies often opt for Saturday as the supplementary day off to align with global operational standards. Conversely, certain companies adhere to Thursday as the ‘weekend’ due to the local school schedule, which designates Thursday and Friday as the customary weekend.
13th Month Salary
There is no requirement for employers to pay a salary for the 13th month in Bahrain.
Employees vs Independent Contractors Compliance in Bahrain
| Aspect | Regular Employees | Independent Contractors | Agency Workers (Temps) |
|---|---|---|---|
| Employment Type | Fixed-term or unspecified length, usually permanent and full-time. Possible part-time positions. | Individuals with established businesses or professional licenses. | Employees provided on a temporary basis by licensed agencies. |
| Contract Registration | Contract must be registered with the LMRA for residence visa and work permit. | Employer likely responsible for obtaining licenses for independent contractors. | Agency remains the sponsor for temporary workers under their sponsorship. |
| Probationary Period | Can have a probationary period of 3 to 6 months, depending on industry and work conditions. | Not specified. | Not specified. |
| Language Requirement | Contract must be written in Arabic; often translated from another language as an attachment. | Not specified, but implied that contracts may be in other languages. | Not specified. |
| Obligations to LMRA | Contract registration, updating of documents, and reporting changes to LMRA. | Not specified, but likely depends on the nature of the contract. | Agency likely responsible for registration and compliance. |
| Corporate Registration | Foreign employers cannot engage directly unless registered under the Commercial Registry. | Not specified. | Not specified. |
| LMRA Registration | Mandatory LMRA registration for foreign employers with allocated work permits. | Not specified. | Likely required for agencies providing temporary workers. |
| Monthly Fees for Expats | Monthly fees required for each expat employee as per LMRA Law. | Not specified. | Not specified. |
| Payment Currency | Recent motions to make payroll in local currency using local payroll service. | Not specified; no enforcement as of late. | Not specified. |
| Work Permits and Visas | Valid work permit and residence visa sponsored by the employer. Applies to all except Bahrain and GCC nationals. | Alternative visas and work permits may be available for short-term work. | Agency sponsorship for temporary workers. |
| Language of Documentation | Employment records and contracts must be documented in Arabic; translated versions may be attached. | Not specified, but likely depends on the language used in the original contract. | Employment-related records and contracts required in Arabic; translated versions may be attached. |
Social Security in Bahrain
Refer to the Corporate Tax Summary’s Other Taxes section for comprehensive details on Value-Added Tax and Excise Duty.
Employers are mandated to withhold these contributions and remit them to the SIO on a monthly basis.
- Personal Income Tax: There is no individual income tax in Bahrain.
- Social Security: Employers and employees contribute to social insurance based on prescribed rates, with a maximum monthly contribution. The ongoing compliance of the pension scheme is monitored by SIO.
- Reporting: Employers must ensure ongoing compliance with the pension scheme based on criteria set in the provisioning law of SIO.
Bahrain’s regulatory landscape ensures that both employers and employees fulfill their obligations regarding social security contributions and compliance with relevant authorities.
Payroll in Bahrain
Minimum wages in Bahrain
Bahrain does not have a set minimum wage rate. Workers in the public sector are paid 300 BHD.
- Payroll Cycle Management Efficiently process payments for both employees and contractors, adhering to local currency norms.
- Comprehensive Payroll Services Covering setup, processing, and administration, Mercans handles the entire payroll spectrum.
- Statutory Compliance Ensure adherence to statutory obligations through precise filings and timely payments.
Bahrain Employee Hiring Cost
Consider a hypothetical scenario in Bahrain, where a local employee is hired with a monthly gross salary of $10,000 USD (3,769.62 BHD). After deductions, the estimated monthly net salary amounts to $9,300.00 USD (3,505.75 BHD), resulting in a total monthly payroll cost of $11,200.00 USD. This example outlines the financial aspects associated with employing a local staff member in Bahrain, taking into account salary and related costs.
Termination in Bahrain
In Bahrain, the termination of employment contracts is governed by specific regulations outlined in Articles 97 and 98 of the Labor Law. The termination process varies depending on the nature and duration of the employment contract:
- Contracts formed for the performance of a specific task cease upon the completion of that task.
- Renewal is possible if both parties agree to engage in another project or task.
- When the contract lacks a specified duration.
- If the agreed-upon duration exceeds five years.
- When the total duration, including renewals, surpasses five years.
- If parties continue working post-expiry without an explicit agreement for renewal.
These regulations provide a clear framework for the termination and renewal of employment contracts, emphasizing the importance of explicit agreements and compliance with specified durations. Employers and employees are encouraged to navigate termination procedures in alignment with the stipulated legal provisions.
Employee Benefits in Bahrain
Personal Income Tax in Bahrain
There is no individual income tax in Bahrain.
Work Permit in Bahrain (page 16 and 17)
To reside and work in Bahrain, all expatriates must obtain an employment residency visa from immigration authorities and a work permit from the Labor Market Regulatory Authority (LMRA). GCC nationals, while exempt from residency visas, need to register with the LMRA for work permits.
Entry to Bahrain requires a visa, excluding GCC citizens. Various visas are available, including:
Visa on Arrival
Obtainable by nationals from certain countries, including the U.K, U.S, Japan, Hong Kong, and Malaysia. Valid for three months, it must be renewed every two weeks, even while in Bahrain.
Business Visas
Issued for business visits and representation purposes. Duration varies based on the passport holder’s nationality, restricting activities to official company business.
Tourist Visas
For holiday or pre-expat contract fact-finding trips, requiring application unless eligible for visa upon arrival. Some nationals are entitled to visa-on-arrival, but it does not allow economic activity during the stay.
72-Hour Visa
Obtained on arrival at Bahrain International Airport or King Fahad Causeway, mainly for business visits, trade delegations, exhibitions, and seminars.
Work Visas
Applied for by sponsors on behalf of foreign employees. Requires a signed employment contract, sponsor stamp, and, if outside Bahrain, a medical report from an LMRA-approved health center in the employee’s home country.
Note: Some passport holders are restricted from entering Bahrain.
Work Visa Application Requirements:
- Visa Application Form
- Employee’s passport
- Passport size photograph
- Sponsorship Letter (indicating employer details, employee’s name, birth date, nationality, etc.)
- Copy of the contract
- Health record from an authorized clinic
- Fee of BHD 100
Residency Permit (Family Visa) Application Requirements:
- Application Form
- Copy of the employee and family’s passport
- Employee’s Sponsorship Letter
- Employee’s Contract
- Family health record from an authorized clinic
- Fee of BHD 22 per applicant
CPR Card (Identification Card) Application Requirements:
- Employee (or spouse) passport
- Sponsorship letter stating names of dependents
- Marriage certificate (for spouse) and birth certificate (for children)
- Fee of BHD 1 per applicant
EOR Solutions in Bahrain
Conclusion
In conclusion, opting for Employer of Record solutions in Bahrain streamlines the complexities of international workforce management, ensuring legal compliance and seamless operations. With comprehensive services covering legal, payroll, and HR aspects, businesses can confidently expand into Bahrain’s market, enjoying flexibility and efficient entry into the workforce landscape. Employer of Record solutions offer a strategic and hassle-free approach for companies seeking success in the dynamic business environment of Bahrain.