Payroll Services in Bahrain

Mercans provides comprehensive payroll outsourcing Bahrain services, including managed and SaaS options, tailored to businesses in Bahrain. With years of industry experience, we ensure accurate and compliant payroll processing, making us the preferred choice for payroll services in Bahrain Our local team of payroll specialists in Bahrain is well-versed in local laws, offering dedicated support for a seamless payroll experience. Trust Mercans for timely payroll transactions and multi-currency payments, catering to the diverse needs of the Bahraini market.

Payroll Cycle, Working Hours and Overtime

Payroll Cycle

According to Article 40, the law mandates that employees paid monthly should receive their salaries on a monthly basis. For those compensated based on production and requiring a minimum of two weeks to complete their work, an advance payment should be made in the first week, with the remaining balance settled in the final week upon completion of the task. Hourly employees must receive payment at least once a week.

Working Hours

As per Article 51, a worker’s daily employment should not exceed eight hours, and weekly employment should not surpass 48 hours. During the holy month of Ramadan, Muslim workers should not work more than six hours per day.

Overtime 

Overtime refers to any additional hours worked beyond regular working hours. Article 54 stipulates that employees are entitled to compensation equivalent to their normal working hours plus an additional 25% for daytime overtime and at least 50% for nighttime overtime. Nighttime, defined as the period between 7 PM and 7 AM, is subject to these provisions. Overtime hours in Bahrain should not exceed 12 hours per week. If an employee works on their rest day or a public holiday, they can choose between receiving their normal wage plus an additional 50% or taking an extra day off. All hours worked during holidays and Eid celebrations are considered overtime.

Minimum Wages and 13th Month Salary

• Minimum Wages: Bahrain does not have a set minimum wage, except for public sector workers who receive a rate of 300 BHD, applicable only to Bahraini nationals. The minimum wage in Bahrain was last updated on January 1, 2015.
• 13th Month Salary: There is no legal obligation to provide a 13 th or 14th month salary.

Company Setup in Bahrain

Setting up a business in Bahrain involves registering with the Ministry of Industry, Commerce, and Tourism to obtain a Commercial Registration (CR) Number. This certificate includes crucial details such as the registration number, establishment date, legal representative’s information, and more. There are three types of CR certificates issued:

• Commercial Registration without License: Obtained initially to register the company legally, facilitating tasks like leasing space and engaging with vendors.
• Commercial Registration with License: Issued after obtaining necessary approvals/licenses for business activities.
• Virtual Commercial Registration: Designed for small enterprises, simplifying the establishment process.

Utilizing the Sijilat portal streamlines registration and licensing processes online, eliminating the need for physical visits. To access Sijilat, an advanced eKey is necessary, or applicants can apply through a professional body or a representative with a notarized power of attorney.

Various types of companies can be established in Bahrain, including Public Shareholding Company, Closed Shareholding Company, Limited Liability Company, Joint Liability Company, Limited Partnership Company, Limited by Shares Company, SPC, Foreign Branch, and Representative Office.

When applying for a CR, investors need to provide details such as their name, nationality, contact information, authorized signatories, desired business activity, establishment’s capital, commercial address, and legal representative’s information. Additional details may be required as per the Ministry of Industry & Commerce discretion.

Payroll Taxes in Bahrain

Social Security in Bahrain

Social security regulations encompass all employed individuals, aged 17 to 60. However, non-Bahraini employees are entitled only to the ‘Insurance against Employment Injury’ provision within the social security framework.

Income Subject to Social Security

Contributions to social security (SIO) are computed based on employees’ contractual salaries as reported to the Social Insurance Organization (SIO) using January figures, up to a monthly salary cap of BHD 4,000.

Full monthly social security contributions are applicable even for partial periods, such as new hires or those leaving before the end of a month.

The following rates of social security contributions are applicable:

As a norm, employers typically cover the entire 4% social security contribution without deducting the 1% employee contribution from expatriate employees’ salaries.

Some employers report only basic salaries of expatriate employees to SIO instead of their full contractual salaries.

Initial Employer Registration with the Social Security Authority

All establishments must register with the Labor Market Regulatory Authority (LMRA) before hiring any expatriate employees.

The registration process involves several steps, including completing an online registration form, submitting necessary documents, scheduling an appointment with LMRA, and submitting the New Establishment Registration Form either in person or through an authorized representative.

Required documents for LMRA registration include the LMRA registration form, appointment letter, commercial registration certificate (CR), and authorization letter from the company’s Chairman or an authorized person.

Companies can then proceed to register with the Social Insurance Organization (SIO) after completing LMRA registration, providing documents such as the SIO registration form, CR copy, memorandum of association (if applicable), and personal IDs of authorized officials.

Registration of New Hires and Leavers with the Social Security Authority

Bahraini national employees are registered via the SIO’s web portal, while expatriate employees are registered through LMRA’s website. If expatriate employees are not automatically registered with SIO, a registration form must be submitted.

A termination form signed by both the employer and employee is necessary to deregister an employee from SIO.

All new hires and leavers must be registered with SIO within 30 days of the event.

Registration of Salary Changes

Salary changes are reported to SIO based on January figures by February 15 each year. Subsequent changes are reported in the following January.

Personal Income Tax in Bahrain

There is no individual income tax in Bahrain. 

Payroll Compliance in Bahrain

In Bahrain, employers are obligated to submit the following statutory filings. Mercans assists you in completing the necessary filings as per the Bahrain local laws.

Statutory Filings and Contributions 

Salary declaration

Employers need to verify employees’ salaries as of January 1st and update them on the SIO online portal. Declarations must be submitted for all employees, even if there are no changes in salary.

GOSI Monthly Contribution

SIO generates monthly invoices for registered organizations, detailing employee numbers, additions, exclusions, and contribution amounts for the previous and current months. Payments can be made through the SIO online portal.

LMRA Monthly Contribution

LMRA generates monthly invoices on the 1st of each month, detailing contribution amounts, visa renewal fees, and administrative charges. Payments can be made through the LMRA online portal.

Wage Protection System (WPS)

The WPS allows LMRA to monitor whether private sector enterprises are paying wages as agreed and on time through financial transfers via approved banks or financial institutions. There is no separate registration process for WPS; it is integrated with licensed banks and financial institutions. Companies must ensure all employees have bank accounts and that salaries are paid through these institutions. Salary upload files typically contain the company’s CR number and registered address, along with employees’ bank account numbers, facilitating tracking by the WPS system.

Employee Benefits in Bahrain

• Annual Leave: Bahraini law mandates 30 calendar days of annual leave with full pay for employees, ensuring adequate time for rest and recreation.
• Maternity Leave: Female employees are entitled to 60 days of maternity leave with full pay, extendable by an additional 15 days without pay, promoting maternal health and family well-being.
• Paternity Leave: Fathers are granted up to five days of paternity leave after the birth of a child, allowing for bonding time and family support.
• Sickness Absence: Employees are provided with 55 calendar days of sickness absence entitlement, with varying pay rates based on the duration of absence, safeguarding health and providing financial support during illness.
• Pilgrimage Leave: Bahraini law may provide provisions for pilgrimage leave, allowing eligible employees time off to fulfill religious obligations such as Hajj or Umrah.
• Expenses: Employers may cover certain expenses related to work duties, such as travel or equipment expenses, ensuring that employees are adequately supported in performing their roles.
• Public Holidays: Employees are entitled to public holidays with full pay, including New Year’s Day, Labour Day, Eid Al Fitr, Eid Al Adha, among others, allowing for cultural and religious observance.

Benefits of Payroll Outsourcing in Bahrain

For our Payroll services, we’ve strategically implemented a robust tool that seamlessly operates across diverse countries, ensuring regional consistency and meeting the specific needs of our clients. This tool aligns with our dedication to delivering:

• Stringent Data Security: We integrate industry-leading security measures to safeguard sensitive data, backed by ISO 27001 and ISAE3402 certifications ensuring adherence to stringent information security protocols.
• Consistent Performance: Our system ensures consistent and sustainable performance, tailored to meet the dynamic demands of payroll services.
• Flexibility and Scalability: We offer flexibility and scalability to accommodate evolving client needs and adapt to changing business environments.
• Collaborative Cloud Platform: Utilizing a Cloud-based platform fosters collaborative work, promoting efficiency and accessibility across teams.

Incorporating ISO 27001 and ISAE3402 certifications underscores our commitment to the highest standards of information security and operational integrity.

Key Features of Electronic Payroll Support

• Full Traceability: Our process ensures traceability from generation to transmission and validation, meticulously validated by our expert human team to maintain consistency.
• Efficiency in Human Resources: We streamline the payroll settlement process, enhancing the efficiency of the human resources area and achieving significant time savings.
• Certified Suppliers: Partnering with certified suppliers holding ISO 27001 certification ensures secure data transmission processes, bolstering the integrity of our services.

In alignment with Bahraini labor regulations, Mercans ensures that employees receive their entitled benefits by meticulously managing statutory deductions and entitlements. Our dedication lies in upholding compliance and securing employees’ rights as mandated by the law. Below are the primary monthly payments and provisional costs related to employee benefits:

A) Monthly Payments for Employee Benefits

• Health Insurance
• Pension Contributions
• Occupational Injury Insurance
• Taxes and Government Contributions
• Vocational Training Program Fees
• Social Welfare Tax
• Employee Welfare Fund
• Solidarity and Guarantee Fund
• Catastrophic Health Events Fund

B) Provisional Costs (Applicable during Termination, Commencement, Termination, and Mid-Year)

• Service Bonus
• Vacation Pay
• End of Service Benefits
• Interest on End of Service Benefits

Mercans’ meticulous handling of these payments and costs demonstrates our unwavering commitment to employee well-being and adherence to legal requirements, fostering a workplace environment that prioritizes both statutory compliance and the welfare of our esteemed employees.

Payroll Solutions in Bahrain

Discover Our Adaptable Solutions:

• SaaS (Software as a Service): Customized for enterprise-level businesses handling multi-country payroll complexities stemming from diverse data points, locations, currencies, and languages. Our SaaS solution optimizes operations for peak efficiency.
• Managed Services: Tailored for mid-sized and large enterprise businesses, our Managed Services offering is ideal for managing multi-country payroll. It delivers on-demand HR expertise, ensuring utmost security, reliability, and compliance.
• HRMS (Human Resource Management System): Suited for mid to large businesses expanding their operations, our HRMS solution provides a comprehensive suite of functionalities, including payroll and benefits management. Clients can select specific features, tailoring a solution to their exact needs for maximum efficiency.

Streamline Payroll with Mercans’ Technology and Integrations

• Technology: Explore the forefront of innovation with Mercans’ cutting-edge technology that powers our global payroll solutions. Learn more about our technological prowess here
• Integrations: Seamlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the power of integration here
• Recognitions: Join a partner recognized for excellence. Mercans has earned accolades for its commitment to delivering exceptional payroll services. Explore our awards and recognitions here