Bahrain – Changes in Social Security Rates & EOSB – 1st January 2026

Social Security and Payroll Contributions Updates

Effective January 1, 2026, the employer’s contribution rate to the Social Insurance Organization (SIO) for Bahraini employees will increase by 1 percentage point. This is a mandated annual increment, continuing Bahrain’s 2022 social insurance reform aimed at strengthening the pension fund.

• Employer Contribution: The total employer’s pension contribution (covering retirement, unemployment, and work injury) will rise from 17% in 2025 to 18% in 2026 of the employee’s wage.
• Employee Contribution: The employee’s deduction rate remains unchanged at a total of 8% (7% for pension plus 1% for unemployment).

(Note: These percentages apply to the employee’s applicable wage up to the statutory salary cap and fund pensions, work injury, and unemployment benefits.)

New Funded End-of-Service Benefit (EOSB) System for Expatriate Workers

Effective March 1, 2024, Bahrain introduced a new end-of-service benefit (EOSB) scheme for expatriate employees, fundamentally altering the method of managing their service gratuities.

Under this new system, the traditional lump-sum payment by the employer upon termination has been replaced. Employers are now required to make monthly contributions to a fund administered by the Social Insurance Organization (SIO). These accumulated contributions will cover the employee’s EOSB (or leaving indemnity).

The required monthly contribution rates, based on the employee’s salary and tenure, are:

• 4.2% of the monthly wage for the first three years of service (equivalent to a half-month’s wage per year).
• 8.4% of the monthly wage for each year of service exceeding three years (equivalent to one month’s wage per year).

Upon the cessation of employment, the expatriate worker will directly claim their accrued benefit from the SIO, rather than the employer. This transition aligns Bahrain with international best practices by ensuring that the EOSB is securely funded and readily available.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change.

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Bahrain – Changes in Social Security Rates & EOSB – 1st January 2026

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