INDEMNITY CALCULATION IN BAHRAIN LABOUR LAWS

According to Bahrain Labour Law Indemnity is protection or compensation is right of every employee given when employee service is ended or terminated. To understand the laws related to indemnity or end of service compensation/ Benefits you must first have knowledge related to you contract, check if your contract is indefinite(permanent) or definite(temporary). There are lot of things in labour laws that were not easy to understand but I try my best to give the simplest possible explanation of each provisions and article related to Indemnity laws.

The legal document which represents Bahrain Labor laws is Law No.36 2012 which is also called  “The promulgation of the labour law in the private sector”. All of below references is taken from that document.

On Which Basis Indemnity(End of Service Compensation) Calculated:

According to Article 47 of Bahrain Labour laws End of Service Indemnity is calculated on the basis of last Basic Salary of month including Social Gratuity if any. Also those worker who works on daily basis and get paid for one day as well as given with commission on each sale or production will be given  indemnity  on the basis of Average wage of Last 3 Months.

Article 111 Provision on End of Service Indemnity:

For Indefinite Labour Contract Holder:(Termination)

Paragraph A: If company/employer terminates the indefinite contract with worker means if worker is fired by company/employer within period of first three months after starting of employee service. Than in this case employee is not given with compensation but the reason of termination is due to employer  arbitrary reasons or personals reasons than worker is must be given with compensation equals to one month salary.

Paragraph B: In case if worker completes its first three month of service and employer terminate him with no reason or due to any other legal excuse than worker will be given with compensation equals to wage of 2 days of each month OR minimum one month wage OR maximum 12 months wage totally relies on employer.

For Definite Labour Contract Holder:(Termination)

Paragraph C: In case the employer terminates or fired his worker in Definite Labour contract without any reason than employer must give his employee with compensation equals to wage of remaining period of the contract. Sometime both parties agrees on lesser compensation but still minimum three months compensation must be given or wage of remaining period whichever is decided by both parties.

Paragraph D: In case of Termination due to Work Performance:  If the employer terminates the labour contract concluded for the performance of a specific work for no reason or for an illegitimate reason, employer shall give the compensation to worker equal to wage of remaining period of labour contract. Sometime both parties agrees on lesser compensation but still minimum three months compensation must be given or wage of remaining period whichever is decided by both parties.

The above article is defined in terms for those who were terminated or fired by employer to reason or not any reason we shall discuss what compensation is given in case if employee successfully. completes its service.

Article 116:

For those employees  who don’t subject to provisions of the Social Insurance Law shall be given with compensation equals to the monthly half wage for each year of service if the contract is completed or terminated less than 3 years of service. In case the service exceed 3 years than compensation equals to each full wage of one month for each year of service will be given to employee. The worker
shall be entitled to a reward for the fraction of a year pro rata the period of service he spent with
the employer. 

Other Articles related to INDEMNITY is 104, 105, 115, 112

For example if an employee completes first 3 year of his employee and his salary of last month is 3500 bhd than he is entitled for 1250+1250+1250 of compensation. These figures can only be derived after calculations through formulas.
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