Contribution by Employer to Social Insurance Organisation for End-of-Service Benefit
A. Update
The Prime Minister of Bahrain recently announced Resolution No. (109) of 2023 promulgating the end-of- service gratuity system for non-Bahrainis working in the private sector. Pursuant to the same, Social Insurance Organisation (SIO) has also clarified that the employers should pay contributions towards end- of-service benefit (gratuity) for non-Bahraini workers to SIO on monthly basis starting from its effective date in March 2024. The rate of contribution will be 4.2% of the wage for the first three years, counting from the date the insured person begins working for the employer, and 8.4% of the wage for the subsequent years until the end of service. SIO has also clarified that the employer’s obligation to contribute towards the end-of-service benefit to SIO does not apply for the period immediately preceding the implementation of this system.
The end-of-service reward will be disbursed to non-Bahraini workers upon the end of their service or their departure from the country. The disbursement will be made by employer directly for the period from start of service till February 2024, and SIO will disburse the benefit to the employee for the period starting from March 2024 till the end of service, instead of the employer paying the whole end-of-service benefit in one lump sum directly to the worker upon the end of his service.
Increase in Social Security contribution rate
A. Update
The employer's share of the social security contribution for Bahraini workers will be increased to 16% from January 2024. Employer’s total share of contribution will continue to increase by 1% at the start of each year till it reaches 20% by January 2028.
The employee’s total contribution will continue to be 8%.
Social Insurance Contribution Rates Update
A. Update
Bahraini employees in Bahrain:
Law No. (14) for the year 2022 amends provisions of the Social Insurance Law promulgated by Legislative Decree No. (24) for the year 1976.
The changes are implemented for the Social Security contributions for Bahrain employees working in Bahrain and other GCC countries as follows:
1. Employer share:
- Effective May 2022, the employer’s share for social insurance has been increased by 2% (from 12% to 14%) and is applicable till December 2022.
- Effective January 2023 until January 2028, the employer’s share will increase by 1% each year, bringing the total percentage of the employer’s share to 20% by 2028.
2. Employee share:
- No change in employee share for the year 2022.
- Effective January 2023, the employee’s share will increase by 1% (from 7% to 8%) and will remain the same until further notice.
Bahraini Employees working in other GCC countries will contribute 1% additional from the existing rate in respective GCC country.
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