Not legal advice
Content summarises labour law as published by each GCC ministry, current as of May 2026. Not a substitute for legal advice. Employment law is jurisdiction-specific and subject to change. For contracts, disputes, visa issues, or any decision with legal consequences, consult a qualified labour lawyer licensed in your jurisdiction.
Not legal advice
This guide summarizes Bahrain employment law for informational use only. It is not a substitute for advice from a qualified labour lawyer. Employment law is complex and jurisdiction-specific. For contracts, disputes, visas, or decisions with legal consequences, consult a licensed labour lawyer in your jurisdiction.
Quick summary
End-of-service gratuity is 15 days of wage per year for the first three years, then 30 days per year thereafter, with no statutory cap. Payable after one year of continuous service. Calculated on the last wage, including fixed regular allowances. Vesting and payout rules differ for fixed-term and indefinite contracts.
The statutory formula
Article 116 of Bahrain Labour Law No. 36 of 2012 sets the gratuity formula:
- Years 1–3: 15 days of wage per year of service.
- Years 3+: 30 days of wage per year of service, on top of the years-1–3 entitlement.
- No statutory cap. Long-service senior executives can accrue substantial entitlements.
Partial years are calculated pro-rata. The daily rate is the monthly wage divided by 30, so one month of gratuity equals one month of wage.
The wage base, broader than UAE/Saudi
A distinctive feature of Bahrain: the gratuity calculation uses "wage," which under Bahraini case law has been interpreted to include fixed, regular, contractually committed allowances , housing, transport, mobile, food, alongside basic salary. Variable bonuses and commission are excluded. This is a more employee-favourable definition than the UAE's basic-only or Saudi's contested-allowance treatment.
Vesting and minimum service
Article 116 requires at least one year of continuous service for any gratuity to vest. Below that, no entitlement. Above that, entitlement accrues pro-rata.
Resignation vs termination
For indefinite-term contracts, gratuity is payable in full regardless of which party terminates, once the one-year threshold has been met. For fixed-term contracts, gratuity is payable on contract expiry. Termination for cause under Article 107 can result in forfeiture, the closed list of grounds includes deception, gross misconduct, repeated breach after written warning, and similar.
Payment timing and currency
Gratuity is paid in cash within seven days of contract end. It is paid in Bahraini Dinar (BHD), which uses three decimal places , a quirk to watch for when reading payslips, since rounding rules differ from the two-decimal-place currencies (AED, SAR, QAR) used elsewhere in the GCC.
Worked example
Priya worked for a Manama firm for seven years, last wage BHD 1,800/month (BHD 1,200 basic + BHD 600 fixed allowances, all part of the wage base). Years 1–3: 3 × 15 days = 45 days × (BHD 1,800 ÷ 30) = BHD 2,700. Years 4–7: 4 × 30 days = 120 days × BHD 60/day = BHD 7,200. Total gratuity: BHD 9,900. Paid within seven days of her last working day.
Frequently asked questions
Does my housing allowance count toward Bahrain gratuity?
Yes, if it's a fixed, regular, contractually committed allowance. This is one of the more employee-favourable elements of Bahraini employment law compared with UAE (basic-only) or Saudi (contested). Variable payments, bonuses, commission, are excluded.
Is there a cap on gratuity?
No statutory cap. Long-tenure executives can accrue significant entitlements. This differs from UAE (two years' basic) and Kuwait (1.5 years' wage).
Do I get gratuity if I resign?
Yes, in full, provided you've completed at least one year of service. The old sliding-scale reductions for short-tenure resignations that some GCC jurisdictions still apply don't appear in Bahrain Law for indefinite contracts.
When do I get paid?
Within seven days of contract end. Late payment is enforceable through the Ministry of Labour's dispute mechanism and, ultimately, the Labour Court. Interest may accrue from the date the gratuity was due.
When to consult a labour lawyer
Consult a Bahraini employment lawyer if your employer is computing gratuity on basic salary only (the wage base should normally include fixed allowances), they're invoking Article 107 'for cause' grounds you dispute, your contract has a bespoke gratuity formula different from the statutory one, or your tenure spans periods of fixed-term renewals that may have converted to indefinite.