Bahrain end-of-service gratuity explained
By Dexaloop · Updated 27 October 2026 · Checked against the sources listed below
In Bahrain, a non-Bahraini worker in the private sector earns an end-of-service gratuity of half a month's wage for each of the first three years of service and one month's wage for each year after that, with part years counted in proportion. Since 1 March 2024 the gratuity has two payers: the employer pays the part earned before that date, under Labour Law No. 36 of 2012, and the Social Insurance Organization (SIO) pays the part earned from that date, under Resolution No. 109 of 2023. This guide explains how the two fit together and works through a full example. It is general information on Bahrain law, checked on 27 October 2026, and every figure in it was produced by the same engine as the Dexaloop gratuity calculator.
The rate: half a month, then a full month
Article 9 of Resolution No. 109 of 2023 sets the gratuity at half a month's wage for each of the first three years of work and a month's wage for each later year. It adds that fractions of a year earn a share in proportion to the time served with the employer. Article 116 of the Labour Law uses the same two rates.
| Part of your service | Gratuity for each year |
|---|---|
| Years 1 to 3 | Half a month's wage |
| Year 4 onwards | One month's wage |
| A part year | The same rate, in proportion to the days served |
So the rate depends on how long you have worked for the employer, not on your age or your job. Your first three years always stay at the lower rate, however long you stay.
What changed on 1 March 2024
Resolution No. 109 of 2023 was issued on 12 December 2023 and came into force on 1 March 2024. Article 2 applies it to non-Bahraini workers in the private sector, with some groups excluded under Article 3.
Before that date, the whole gratuity was paid by the employer at the end of the job, under the Labour Law. The Resolution moved the future part to the SIO, which builds up a fund from monthly employer contributions. Article 5 sets those at 4.2% of the wage for each of the first three years and 8.4% after that. Over a year, 12 × 4.2% is about half a month's wage and 12 × 8.4% is about one month's wage, which matches the two gratuity rates.
Article 14 deals with the years already worked: service before the Resolution came into force stays under the Labour Law. In practice this splits one gratuity into two parts:
- Employer part: what you had built up by 1 March 2024.
- SIO part: what you build up from 1 March 2024 to your last day.
The two parts add up to the same total you would get from one unbroken calculation. Splitting the payer does not change the amount.
The point most people get wrong: the three-year clock
The three years at half a month count from your first day with the employer, not from 1 March 2024. A worker who joined in 2019 was already in year 5 by March 2024, so the SIO part of their gratuity is at the full one month a year from the start. Restarting the count in 2024 would pay three more years at the lower rate and give too low a figure.
What counts as wage
Article 1 of the Resolution defines the wage as the pay fixed in the employment contract and paid regularly, plus any increases and the social allowance, if there is one. Housing, transport, food and other allowances are not included. For the employer's part, Article 47 of Labour Law No. 36 of 2012 sets the same base: the gratuity is worked out on "the last basic wage plus the social allowance, if any" (our translation of the Arabic text). For many expatriates the gratuity base is simply the basic salary.
Article 10 adds two rules. The gratuity is paid when service ends and is worked out on the worker's last wage. It is also limited to the contributions collected for the worker. Workers usually do not know that contributions figure, so an estimate shows the formula amount and the SIO confirms the final figure.
Worked example
Rahul joined a company in Manama on 1 June 2019. His last day is 1 December 2026, and his last basic salary is BHD 450 a month, with no social allowance.
Length of service: 7 full years (to 1 June 2026) plus 183 days.
| Step | Sum | Amount (BHD) |
|---|---|---|
| Years 1 to 3 at half a month | 3 × 0.5 × 450 | 675.000 |
| Years 4 to 7 at one month | 4 × 1 × 450 | 1,800.000 |
| 183 days of year 8 at one month | 183 ÷ 365 × 1 × 450 | 225.616 |
| Total gratuity | 2,700.616 |
The split at 1 March 2024. By that date Rahul had 4 full years plus 274 days:
- Years 1 to 3: 3 × 0.5 × 450 = 675.000
- Year 4: 1 × 450 = 450.000
- 274 days of year 5: 274 ÷ 365 × 450 = 337.808
- Employer part: BHD 1,462.808
The SIO part is the rest: 2,700.616 minus 1,462.808 = BHD 1,237.808.
The calculator counts a part year as days served divided by 365, and shows amounts to three decimal places (fils).
Common mistakes
- Restarting the three years in March 2024. The count runs from the first day of service.
- Adding housing or transport allowance. Only the contract wage, its increases and any social allowance count.
- Using the starting salary. The last wage is the base.
- Treating the two parts as two separate gratuities. They are one gratuity, split by date. Working each part with its own fresh three-year count gives the wrong answer.
- Ignoring part years. Days beyond the last full year count in proportion.
Keeping your own record
Gratuity questions are much easier to settle when you have your contract, your payslips and a dated note of your salary changes. The SIO pays the part for service from 1 March 2024, so check the SIO website for how to claim it. The employer part is settled with the employer. A clear calculation that shows each step helps both sides check the same numbers. The calculator below gives that breakdown, and the Haqdar app for iPhone shows gratuity, leave and final settlement figures with the article of law behind each one.
Estimate your Bahrain gratuity: tools.dexaloop.com/bahrain-gratuity-calculator/. Free, no sign-up, and it runs on your device.
Questions
Did the 2024 change reduce gratuity for expatriates in Bahrain?
The rates did not change. Labour Law No. 36 of 2012 and Resolution No. 109 of 2023 both give half a month's wage for each of the first three years and one month's wage for each later year. What changed from 1 March 2024 is who pays: the SIO pays for service from that date, and the employer for service before it.
Does my three-year count restart on 1 March 2024?
No. Your years of service run from your first day with the employer. If you joined in 2019, you were already past three years by March 2024, so service after that date is at one month's wage a year.
Is gratuity worked out on my first salary or my last?
On your last wage. Article 10 of Resolution No. 109 of 2023 says the gratuity is paid at the end of service on the basis of the worker's last wage.
Does housing allowance count toward gratuity in Bahrain?
No. The wage for gratuity under Article 1 of the Resolution is the contract pay plus any increases and the social allowance, if there is one. For service before 1 March 2024, Article 47 of the Labour Law likewise uses the last basic wage plus any social allowance. Housing, transport and similar allowances are not part of it.
Who pays the employer contributions for the SIO gratuity?
The employer alone. Article 5 of the Resolution sets a monthly contribution of 4.2% of the wage for the first three years of service and 8.4% for later years. Nothing is deducted from the worker for it.
Sources
- Resolution No. 109 of 2023 on the end-of-service gratuity system (Arabic), Legislation and Legal Opinion Commission
- Labour Law for the Private Sector, Law No. 36 of 2012 (Arabic), Legislation and Legal Opinion Commission
- Social Insurance Organization (SIO): End of service gratuity for non-Bahrainis
This guide is general information, not legal, tax or financial advice. Rules change; check the official source for your own case. Found a mistake? Email support@dexaloop.com.