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End-of-service indemnity in Bahrain explained
Pragma editorial team · · 2 min read
What indemnity is
End of service indemnity, or gratuity, is a lump sum paid to an employee at the end of employment in recognition of their service.
How it is calculated
SIO guidance for non-Bahraini employees describes the gratuity as 15 days' salary for each of the first three years of service, and one month's salary for each year thereafter. It is calculated on basic salary plus social allowance, if any, and does not include other allowances.
The March 2024 change for expatriates
From 1 March 2024, employers no longer pay expatriate gratuity directly at the end of service. Instead, they pay a monthly contribution to the SIO: 4.2% of monthly wages for each of the first three years, and 8.4% thereafter. At the end of employment, the employee applies to the SIO for the entitlement.
What this means for your accounts
For expatriate staff, the cost now appears every month as a contribution rather than as a single payment at exit. Your payroll needs to calculate it correctly and your ledger needs to record it.
How Pragma helps
Pragma tracks service length and salary base for every employee, calculates the monthly SIO contribution for expatriates, and keeps each person's position visible.