Navigating the complexities of employment termination in Bahrain requires a thorough understanding of the prevailing labour laws. Both employers and employees must adhere to specific regulations governing notice periods, grounds for dismissal, procedural steps, and entitlements such as severance pay. Compliance is crucial to ensure fair treatment of employees and avoid potential legal disputes or penalties.
Understanding the legal framework for ending an employment relationship is vital for businesses operating in Bahrain. This includes recognizing the different types of employment contracts, the valid reasons for termination, and the mandatory steps that must be followed to ensure the process is conducted lawfully and ethically.
Notice Period Requirements
The required notice period for terminating an employment contract in Bahrain depends primarily on the type of contract and the employee's tenure. The Labour Law sets minimum standards that must be met.
For indefinite-term contracts, the minimum notice period is typically based on the employee's length of service. For definite-term contracts, termination before the contract's expiry date without a valid reason usually requires compensation equal to the remaining period's wages, unless the contract specifies a notice period for early termination.
| Employment Duration (Indefinite Contract) | Minimum Notice Period |
|---|---|
| Less than 3 months | 1 day |
| 3 months to 2 years | 7 days |
| More than 2 years | 30 days |
It is important to note that the employment contract or a collective agreement may stipulate a longer notice period than the statutory minimum, in which case the longer period applies. Notice must be given in writing.
Severance Pay Calculations and Entitlements
Severance pay, also known as end-of-service indemnity, is a statutory entitlement for employees in Bahrain upon termination of their employment, provided certain conditions are met. This payment is calculated based on the employee's last basic wage and their length of service.
The calculation for severance pay is as follows:
| Employment Duration | Calculation Formula |
|---|---|
| First 3 years | Half a month's basic wage for each year of service |
| Subsequent years | One month's basic wage for each year of service |
The indemnity is calculated for the total period of service. Fractions of a year are calculated on a pro-rata basis. Employees are generally entitled to full severance pay upon termination, except in cases of summary dismissal for specific gross misconduct reasons as defined by law. Resignation by the employee may affect the entitlement depending on the length of service.
Grounds for Termination
Employment contracts in Bahrain can be terminated based on various grounds, which are broadly categorized as termination with cause and termination without cause.
Termination With Cause (Summary Dismissal)
An employer may terminate an employee's contract without notice or severance pay in specific instances of gross misconduct. The Labour Law enumerates specific grounds for such summary dismissal, including:
- Assuming a false identity or submitting forged certificates/documents.
- Committing a mistake that causes gross material loss to the employer, provided the employer notifies the employee within 48 hours of becoming aware of the incident.
- Disobeying written instructions concerning the safety of employees or the workplace, provided the instructions were posted in a conspicuous place and the employee was informed of them.
- Absenting himself without legitimate cause for more than twenty intermittent days or more than ten consecutive days in a year.
- Divulging industrial or commercial secrets.
- Being found during working hours in a state of drunkenness or under the influence of a narcotic drug.
- Assaulting the employer, the responsible manager, or any of his colleagues or customers during working hours or by reason of work.
- Committing a breach of the employment contract.
Termination Without Cause
Termination without cause refers to ending the employment relationship for reasons that do not constitute gross misconduct. In such cases, the employer must provide the required notice period (or payment in lieu of notice) and pay the full end-of-service indemnity. Redundancy or restructuring can be considered valid reasons for termination without cause, but the employer must still comply with notice and severance obligations.
Procedural Requirements for Lawful Termination
To ensure a termination is lawful, employers must follow specific procedural steps. Failure to adhere to these requirements can render the dismissal unfair or unlawful, potentially leading to legal challenges.
Key procedural steps include:
| Step | Description | Required Documentation |
|---|---|---|
| Written Notice | Provide the employee with written notice of termination, adhering to the statutory or contractual notice period. | Termination Letter |
| Reason for Termination | Clearly state the reason for termination in the notice letter, especially if terminating with cause. | Termination Letter |
| Final Settlement | Calculate and pay all outstanding entitlements, including wages, accrued leave pay, and severance pay. | Final Settlement Statement, Payslips |
| Return of Property | Arrange for the return of company property by the employee. | Checklist of Company Property |
| Experience Certificate | Upon request, provide the employee with a certificate of experience. | Experience Certificate |
For termination with cause, the employer must also ensure that the reason aligns with the legally defined grounds and that the employee has been given an opportunity to respond to the allegations, where applicable. Common pitfalls include insufficient notice, incorrect calculation of severance, or lack of proper documentation.
Employee Protections Against Wrongful Dismissal
Bahraini labour law provides employees with protection against arbitrary or wrongful dismissal. A dismissal is considered wrongful if it is not based on a valid legal ground or if the correct procedures are not followed.
If an employee believes they have been unfairly dismissed, they can file a complaint with the Ministry of Labour and Social Development. The Ministry attempts to mediate a resolution between the parties. If mediation fails, the case may be referred to the Labour Court.
The Labour Court has the authority to examine the grounds and procedures of the termination. If the court finds that the dismissal was wrongful, it may order the employer to:
- Reinstate the employee to their position.
- Pay compensation to the employee. The amount of compensation is determined by the court based on factors such as the employee's length of service, the damage incurred, and the reason for dismissal, but it cannot be less than two months' gross wage for indefinite contracts or the remaining period's wage for definite contracts.
Employees are also protected from termination based on discriminatory grounds, such as gender, religion, or trade union membership. Termination due to an employee filing a complaint against the employer or participating in a lawful strike may also be considered wrongful.
