End-of-Service Indemnity
Written in plain language for general understanding. This is educational content, not legal advice. Based on Bahraini national legislation, decree-laws, and ministerial orders.
Bahraini National Law
What is this right?
When your employment ends in Bahrain, you may be entitled to an end-of-service indemnity (also called gratuity or severance). This is a lump-sum payment based on your length of service:
- First 3 years: Half a month's wage for each year of service.
- After 3 years: One full month's wage for each additional year of service.
- Calculation basis: Based on your last basic wage (excluding allowances unless your contract says otherwise).
- Partial years: You receive a pro-rated amount for any incomplete year.
- Minimum qualifying period: You must have worked at least 1 year to qualify.
The indemnity is payable regardless of whether you resign or are terminated, though dismissal for gross misconduct under Article 113 may forfeit the right.
When does it apply?
- Your employment contract ends for any reason — resignation, termination, contract expiry, or retirement.
- You have completed at least 1 year of continuous service.
- You were not dismissed for gross misconduct under Article 113 of the Labour Law.
What should you do?
- Calculate your entitlement before your last day — half a month per year for the first 3 years, one month per year after that.
- Request a written breakdown of the indemnity from your employer.
- Ensure the calculation uses your last basic salary and includes all qualifying years.
- If your employer refuses to pay, file a claim with the Ministry of Labour within 1 year of your last working day.
What should you NOT do?
- Do not sign a final settlement that waives your indemnity unless you fully understand and agree to the terms.
- Do not wait too long to claim — there is a limitation period for filing labour disputes.
- Do not confuse indemnity with pension — Bahraini nationals covered by social insurance (SIO) may have different arrangements.
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