Social Insurance
RegulationHow social insurance contributions are calculated for employers in Bahrain
In 2026 the contribution for a Bahraini employee is 26% of wages, of which the employer pays 18% and 8% is deducted from the employee, rising in 2027 to 27% as the employer's share increases to 19%. The contribution for a foreign employee is 8.2% in the first three years, then 12.4% thereafter.
What has changed in social insurance contributions
The cost of an employee to the establishment is no longer as fixed as it was a few years ago. Two pieces of legislation changed how it is calculated:
Law No. (14) of 2022 introduced an annual increase in the employer's share for Bahraini employees: 18% in 2026, rising to 19% in 2027, while the employee's share remains 8%.
Prime Minister's Decision No. (109) of 2023 moved the end of service gratuity for non-Bahraini workers from a sum the employer pays when the contract ends to a monthly contribution paid to the Organisation, effective 1 March 2024.
Who the system covers
It covers every private sector establishment with employees registered with the Social Insurance Organisation, whether a company or a sole establishment, regardless of the number of employees. The calculation differs according to the employee's nationality:
Bahraini employee: contributions are calculated as a share paid by the employer and a share deducted from the employee's salary.
Non-Bahraini employee: covered by employment injury insurance, unemployment insurance and the Organisation's end of service gratuity scheme.
How it is calculated for a Bahraini employee
| Year | Employer's share | Employee's share | Total contribution |
|---|---|---|---|
| 2026 | 18% | 8% | 26% |
| 2027 | 19% | 8% | 27% |
Worked example: a Bahraini employee earning 800 BD
Contributions are calculated monthly as a percentage of the wage registered with the Organisation. The employee's share is deducted from the salary, and the employer pays the total to the Organisation.
A Bahraini employee with a registered wage of 800 BD in 2026: the employer pays 144 BD a month (18%), 64 BD is deducted from the employee (8%), and the total monthly contribution to the Organisation is 208 BD (26%).
In 2027 the employer pays 152 BD for the same employee (19%), the deduction from the employee stays at 64 BD, and the total becomes 216 BD (27%). The employee's cost to the establishment therefore rises by 8 BD a month, or 96 BD a year, with no change at all to the salary.
How it is calculated for a non-Bahraini employee
| Item | Paid by | First three years | From the fourth year |
|---|---|---|---|
| Employment injury | Employer | 3% | 3% |
| Unemployment insurance | Employee | 1% | 1% |
| End of service gratuity | Employer | 4.2% | 8.4% |
| Total | 8.2% | 12.4% |
Worked example: a foreign employee earning 500 BD
Contributions for a foreign employee are lower, but they rise after the third year of service. The employer's share is 7.2% in the first three years and 11.4% thereafter, while the employee's share is a fixed 1%. For the end of service gratuity scheme, the wage means the wage set in the employment contract, plus any increments and social allowance.
In the first three years: the employer pays 36 BD a month (15 for employment injury and 21 for the end of service gratuity), 5 BD is deducted from the employee, and the total is 41 BD.
From the fourth year: the employer pays 57 BD a month, the deduction from the employee stays at 5 BD, and the total is 62 BD, because the end of service gratuity rate doubles to 8.4%.
The impact on the employer
Estimating the cost of hiring
The actual cost of a Bahraini employee in 2026 is the salary plus 18%, not the salary alone. A foreign employee's cost rises automatically from the fourth year.
Preparing the annual budget
The employer's share for Bahraini employees rises from 18% to 19% in 2027, so a budget that does not account for this increase falls short of the actual cost.
Accuracy of the registered data
Contributions are calculated on the wage registered in the Organisation's system, so the registered wage must match the actual wage in the employment contract. Any error in this data produces contribution differences that the establishment is later asked to pay, and late payment is subject to the provisions of the Social Insurance Law.
What the employer should do now
Review the registered salaries
In the Organisation's system, and match them against the actual salaries in the employment contracts.
Register each new Bahraini employee
With the Organisation from the date they start work.
Review the monthly invoice
Issued by the Organisation's system before payment, and confirm it matches the number of employees and their salaries.
Account for the 2027 increase
In the salary budget for Bahraini employees.
Remove the employee from the Organisation's system
On resignation or termination, stating the exclusion date, so the monthly invoice does not keep charging contributions for them.
Official references
- Law No. (14) of 2022 amending certain provisions of the Social Insurance Law promulgated by Legislative Decree No. (24) of 1976, issued on 18 April 2022.
- Prime Minister's Decision No. (109) of 2023 issuing the end of service gratuity scheme for non-Bahrainis working in the private sector, effective 1 March 2024.
- Legislative Decree No. (78) of 2006 on unemployment insurance.