Understanding the Recent Changes in Social Insurance Contributions in Bahrain

By Abdulla Sahwan

The Kingdom of Bahrain, known for its robust workforce and diverse economy, has made significant amendments to its Social Insurance Law. These changes, which came into effect in 2022, have implications for both Bahraini and expatriate employees, as well as employers operating within the country. This blog aims to provide a detailed understanding of these changes, focusing on the revised social insurance contribution percentages and the legal obligations of employers.

Social Insurance Contributions for Bahraini and Expatriate Employees

Under the newly amended Social Insurance Law (Law No. 24 of 1976), the total social insurance contribution for a Bahraini employee is now 21%. This is divided into a 14% contribution paid by the employer and a 7% contribution paid by the employee.

For expatriate employees, the total social insurance contribution stands at 4%, with the employer paying 3% and the employee contributing 1%.

Future Changes to Employer Contributions

A key aspect of the recent amendments is the planned increase in employer contributions. As per Decision No. 7 of 2022 Amending the Social Insurance Executive Regulations, the employer's contribution will increase by 1% each year from January 2023 until it reaches 20% in 2028. Consequently, this will result in a gradual increase in the total social insurance contribution for Bahraini employees.

Legal Obligations of Employers

With these changes in place, it's crucial for employers to be aware of their legal obligations under the updated Social Insurance Law. Employers must ensure they are in compliance with their contributions, both for Bahraini and expatriate employees. This includes registering employees with the Social Insurance Organization, providing accurate records of salaries and contributions, withholding and remitting employee contributions, and notifying the organization of changes to an employee's status, such as termination or resignation.

Non-compliance with these obligations can result in penalties, including fines or potential legal action by the Social Insurance Organization.

Conclusion

The recent amendments to Bahrain's Social Insurance Law are a significant development for the country's workforce and employers. It's essential for companies operating in Bahrain to familiarize themselves with the changes and their obligations under the law.

By staying informed and complying with the updated regulations, businesses can not only avoid potential penalties but also ensure the well-being and financial security of their employees – both Bahraini and expatriate – fostering a more productive, thriving workforce.

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