Private-sector employment

Bahrain final settlements: gratuity and termination compensation

Separate the components of a final settlement instead of applying one universal severance formula.

Last updated: 10 October 2026

Reviewed: 10 October 2026. This is general information. Official sources are linked below; individual cases and applicable rules should be checked with the relevant authority or a qualified adviser.

“Severance” can refer to different amounts

A final settlement can include outstanding wages, unused annual leave, compensation for unserved notice, termination compensation and end-of-service benefits. Eligibility and calculation differ for each item.

Articles 47, 59, 99, 111 and 116 address different parts of that assessment. Use an itemised statement rather than labelling the whole amount “gratuity”.

Official sources: Bahrain EDB: Labour Law for the Private Sector, Law No. 36 of 2012 (English text with listed amendments)

Termination compensation depends on the contract and reason

Article 111 distinguishes indefinite contracts, fixed-term contracts and contracts for particular work. For an indefinite contract terminated without a legitimate reason after the first three months, the text uses two days’ wages per month of service, subject to a one-month minimum and twelve-month maximum, with further provisions for arbitrary dismissal.

This is not two months’ salary for each service year and is not a universal minimum of three months. Fixed-term and specific-work cases have their own rules. Have the facts and any contractual compensation assessed before using a figure.

Official sources: Bahrain EDB: Labour Law for the Private Sector, Law No. 36 of 2012 (English text with listed amendments)

Keep notice and gratuity separate

Article 99 deals with notice and compensation for an unserved notice period. It expressly preserves a possible separate entitlement to termination compensation.

For covered non-Bahraini employees, establish SIO gratuity coverage and separate earlier service. Do not assume that dismissal automatically removes all earned wages, leave or gratuity, or that every resignation reduces the benefit by a fixed percentage.

Official sources: Bahrain EDB: Labour Law for the Private Sector, Law No. 36 of 2012 (English text with listed amendments) · SIO: end-of-service gratuity for non-Bahrainis

Review the statement before agreeing it

Article 40 distinguishes ordinary termination payment from voluntary departure; the latter has a seven-day payment provision. This does not establish a single timetable for every disputed amount or SIO benefit application.

  • Identify the legal or contractual basis and service period for each line.
  • Record payments already received without counting them twice.
  • Preserve the contract, notice, salary records and leave record.
  • Obtain prompt advice on disputed amounts and the deadline for the particular claim.

Official sources: Bahrain EDB: Labour Law for the Private Sector, Law No. 36 of 2012 (English text with listed amendments)

Related guides

Browse all guides

Ask BahrainAgent about document support. Authority decisions and legal outcomes cannot be guaranteed.