Bahrain: Wage Protection System to be Implemented for Private Sector Employers

April 6, 2021

Overview 

The Labor Market Regulatory Authority recently announced the introduction of a Wage Protection System that all employers in Bahrain’s private sector will be required to comply with. The system will be implemented in three phases, beginning May 1, 2021 for companies with the largest number of employees. Through this system, employers will be required to pay their employees through an approved financial agency to ensure timely payment of employees’ salaries according to their employment contract. 

Key Points

  • The Labor Market Regulatory Authority will implement a Wage Protection System for private sector employers in Bahrain. 
  • The system will be implemented in three phases which will depend on company size: 
    • Phase 1 – Begins May 1, 2021 for companies with 500 employees or more. 
    • Phase 2 – Begins September 1, 2021 for companies with 50 to 499 employees. 
    • Phase 3 – Begins January 1, 2022 for companies with 1 to 49 employees. 
  • Employers are encouraged to contact their banks for instructions on implementing and utilizing the new system. 
  • Employers who are non-compliant with the new system could face financial penalties and be restricted from using the Labor Market Regulatory Authority portal for filing and renewing work permits. 

What Are the Changes?

The Wage Protection System is a new system that all employers in the private sector in Bahrain must follow. Employers will now be required to pay workers’ salaries through an approved bank or financial agency in Bahrain, and therefore should communicate with their respective bank about how to implement this new system so they are prepared when their phase begins. The system is being implemented to help streamline the monthly salary disbursement process for employers and improve employer and workers’ rights in the country. 

Looking Ahead

The Wage Protection System will provide better transparency for foreign nationals working for companies in Bahrain and help employers build simplified payment solutions which will help minimize labor disputes and correct delayed or missing payments. Employers should contact their banks immediately to ensure they are prepared to be in compliance with the new system by the time their phase begins. 

Content in this publication is not intended as legal advice, nor should it be relied on as such. For additional information on the issues discussed, consult an Envoy-affiliated attorney or another qualified professional.

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