On July 26, 2012, the King of Bahrain issued new labour Law No. 36 of 2012 (the New Law). The New Law repeals and replaces the old labour law (No. 23 of 1976).

The New Law underpins Bahrain’s efforts to come in line with international standards, and it has aligned Bahrain’s domestic law with several of the Arab and international labour treaties and conventions to which it is a signatory and which have come into effect over the last 36 years (since the enactment of the old labour law). Implementing regulations will be brought into force within six months of the date of the new Law.

It is expected that the New Law’s pro-employee approach will help to increase salaries and improve working conditions, and generally help to create a better investment environment in Bahrain by aligning the practices and benefits for private-sector employment with Bahrain’s public sector. Furthermore, Bahrain has now become the first GCC country to scrap the sponsorship system, as under the new Law an expatriate worker can switch jobs without the need for his prior employer’s consent.

In addition to benefiting the working environment in the private sector, implementation of the New Law is expected to result in faster resolution of labour disputes which, under the old law, often took as long as three years to resolve through the courts.

The following is a high-level review of some of the more significant changes that have been made under the New Law.

Scope of the Law

For the first time throughout the GCC, domestic staff (including gardeners, drivers and cooks) previously not protected under the law will come under the ambit of the New Law. Such employees will now be employed under clear contractual terms in line with all private-sector employees. This is seen as a major component of preventing human trafficking in Bahrain.

Non-Discriminatory Practices

Discriminatory practices – of whatever nature – are prohibited under the New Law. For example, discrimination in the payment of wages based on sex, ethnic origin, language, religion or beliefs is prohibited (Article 39). In addition, further anti-discriminatory provisions can be found in the New Law which prohibit termination of contracts based on sex, colour, religion or membership in a trade union.

Annual Leave

Under the old law, annual leave was provided at 21 days for the first five years of service and 28 days for every year thereafter (Article 84). Under the New Law, all employees are entitled to 30 working days paid annual leave, at the rate of two-and-a-half days a month (Article 58).

Maternity Leave

Under the old law, maternity leave was provided at 45 days paid leave with a further 15 days unpaid. The New Law provides for 60 days paid leave and an additional 15 days unpaid (Article 32). Further – and significantly – female employees with children under six years of age are now entitled to leave without pay for six months to care for their child. This leave may be taken on three separate occasions (i.e., for three children) during an employee’s service. Some have argued that this provision may backfire on female employees, making many employers more reluctant to take them on, specifically if they have young children.

Sick Leave Entitlement

The New Law introduces an increase in sick leave from 45 days per year (15 days at full pay, 15 days at half pay and 15 days without pay) to 55 days (15 days at full pay, 20 days at half pay and 20 days without pay) (Article 65 ).

Delays in Salary Payments

Employers will now be liable to compensate employees for any delays in payment of monthly salaries at the rate of 6% per year for wages that are delayed for six months or less. This rate is increased at the rate of 1% for each month’s delay thereafter up to a maximum of 12% per year.

Summary Dismissal

Under the old law, employees who were summarily dismissed were not entitled to claim indemnity (Article 113). However, under the New Law, an employee who is terminated for cause, although not entitled to notice or compensation, is nevertheless entitled to leaving indemnity in accordance with the law (Article 107).

Labour Disputes

The procedure for settling labour disputes has changed. A Labour Case Administration Office (the Labour Office) has been created as an attempt at ensuring, wherever possible, amicable settlements. All labour-related claims must first be filed with the Labour Office and shall be heard before a labour administration judge (Articles 112, 113). The judge does not render any decisions per se; rather, he prepares a report which includes the facts of the dispute, the parties’ respective submissions, the evidence and his own opinion. After hearing both sides and preparing his report, the judge will then propose an amicable settlement between the parties. In the event that the parties do not reach an amicable settlement, the labour case administration judge shall refer the matter to the High Civil Court with a report. The High Court will hear labour disputes on an urgent basis and must hand down its decision within 30 days of the date of the first hearing (Article 133). The High Court’s decision is final, and the parties may only appeal to the Court of Cassation on matters of law. Previously, the parties had a right of appeal to the Court of Appeal. It is envisaged that this entire process will not take any more than three to four months to complete.

Penalties

Employers will face tougher penalties if they fail to comply with the New Law; in particular, imprisonment of up to three months and/or fines of BD500 to BD1,000 in certain cases for failure to implement adequate health and safety policies (Article 192). The punishment is doubled for a repeat offence (Article 194).