Gratuity is the payment of a lump sum amount of money to the employee by the employer for their service. End-of-service gratuity is usually paid out to employees who meet certain contractual terms or have been unfairly dismissed. Gratuity is also called leaving indemnity in the Bahrain Labor Law. If someone has resigned from the company or has got terminated, then the gratuity amount will be very useful for him to find the next job or plan his future. Hence, knowing the gratuity formula and calculation is very important. HR Chronicle is the leading Human Resource and Payroll Management Software in the GCC Region. It is considered one of the best HR SaaS software as per the client feedback.
Article -47 of Bahrain Labor Law
“Article (47): A worker’s entitlements related to his leaving indemnity, amounts due for the balance of annual leave provided for in Article (59) and the compensation due according to the provisions of Article (99) (b) and Article (111) of this Law shall be calculated on the basis of the worker’s most recent basic wage in addition to the social allowance if any. If a worker is employed on a piece-rate or production basis or receives a fixed wage in addition to a commission or percentage, the calculation of such entitlements shall be based on the average wage of the worker during the last three months. “
The above article states that Gratuity is calculated based on the last Basic Salary of the month including social allowance if any.
Also, those employees who work on a daily salary, production basis and get paid for one day as well as given with commission on each sale or production will be given gratuity based on the Average wage for the Last 3 Months.
Article – 116 of Bahrain Labor Law
“A worker who is not subject to the provisions of the Social Insurance Law shall be entitled upon the termination of his employment to a leaving indemnity at the rate of half month’s wage for each of the first three years of employment and one month’s wage for each of the following years in service. A worker shall be entitled to receive his leaving indemnity for fractions of the year in proportion to the period spent at the employer’s service.”
For legal advice always consult a legal professional like a lawyer or the Ministry. The contents of this article do not constitute legal advice.
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HR Chronicle is the Leading HR and Payroll Management Software in the GCC Region. HR Chronicle is designed as per GCC Labor law and policies. No manual calculations, no paperwork, no last-minute confusion. With HR Chronicle manage your company’s HR and payroll processes efficiently.
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Reference Link: https://lmra.bh/portal/en/page/show/199