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Employment Agreement Essentials

Understand the key elements of employment contracts in Bahrain

Types of employment agreements

In Bahrain, the labor law provides a structure for various employment agreements, each designed to cater to different employment needs. The most common types of employment agreements are as follows:

Unlimited Duration Contracts (Permanent Contracts)

Unlimited duration contracts, also known as permanent contracts, are the most common type of employment agreement in Bahrain. These contracts offer long-term employment security for the employee, with termination procedures outlined in the Labour Law (Law No. 36 of 2012). The key characteristics of these contracts include no pre-defined end date for employment and salary and benefits typically determined by the contract and Bahraini labor law.

Fixed-Term Contracts (Temporary Contracts)

Fixed-term contracts, or temporary contracts, have a defined duration of employment specified in the contract. Termination upon contract expiry is automatic unless both parties agree to an extension. These contracts are commonly used for project-based work, seasonal requirements, and trial periods, although a probationary period within an unlimited contract is more common.

Part-Time Contracts

Part-time contracts are for employees who work less than the standard full-time working hours as defined by the Labour Law or the specific agreement. Employees under these contracts are entitled to benefits on a pro-rated basis according to their working hours.

Collective Bargaining Agreements

Collective bargaining agreements are applicable to employees covered by a trade union. These agreements are negotiated between the employer and the trade union representing a group of employees. They outline the terms and conditions of employment, including wages, benefits, working hours, and grievance procedures, which supersede individual employment contracts.

Special Contracts

Special contracts are specific agreements catering to unique employment situations. Examples of these contracts include apprenticeship agreements for vocational training and fixed-schedule contracts for specific working hours per day or week.

Essential clauses

In Bahrain, a well-drafted employment agreement provides clarity and protects both employers and employees, even though the Labour Law (Law No. 36 of 2012) establishes minimum requirements. Here are the essential clauses:

Parties to the Agreement

The employer and employee should be clearly identified with their full names and contact details. If the employer is acting on behalf of another entity, this should be specified.

Commencement of Employment and Contract Type

The start date of employment should be defined. The type of contract (unlimited, fixed-term, part-time, etc.) should be indicated.

Job Description and Duties

The employee's job title, department, and primary responsibilities should be outlined. A reference to a detailed job description document for more specific duties can be included.

Remuneration and Benefits Package

The employee's base salary, currency, and payment frequency should be specified. Any allowances, bonuses, or overtime pay structures should be detailed. Benefits offered, such as health insurance, paid leave, and pension contributions (if applicable) should be outlined.

Working Hours and Location

The standard working hours per day/week and any potential flexible work arrangements should be defined. The primary work location and any possibility of remote work or relocation should be specified.

Leave Entitlements

Annual leave allowance, including any sick leave, vacation leave, or maternity leave provisions should be outlined. While the Labour Law dictates minimum leave entitlements, the agreement can offer more generous leave policies.

Termination Clauses

Notice periods required for termination by either party, following Labour Law guidelines, should be specified. Potential grounds for termination with or without notice (e.g., misconduct, redundancy) should be outlined. Any severance pay or compensation terms in accordance with the Labour Law should be addressed.

Confidentiality and Intellectual Property

Clauses protecting the employer's confidential information and intellectual property should be included. The scope of confidential information and acceptable usage by the employee should be defined.

Dispute Resolution

The process for resolving any disagreements arising from the employment contract should be outlined. This may involve internal grievance procedures or escalation to the Ministry of Labour.

Probationary period

The Bahraini Labour Law (Law No. 36 of 2012) provides a framework for probationary periods in employment contracts. Here's a breakdown of the key points:

Applicability and Duration

A probationary period can be included in an employment agreement, but it's not mandatory. The maximum duration is three months, with the possibility of extension to six months for specific occupations determined by the Ministry of Labour.

Express Agreement Needed

The probationary period must be explicitly mentioned in the employment contract for it to be valid.

Termination During Probation

Either the employer or the employee can terminate the contract during the probationary period by providing written notice of at least one day. No justification is required for termination during this period.

Restrictions on Re-probation

An employer cannot place an employee on probation more than once for the same position.

Benefits and Protections During Probation

Employees on probation are entitled to some basic rights and protections under the Labour Law, including minimum wage and working hour regulations. However, some benefits, like end-of-service gratuity, might not accrue during probation until its successful completion.

Confidentiality and non compete clauses

In Bahrain, employers are legally permitted to include confidentiality and non-compete clauses in employment agreements, albeit with certain considerations.

Confidentiality Clauses

Confidentiality clauses are legally enforceable in Bahraini employment contracts. These clauses are designed to safeguard sensitive information such as trade secrets, client lists, or proprietary data from unauthorized disclosure by employees.

Enforceability: Bahraini courts typically uphold confidentiality clauses provided the protected information is clearly defined and recognized as a legitimate business secret. The agreement should outline the specific information deemed confidential and the acceptable usage by the employee.

Non-Compete Clauses

Non-compete clauses, which limit an employee's ability to work for a competitor post-employment, are also allowed in Bahrain. However, their enforceability is subject to stricter scrutiny compared to confidentiality clauses.

Challenges and Considerations:

  • Reasonableness: Bahraini courts evaluate the reasonableness of the non-compete clause. This includes factors such as the duration of the restriction (usually limited to a few months post-termination), the geographic scope (limited to a specific area where the employer operates), and the employee's job level (more enforceable for senior roles with access to sensitive information). Overly broad restrictions are less likely to be upheld.
  • Public Policy: Bahrain's legal system, like many jurisdictions, prioritizes an employee's right to earn a living. Non-compete clauses that significantly impede an employee's ability to find work in their field are unlikely to be enforced.

Legitimate Business Interest: Employers must show a legitimate business interest in enforcing a non-compete clause. This could involve protecting confidential information, client relationships, or specialized training provided to the employee.

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