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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Bahrain

Notice period

In Bahrain, the Labour Law stipulates the legal requirements for notice periods during employment termination.

30-Day Minimum Notice Period

As per Article 99 of the Labour Law, employers are mandated to provide a minimum notice period of 30 days to an employee before terminating their contract. For instance, if an employer decides to terminate an employee's contract on April 1st, they must notify the employee in writing by March 2nd at the latest.

Notice Period in Employment Contracts

The minimum 30-day notice period is the legal baseline. However, employers can agree to a longer notice period within the employee's contract. This is a common practice, especially for senior-level positions. In such cases, the employer must adhere to the longer notice period specified in the contract. For example, an employee's contract might stipulate a 60-day notice period for termination by either party. If the employer decides to terminate this employee's contract, they must provide written notice 60 days in advance.

Exceptions and Considerations

  • Probationary Period: During the probationary period, a shorter notice period might apply, with a minimum of one day's notice required by both employer and employee.

  • Apprenticeship Contracts: Apprenticeship contracts have a separate provision, requiring a minimum of seven days' notice for termination by either party.

  • Garden Leave: Employers may request an employee to serve a period of "garden leave" during their notice period. This means the employee remains employed but is not required to come to work.

Severance pay

In Bahrain, employees may be entitled to a form of severance pay known as "end-of-service gratuity" under certain conditions when their employment is terminated.

Entitlement to Severance Pay

Employees working under indefinite term contracts are entitled to severance pay if their employment is terminated by the employer. Even in cases of resignation, employees are entitled to severance pay if they have completed a minimum of one year of continuous service. For those working under fixed-term contracts, they are entitled to severance pay upon contract completion, unless the contract is renewed.

Calculation of Severance Pay

The calculation of the end-of-service gratuity is stipulated by Bahrain's Labour Law. For the first three years of service, the employee is entitled to half a month's wage for each year of service. For subsequent years, the employee is entitled to one month's wage for each additional year of service.

The calculation is based on the employee's basic salary at the time of termination. Allowances, apart from social allowances, may be excluded from the calculation depending on the employment contract or company policy.

Exceptions to Severance Entitlement

There are situations where an employee may not be entitled to severance pay. These include termination due to gross misconduct as defined by Article 120 of the Labour Law, and voluntary resignation without completing at least one full year of continuous service.

Additional Considerations

Severance calculations differ slightly for foreign employees or Bahraini employees whose wages exceed a certain threshold and are excluded from the Bahrain Social Insurance Law.

Termination process

In Bahrain, the termination process for employees is governed by specific legal guidelines. There are two types of termination: for cause and without cause. Termination for cause, as per Article 120 of the Bahrain Labour Law, allows an employer to terminate an employee's contract without notice if the employee commits an act of gross misconduct. Before termination, the employer should conduct an investigation and notify the employee of their shortcomings, depending on the situation. On the other hand, an employer may terminate an employee's contract without cause, provided they adhere to certain rules.

Steps in the Termination Process

  1. Written Notice: The employer must provide a written termination notice to the employee, clearly stating the reason for termination and the effective termination date.

  2. Settlement of Dues: The employer must settle all outstanding dues owed to the employee, including unpaid wages, accrued leave, and end-of-service gratuity (if applicable).

  3. End-of-Service Certificate: The employer is legally obligated to provide the employee with an end-of-service certificate detailing the employment dates, job title, wages, benefits, and the reason for termination.

Additional Considerations

  • Termination During Probation: During the probationary period, either party can terminate the contract with a shorter notice period (minimum one day).
  • Termination Due to Downsizing: Employers may need to notify the Ministry of Labour 30 days in advance before terminating employment due to business restructuring or downscaling.

Termination Disputes

If any disputes arise during the termination process, employees can file a complaint with the Ministry of Labour and Social Development. The ministry can facilitate mediation or refer the matter to the Bahraini courts for resolution.

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