A group of Bahraini members of parliament submitted a motion to suspend the recently introduced end-of-service indemnity system, which requires private-sector employers of migrant workers to pay indemnity contributions to Bahrain’s General Authority for the Social Insurance Organisation (SIO).
The lawmakers argued that the new system imposes a significant financial burden on businesses, particularly small and micro-enterprises, which make up the majority of businesses in Bahrain. They also criticised the lack of prior consultation with the Bahrain Chamber of Commerce and Industry before the system's implementation. The backlash also reflects broader issues with businesses’ non-compliance in paying end-of-service benefits.
These objections contrast with the government's justification for the system, which stated it would ease financial pressures on employers by replacing large lump-sum indemnity payments at the end of a contract with more manageable monthly contributions.
In March 2024, the SIO began implementing Resolution No. 109 of 2023 to collect monthly indemnity contributions from private-sector employers with workers insured under SIO. These contributions are disbursed directly to migrant workers at the end of their service. Bahrain is currently the only Gulf country where the government directly manages the collection and disbursement of end-of-service benefits—a reform the International Labour Organisation has called a "major milestone in enhancing migrant workers’ rights."
Under the current system, employers contribute 4.2% of migrant workers’ salaries for the first three years, rising to 8.4% thereafter. Employers with workers who had served more than three years before March 2024 are immediately subject to the 8.4% contribution rate. Employers remain responsible for paying lump-sum indemnities for service periods before the new system's implementation.
Since its rollout, however, many employers and lawmakers have protested that the system has worsened the financial outlook for businesses. After the new system’s implementation last year, MP Mohammed Al Maarafi stated that it would “cause catastrophic damage to the commercial sector and lead to a contraction in liquidity.” He further argued that the justification for bolstering social insurance funds through the new system would come at the expense of the commercial sector. Al Maarafi also more recently proposed an amendment to the labour law to allow the indemnity rate for migrant workers to be determined by mutual agreement in their employment contracts.
These concerns ultimately led lawmakers to propose a bill to suspend the system altogether. What these narratives overlook is the reality that, even under the new system, migrant workers continue to face difficulties in accessing their indemnity benefits.
Issues with the New End-of-Service Indemnity
Having the SIO collect contributions and directly distribute end-of-service benefits to migrant workers is a positive step, particularly since only a few companies set aside funds for these obligations. As a result, many workers return home without receiving their rightful dues. However, access to these benefits remains limited. For many low-income workers, a lack of awareness and difficulties navigating the SIO portal make it challenging to claim their indemnity benefits, especially without external assistance.
Under the new system, the indemnity claim process requires migrant workers to apply online through the SIO’s website, which is only available in English and Arabic. To access the portal, workers must first obtain an “Advanced eKey” —a digital authentication key that can only be acquired at eKiosks or eService centres through ID and biometric verification. Once they have access, workers must verify and update their International Bank Account Number (IBAN) before submitting an application under the "Non-Bahraini EOS Allowance" category. This process is challenging for many low-income workers who struggle with a lack of awareness, language barriers, and limited digital literacy.
A migrant community leader told Migrant-Right.Org that, in recent months, they’ve received multiple complaints from low-income migrants seeking help to retrieve part of their indemnity from the SIO. The community leader noted that, in some cases, HR departments assist workers in claiming their indemnity, but when HR offers no support—or is non-existent—workers are left to navigate the complex claim process on their own.
Another significant issue with the new end-of-service indemnity system is that both the indemnity contribution and disbursement are based on the contract registered with the SIO, which is submitted solely by the employer. For many migrant workers, this registered contract does not reflect the wages and terms they actually agreed to or are being paid. Contract substitution remains a widespread practice in Bahrain, even prior to the introduction of the new indemnity system. Many employers submit contracts with lower wages and allowances in order to reduce contribution fees, such as those for work injury and unemployment. A similar issue exists with the implementation of the wage protection system, where the registered worker’s wages depend solely on the employer’s input, which can be manipulated.
While migrant workers can file a case against their employer for contract substitution, the problem arises when workers only discover the issue at the end of their service. By then, they have limited time to stay in the country and pursue legal action. Additionally, these cases often require costly resources, such as hiring a lawyer, which is beyond the financial reach of many workers. Workers who fall into irregular status due to actions taken by their employer—such as filing a false absconding case— also often struggle to claim their indemnity; since they are deemed to be violating labour and immigration laws, they are subject to detention and deportation before their cases can be resolved, and are typically unable to access the legal support needed to address their cases.
Lastly, the new end-of-service indemnity system excludes domestic workers, even though the labour law's indemnity provisions also apply to them. This is even though the vast majority of domestic workers in Bahrain do not receive their indemnity at the end of their service.
The government and segments of civil society in Bahrain have long argued that including migrant workers in the SIO would not only protect their rights but also bolster its financial position. Transparency from the government is crucial to clarify how much employers of migrants are contributing to the SIO and whether migrants—or their families in cases of disability or death—are receiving their indemnity benefits. This is especially significant given past cases involving SIO regulations, such as the unemployment fund, where migrants and their employers contributed but received nothing in return.
The pushback from businesses and lawmakers to revert to the previous indemnity system—where employers were solely responsible for paying a lump sum to migrant workers at the end of their service without government supervision—is merely an excuse to allow employers to easily evade their financial obligations to workers. In reality, even under the new system, migrant workers continue to struggle to access their indemnity. The Bahraini government must ensure that all migrant workers can easily access their indemnity claims and receive their full entitlement before changing jobs or leaving the country.
While the new system represents an improvement, it serves as a cautionary tale: just because the state assumes responsibility for collecting and distributing indemnity does not necessarily mean workers will receive their full rights; this requires more than just shifting the process to state control.
