“Bahrain Lawmakers' Push to Overturn Indemnity Reforms Highlights Non-Compliance”

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…

…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."…

Since its rollout, however, many employers and lawmakers have protested that the system has worsened the financial outlook for businesses. …