Hire in Bahrain: An Employer’s Guide to Hiring Bahraini Talent

Bahrain has positioned itself as one of the Gulf’s most accessible and cost-effective markets for international hiring. The country hosts an attractive mix of affordability, infrastructure, and workforce readiness that many globally expanding companies overlook. With a cost of living 42% lower than Dubai and substantial government backing for tech and fintech growth, hiring in Bahrain presents a practical alternative to more saturated regional hubs.

The Bahrini talent pool is ideally suited for distributed work. With 90% of the workforce speaking fluent English, Bahrain has invested heavily in cloud infrastructure and remote collaboration platforms through its Economic Vision 2030. According to a 2025 market report, Bahrain’s remote workplace services market is experiencing rapid growth as businesses adopt hybrid models and cloud-based collaboration tools. The fintech sector alone is projected to reach $3.45 billion by 2026. But 72% of employers report difficulty finding candidates with digital skills, suggesting a developing but not yet oversaturated talent market.

Bahrain added 41,000 private-sector jobs in 2024, and the government continues to prioritize workforce development and foreign investment. For distributed teams seeking talent in emerging markets with strong English proficiency and lower operational costs, Bahrain offers a strategic entry point into the Middle East. The talent’s there. The question is whether you know how to tap into it legally and quickly. That’s where many companies hit a wall.

Bahrain’s booming labor market

Bahrain is not just diversifying away from oil. It’s actively engineering a labor market designed for digital and distributed work. The country’s ICT market alone was valued at $4.07 billion in 2023 and is forecasted to reach $6.35 billion by 2028. That growth is not speculative. AWS opened a cloud region in Bahrain, and the government partnered with them to launch Cloud Innovation Centers at the University of Bahrain and Bahrain Polytechnic. Cloud-sector growth alone is projected to generate over 9,300 new jobs by 2026.

The workforce itself reflects that shift. About 913,240 people are in the labor force, with 631,763 expatriates holding active permits as of Q2 2024. A female labor force participation of 43% in 2024 is a Middle Eastern anomaly. But that diversity matters when you’re building distributed teams. You want talent pools with varied perspectives and competitive enough to stay sharp but not so saturated that top candidates disappear overnight.

For tech-forward companies, the remote readiness is what stands out. Bahrain launched eKey 2.0, a national digital identity app, in February 2025, and it hit five-figure registrations on day one. Work permits for candidates already in-country generally process in three working days through the Labour Market Regulatory Authority (LMRA), and transfers between employers happen online. That infrastructure means faster onboarding and fewer administrative bottlenecks. When you’re hiring someone in Berlin or Bangalore, three-day processing feels normal. When you’re hiring in the Gulf, that speed is an outlier.

But there’s a policy reality that shapes everything else. Bahrainization drives the labor market. A draft law under review aims to limit foreign workers to 30% of the total workforce in commercial establishments, with targets to employ 20,000 Bahrainis and train 10,000 by the end of 2025. Another law passed in 2025 requires companies managing privatized state services to employ at least 50% Bahraini nationals. Wage subsidies from Tamkeen, the national labor fund, can cover up to 70% of wages in the first year for eligible hires. Those incentives help startups stretch their runway, but the quotas mean you cannot just hire freely. You need to understand the rules before you write an offer letter.

How to hire employees in Bahrain

Hiring talent in Bahrain, whether onsite or remote, requires careful planning. For most foreign companies, two main routes dominate the hiring landscape: establishing your own local entity or partnering with an Employer of Record (EOR).

Setting up a local entity

Establishing a local entity means registering a branch or subsidiary with Bahrain’s Ministry of Industry and Commerce. This approach provides direct control over payroll, compliance, and benefits. You’ll handle local registrations, tax filings, labor law compliance, and sponsorships for expatriate employees. The process can take a few weeks to several months, depending on business activity and the licenses required.

Local entities are generally needed for securing long-term projects, and are required by law when directly employing Bahrainis or expats outside EOR services. Having a local branch allows for easier bank interactions and direct access to Tamkeen wage subsidies, but running payroll and HR internally means you bear the risks of local regulatory changes and quota management.

Hiring through an Employer of Record (EOR)

Using an EOR lets you hire employees in Bahrain without setting up a physical or legal presence. The EOR acts as the legal employer for your Bahrain-based staff, handling contracts, taxes, benefits, and local compliance on your behalf. This model allows foreign companies to scale up quickly and onboard talent in days, not weeks.

Most operational headaches vanish as the EOR manages Bahrainization quotas, payroll, benefits, and regulatory filings. You focus on running your team; the EOR in Bahrain makes sure everyone stays legal. EOR partnerships suit tech startups or firms testing the Bahrain market. They’re particularly beneficial for global teams where flexibility and speed are top priorities.

Choosing between these pathways ultimately depends on your business goals, risk appetite, and how many employees you plan to bring on board. Both options are viable, but each carries different requirements and strategic advantages for global expansion.

Employment contracts in Bahrain

Employment contracts in Bahrain must be written in Arabic and submitted in duplicate, with one copy for each party. If the contract is drafted in another language, an Arabic translation must accompany it. All contracts require registration with the LMRA through the Expat Management System (EMS), and failure to comply can result in fines or business suspension.

Every contract must specify the parties involved, job description, salary, working hours, leave entitlements, and termination conditions. The standard probation period is 90 days, extendable to a maximum of 180 days. During probation, either party can terminate with just one day’s notice. For open-ended contracts, a minimum of 30 days’ written notice is required for terminations outside of probation.

The Labour Law requires employers to cover repatriation costs for expatriates upon contract termination unless the employee breaches the agreement. Draft amendments under review by the Shura Council may introduce stronger job security and clearer contract terms, so staying current with regulatory changes matters.

Working hours, holidays, and leave

The standard working week in Bahrain is 48 hours, typically spread over six days. Note that employees work reduced hours during Ramadan. Overtime is permitted but comes with compensation requirements that must be outlined in the contract. Both employer and employee need to understand these limits upfront to avoid disputes down the line.

Bahrain observes several public holidays throughout the year, including National Day, Eid al-Fitr, Eid al-Adha, and Islamic New Year. Employees are entitled to paid leave for these holidays. Annual leave typically accrues at 30 days per year for most employees after completing one year of service.

Sick leave provisions also exist, with the first 15 days unpaid (though many employers cover this), the next 20 days at half pay, and the following 20 days unpaid. Female employees receive 60 days of paid maternity leave. Employers must clearly document these leave entitlements in the employment contract and carefully track them to remain compliant.

Employee benefits and social contributions

Bahrain’s Social Insurance Organization (SIO) administers social security contributions for both local and expatriate employees. Employers contribute 12% of an employee’s salary to SIO, while employees contribute 7%. These contributions fund pensions, unemployment insurance, and other social benefits. Expatriates are also covered under the social insurance scheme, which is a shift from policies in some neighboring Gulf countries.

Beyond mandated requirements, employers often provide additional benefits to remain competitive:

• Health insurance (common for expatriates and increasingly expected by local talent)
• Housing or housing allowances
• Transportation or car allowances
• End-of-service gratuity (calculated based on years of service for employees not covered by SIO)
• Annual flight tickets for expatriate employees

Gratuity payments are particularly important. Employees not covered by SIO receive gratuity equivalent to half a month’s salary for each of the first three years of service, and one month’s salary for each subsequent year. For fixed-term contracts, gratuity is calculated pro rata based on time served. Competitive benefits packages help attract and retain talent in a market where skilled professionals have options across the Gulf.

Payroll and taxation in Bahrain

Bahrain does not impose personal income tax on employees. That zero-tax environment is one of the country’s strongest selling points for international talent. Employees keep their full salary minus social insurance contributions. For companies, this simplifies payroll but does not eliminate compliance responsibilities.

Employers must register employees with the LMRA and SIO, ensuring accurate salary reporting and timely contribution payments. They must also process payroll in Bahraini Dinars (BHD), and salary payments should be made through bank transfers with clear documentation. Late or incorrect payments can trigger penalties. Wage Protection System (WPS) regulations require that salaries be transferred electronically by a specific date each month, adding another layer of compliance for HR teams managing distributed workforces.

Employee vs. contractor classification

Bahrain’s Labor Law (Law No. 36 of 2012) draws a clear distinction between employees (governed by a “contract of service”) and independent contractors (governed by a “contract for services” under the Civil Code).

The distinguishing factors include the level of control the company exercises, the degree of integration the worker has with the company, and the autonomy they maintain. Workers who follow set schedules, use company equipment, and operate under direct supervision typically qualify as employees, while contractors generally work independently with minimal oversight.

Misclassification mistakes carry a substantial financial burden if authorities determine that you’ve incorrectly classified an employee as a contractor. Penalized companies may become liable for all employment benefits owed since the working relationship began, like paid leave, end-of-service gratuity, and social insurance contributions. You may also face penalties and fines. To minimize risk, ensure contracts are written in Arabic as required and accurately reflect the working relationship.

Termination and severance in Bahrain

Employers can terminate employment for several legitimate reasons, including redundancy, poor performance, or misconduct. But proper procedure (such as warnings) must be followed.

Particularly relevant for global employers, “If an employer terminates an employment contract of the indefinite period within the first three months from the effective date thereof, the worker shall not be entitled to any compensation unless the termination is an unfair dismissal,” outlines Bahrain attorney, Sayed Hassan Alnawah, among other stipulations at LexMundi.

Standard notice periods are 30 days for monthly-paid employees, though this may vary based on payment frequency. Fixed-term contracts simply expire at the end of their term, requiring formal documentation but no additional notice.

Severance is not applicable when employees are terminated for gross misconduct or resign during their probationary period. Employees who resign voluntarily typically must provide 30 to 90 days’ notice, depending on their contract agreement, and failing to do so may result in compensation obligations to the employer.

Bahrain work permits and immigration

Foreign employees of all capacities require Bahraini work authorization issued through LMRA, where local Bahraini employers must also be registered. Employers must first advertise job vacancies in local newspapers for at least seven days and demonstrate that the position cannot be filled by local talent.

Required documentation includes the employee’s passport, signed employment contract, medical certificate from an LMRA-approved clinic, and proof of accommodation and commercial registration. Applications and supporting documents are submitted digitally through the LMRA’s Expat Management System. The standard processing time is 5-10 business days, though some applications may undergo extended security checks. Employees must remain outside Bahrain while their work visa application is pending and can only enter once approval is granted.

Why hire in Bahrain with Pebl

Expanding into Bahrain becomes effortless with Pebl’s global EOR services. Pebl enables you to hire, onboard, and manage compliant teams across 185+ countries without the need to establish a local entity. From handling employment contracts to benefits administration, Pebl’s platform and in-country experts simplify the complexity of international expansion, allowing you to focus on building your team and growing your business. Get in touch to learn more.

FAQs: Hiring in Bahrain

These commonly asked questions can help you better understand what to expect when expanding your team into Bahrain and how to set your new hires up for success.

What is a good salary in Bahrain?

Competitive salaries in Bahrain vary by industry and seniority, with an overall average of approximately BHD 1,500 per month (approximately US$3,980). Sectors such as banking and finance, oil and gas, healthcare, and IT typically offer above-average compensation, with mid-level professionals earning BHD 1,500 to 3,000 and senior roles commanding BHD 3,000 to 6,000 or more. A growing tech ecosystem in Bahrain has created opportunities in AI, cybersecurity, and cloud computing. These salaries range from BHD 2,000 to 4,000-plus.

Can I hire in Bahrain without a local business entity?

Yes, partnering with an Employer of Record like Pebl allows you to hire compliant employees in Bahrain without establishing a local entity. EORs act as legal employers, handling employment contracts, payroll services, benefits administration, and regulatory compliance on your behalf. This approach significantly reduces time-to-hire and eliminates the complexity and cost of entity setup.

What jobs are in high demand in Bahrain?

Bahrain’s growing tech sector has created strong demand for professionals in cloud computing, AI, cybersecurity, and data analytics. The fintech industry is also expanding rapidly, with over 115 active companies seeking talent in blockchain, digital payments, and financial technology. Beyond tech, healthcare, financial services, and construction sectors continue to recruit skilled workers to support the country’s economic diversification efforts.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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