Awareness & Education

Bahrain: SIO’s recent EOSB workshop offers useful insights for the GCC

Funded schemes require ongoing awareness, system and process enhancements as more edge cases emerge over time.

By Nisha Braganza

On 27 August, Bahrain's Social Insurance Organisation (SIO) held a workshop on the End-of-Service Benefits (EOSB) Fund, which mandatorily replaced the gratuity system for non-GCC private-sector employees on 1 March 2024. Attended by over 100 participants, the workshop covered service enhancements, employer obligations and claim procedures.

For other GCC countries considering funded EOSB schemes, Bahrain's experience shows that even a relatively straightforward funded scheme requires ongoing awareness, system and process enhancements, even two years after mandatory rollout as more edge cases emerge over time.

Here are the main points for Bahrain’s private-sector employers:

• SIO urged all private-sector employers to register every eligible employee with SIO, pay contributions in full, disclose accurate salary information and keep wage data current across every wage element. For EOSB purposes, contributions must be calculated on basic salary and social allowance, if applicable.
• Employers were also reminded that there is no salary cap for EOSB contributions, unlike the work injuries and unemployment insurance where there is a ceiling of BD 4,000.
• SIO also highlighted that salaries can now be updated on a monthly basis, unlike the previous practice of updating salaries at the beginning of the year.
• Importantly, where wages have been reduced and the reduction affects the benefit, employers retain the right to recover the difference as Bahrain operates a defined benefit system for EOSB.
• A 5% penalty applies for late monthly contributions. Employers who do not disclose accurate employee salary records are also subject to penalties.

Main issues raised by participants:

Issues generally pertained to record accuracy, beneficiary claims management and cross-border payments.

Many were still unfamiliar with the fact that EOSB needs to be collected from the employer for service before 1 March 2024 and from SIO for service thereafter. Discrepancies in salaries and contributions were also raised.

A further issue discussed was the current requirement for claimants to have a local bank account on record with SIO, as the system does not currently support payments to overseas accounts. This can create practical difficulties, particularly where beneficiaries of deceased workers are living outside Bahrain.

SIO is currently upgrading the service to allow payments to international bank accounts. Until this is implemented, legal beneficiaries living outside Bahrain must appoint a representative via their embassy, which liaises with the Ministry of Foreign Affairs and SIO to process the claim. The payment will then be transferred to the embassy, which will in turn remit it to the international bank account. SIO also clarified that there is no expiry period for making an EOSB claim, provided the claimant meets the required conditions.

Some participants also raised difficulties accessing EOSB benefits where employees have remained outside Bahrain amid recent regional developments.

We’ll take a closer look at how Bahrain’s transition to funded EOSB has affected employers’ EOSB provisions in our upcoming Q3 GCC EOSB Monitor.