--- title: Bahrain End of Service Benefits: Guide for ERP Configuration url: https://www.erpbahrain.com/compliance/end-of-service-benefits/ updated: 2026-10-09 publisher: BAHRAIN ERP (part of Shyphan AI Solutions Pvt Ltd) --- Compliance # Bahrain End of Service Benefits: Guide for ERP Configuration The records and controls to consider when configuring end of service benefits in an ERP system in Bahrain. Quick answer End of Service Benefits in Bahrain: Law 36/2012 Art 116: a worker not covered by the Social Insurance Law gets a leaving indemnity of half a month's wage per year for the first three years and one month's wage per year thereafter, pro rata for fractions. Art 47: leaving indemnity and leave balance are calculated on the most recent basic wage plus social allowance, if any. - SIO: for non-Bahrainis the employer alone pays monthly contributions of 4.2% of wages for the first three years and 8.4% thereafter; payment became effective at SIO on 1 March 2024. - SIO: non-Bahraini gratuity is calculated on basic salary plus social allowance only, as 15 days' salary per year for the first three years and one month per year after, paid as a lump sum. - SIO: gratuity is paid within 5 working days of the application (the LMRA booklet states 10 working days); LMRA says employers must pay contributions in the first 15 days of each month or incur a 5% surcharge. - Sources checked 2026-10-09 This page is part of our Bahrain compliance series. Related topics: [Employee Leave](https://www.erpbahrain.com/compliance/employee-leave/). Apply them in [Zoho Books](https://www.erpbahrain.com/zoho/zoho-books/), [Odoo Accounting](https://www.erpbahrain.com/odoo/odoo-accounting/) or [ERPNext Accounting](https://www.erpbahrain.com/erpnext/erpnext-accounting/), and see [all compliance topics](https://www.erpbahrain.com/compliance/). Checked against official sources on 2026-10-09. Source links are listed on this page. Rules change, so check the latest notice from the Ministry of Labour and your legal adviser before filing. Verified ## What the Official Sources Say - Law 36/2012 Art 116: a worker not covered by the Social Insurance Law gets a leaving indemnity of half a month's wage per year for the first three years and one month's wage per year thereafter, pro rata for fractions. - Art 47: leaving indemnity and leave balance are calculated on the most recent basic wage plus social allowance, if any. - SIO: for non-Bahrainis the employer alone pays monthly contributions of 4.2% of wages for the first three years and 8.4% thereafter; payment became effective at SIO on 1 March 2024. - SIO: non-Bahraini gratuity is calculated on basic salary plus social allowance only, as 15 days' salary per year for the first three years and one month per year after, paid as a lump sum. - SIO: gratuity is paid within 5 working days of the application (the LMRA booklet states 10 working days); LMRA says employers must pay contributions in the first 15 days of each month or incur a 5% surcharge. In Practice ## What This Means for Your ERP - For expatriates, accrue the employer SIO gratuity contribution at 4.2% of basic plus social allowance for years 1-3 and 8.4% afterwards. - Keep a separate pre-March-2024 service liability, because the employer remains responsible for indemnity before that date per LMRA. - Base the EOS and leave-encashment calculations on basic wage plus social allowance only, excluding other allowances. Sources ## Official Sources - [SIO - End of Service Gratuity for non-Bahrainis](https://www.sio.gov.bh/en/end-of-service-gratuity-for-non-bahrainis) - [Law No. 36 of 2012 - Labour Law for the Private Sector (LMRA-hosted English text)](https://www.lmra.gov.bh/files/cms/shared/file/labour%20law.pdf) - [LMRA - Wages and Indemnity booklet](https://www.lmra.gov.bh/files/cms/shared/wt-a6-booklet-wages-and-indemnity.pdf) - [SIO - Amendment Decrees](https://www.sio.gov.bh/en/amendment-decrees) Checked on 2026-10-09. Overview ## End of Service Benefits in Your ERP End of Service Benefits affects how records are captured, approved and reported in your ERP. This guide lists the records involved and the controls worth putting in place. The official rules come from the Ministry of Labour and your legal adviser. We configure the system to what your adviser confirms. - Employment dates - Salary history - Termination reason - Calculation records More ## Related Guides - [ERP control checklist](https://www.erpbahrain.com/compliance/end-of-service-benefits/erp-controls/) - [System configuration](https://www.erpbahrain.com/compliance/end-of-service-benefits/system-configuration/) - [FAQ](https://www.erpbahrain.com/compliance/end-of-service-benefits/faq/) Controls ## Controls and Evidence **Controls and evidence** | Control | Evidence to keep | | Calculation method is validated by your adviser | Approval record, report or screenshot with date | | Inputs are traceable | Approval record, report or screenshot with date | | Provisions are reviewed regularly | Approval record, report or screenshot with date | | Final settlements are approved | Approval record, report or screenshot with date | Configuration ## Settings to Review Settings to review during implementation. Exact names differ by platform. - Calculation rules - Salary history fields - Provision accounts - Settlement workflow Setup ## How to Set Up End of Service Benefits in an ERP **Setup steps** | Step | What to do | | 1. Confirm | Confirm the current requirement for end of service benefits with the Ministry of Labour and your legal adviser | | 2. Map records | Map employment dates, salary history, termination reason to ERP fields | | 3. Configure | Set up calculation rules, salary history fields, provision accounts | | 4. Add controls | Enable the controls above, with approvals and logging | | 5. Test | Run the scenarios below with sample data and compare with expected results | | 6. Document | Record settings, owners and the review rhythm, then train users | Testing ## Test Scenarios Before Go-Live **Test scenarios** | Scenario to test | Expected result | | Try to break this control: calculation method is validated by your adviser | The system blocks or flags it, and the attempt is logged | | Try to break this control: inputs are traceable | The system blocks or flags it, and the attempt is logged | | Try to break this control: provisions are reviewed regularly | The system blocks or flags it, and the attempt is logged | | Try to break this control: final settlements are approved | The system blocks or flags it, and the attempt is logged | | Run the process end to end with sample data | Reports reconcile with the transactions entered | Avoid ## Common Mistakes These are the mistakes we see most often when end of service benefits is configured in an ERP system. - Copying settings from another company without checking them - Allowing manual journals or edits after the period is closed - Leaving master data incomplete, then fixing it in reports - No named owner for reviewing exceptions each month - Not retesting after a system upgrade or rule change People ## Who Is Involved **Roles** | Role | Responsibility | | Finance or HR lead | Owns the process and reviews exceptions | | Accountant or adviser | Confirms the rule and signs off configuration | | System administrator | Maintains settings, roles and logs | | Internal or external auditor | Tests controls and evidence | Ongoing ## Review Rhythm **Suggested review rhythm** | When | Review | | Before go-live | Confirm requirements with the authority or your adviser; test with sample documents | | Monthly | Reconcile reports to filings or statements; review exceptions | | Quarterly | Review user access, approvals and changes made to settings | | After a rule change | Update configuration, retest and record the change | FAQ ## Compliance Questions - Where do these requirements come from? From official publications of the Ministry of Labour and your legal adviser, linked on this page - Who sets the rules for end of service benefits? The rules come from the Ministry of Labour and your legal adviser. Always check current official sources. - What records are involved in end of service benefits? Employment dates, Salary history, Termination reason, Calculation records. - Can BAHRAIN ERP configure our system once rules are confirmed? Yes. We configure and test the system against the requirements your adviser confirms. - What do the official sources say about end of service benefits in Bahrain? Law 36/2012 Art 116: a worker not covered by the Social Insurance Law gets a leaving indemnity of half a month's wage per year for the first three years and one month's wage per year thereafter, pro rata for fractions. Art 47: leaving indemnity and leave balance are calculated on the most recent basic wage plus social allowance, if any. SIO: for non-Bahrainis the employer alone pays monthly contributions of 4.2% of wages for the first three years and 8.4% thereafter; payment became effective at SIO on 1 March 2024. - Which records does end of service benefits involve in an ERP? Employment dates; Salary history; Termination reason; Calculation records. - Which ERP controls support end of service benefits? Calculation method is validated by your adviser; Inputs are traceable; Provisions are reviewed regularly; Final settlements are approved. - Which ERP settings should be reviewed for end of service benefits? Calculation rules; Salary history fields; Provision accounts; Settlement workflow. Have More Questions? Book A Free Consultation [ Talk to Us ](https://www.erpbahrain.com/contact.html) Or, Email us at contact@erpbahrain.com ## Related Pages - [End of Service Benefits guide](https://www.erpbahrain.com/compliance/end-of-service-benefits/) - [All compliance topics](https://www.erpbahrain.com/compliance/) - [Bahrain VAT Registration: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-registration/) - [Bahrain VAT Invoice Fields: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-invoice-fields/) - [Bahrain VAT Credit Notes: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-credit-notes/) - [Bahrain VAT Debit Notes: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-debit-notes/) - [Bahrain VAT Returns: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-returns/) - [Bahrain VAT Reconciliation: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-reconciliation/) - [Bahrain VAT Recordkeeping: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-recordkeeping/) - [Bahrain VAT Exempt Supplies: Guide for ERP Configuration](https://www.erpbahrain.com/compliance/vat-exempt-supplies/)