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Legislative Changes to Bahrain’s Labour Laws

By Hatim Sharif Zu’Bi

Posted: 24th May 2013 09:24

The topic of most interest in Bahrain at present is the introduction of the New Bahrain Labour Law; The Labour Law for the Private Sector Law No.36 of 2012 (New Labour Law) which became effective from 2 September 2012 and repeals and replaces the old Labour Law for the Private Sector (No. 23 of 1976) (as amended).  Implementing regulations are also expected to followwhich will become effective within six months of the date of its issue.
 
TheNew Labour Law has certainly introduced some positives such as further recognition of women's rights, the recognition of domestic staff rights, non-discriminatory practices and an expeditious resolution of labour disputes which, under the old law took up to four to five years to resolve through the courts.  It has also, amongst others, introduced set compensation calculations for unjustified and unfair terminations (depending on the type of employment contract). 
 
Compensation
 
The calculation of the compensation an employee is entitled to in the event of his or her unfair dismissal or unjustified termination by the employer was calculated previously on the basis of custom and market practice.  One of the advantages of the new labour law is that it provides a clear mechanism for the calculation of such compensation which is the reason we have witnessed many more out of court settlements taking place.  The courts will be free to deal with legitimate claims
 
Unjustified & Unfair Termination: The compensation entitlements in the event of unjustified termination are as follows:
 
Indefinite contract of employment
·         If the employer terminates a contract of employment for an indefinite duration within the first three months from its effective date the employee will not be entitled to any compensation.  However, in the event that it is established that the termination during the first three months was an unfair dismissal in accordance with the definition of unfair (Articles (104) and (105) of the New Labour Law) then the employee shall be entitled to compensation equivalent to one month’s wages.
·         If the employer terminates a contract of employment for an indefinite duration without cause or for an unlawful cause after the first three months following the commencement of the employment, the employee will be entitled to the equivalent of two day’s wages for each month of service.  The minimum compensation shall be one month’s wage up to a maximum of 12 months wages.  Furthermore, if the termination is also considered to be a legally unfair dismissal, the employee would additionally be entitled to a further one half of the compensation determined for the unjustified termination aforementioned.
 
It is imperative to note that when calculating the amount of compensation due fractions of a month are deemed a complete month. 
 
Definite Contract of Employment
   
Lawful Terminations: The New Labour Law has also clearly provided for justified terminations where the old law was silent.
 
 
 
The New Labour Law however allows an employer to terminate an employee in the event of the total or partial closure of their establishment, its scaling down or replacement of the production system therefore affecting the size of the workforce.  However, the Ministry of Labour will require a notice and the reasons of such a termination 30 days prior to serving notice of termination on the employee.  The amount of compensation is fixed in the law.
 
 
Female employees: The old law prohibited women from working during certain hours and in certain occupations (unless otherwise prescribed in an Order by the relevant Ministers);the New Labour Law does not impose such restrictions unless otherwise prohibited pursuant to a resolution of the Minister of Labour.  A non-discrimination clause has also been inserted in the new law which provides that "female employees shall be subject to all the provisions governing the employment of employees without discrimination between them where their employment conditions are similar”. 
 
Other enhanced rights for women include an increased period of maternity leave of 60 days and nursing hours.  Female employees have also been given the right to take up to 6 months without pay up to three times throughout her period of service with the employer for the purposes of caring for her child who is not more than six years of age. 
 
Wage and basic wage:The old law did not distinguish between the components of the employee’s gross wage and their basic wage.  Under the old law end of service indemnity was payable on the gross salary which included all the employee's monthly allowances in addition to their basic pay.  The New Labour Law however provides that an employee’s entitlements in relation to the calculation of his leaving indemnity payment are to be calculated only on the basis of the employee’s most recent basic wage in addition to social allowance, if any. 
 
Leave Entitlements:
   
Leaving indemnity: Employees who are not subject to the Bahrain Social Insurance Laws (expatriate employees and Bahraini employees whose salaries are in excess of BD 4,000) previously received less in leaving indemnity under the old law in the event that they resign prior to completing five full years of service in comparison to what they would receive should the employer terminate their employment (unless the termination was for cause under Article 113 of the old law).  The calculation of leaving indemnity under the New Labour Law however would be the same irrespective of who terminated or why the employment relationship was terminated. 
 
Labour Disputes & Litigation: Labour disputes under the old law were initially filed with the Ministry of Labour.  Failure to reach settlement would lead to the dispute being transferred to the Labour Court for determination after a longcourt process which may take several years prior to a final determination.   The New Labour Law attempts to minimize the number of cases that go through the courts.   All claims must now be filed with the Labour Case Administration Office where the Labour Case Administration Judge will hear the case and prepare a report in the hope of attempting an amicable settlement.  In the event that the parties do not reach an amicable settlement, the Labour Case Administration Judge refers the matter to the High Civil Court who will hear the labour dispute on an urgent basis within two months from the date of filing the case.  However, subject to a resolution of the Labour Case Administration Office Chief, such period can be extended for an additional period of two months at the request of the Case Administration Judge.  The New Labour Law requires the High Civil Court Judge to hear the case on an urgent basis and to render its judgment within 30 days from the date of the first hearing.  The High Court Judge's decision is final, and the parties may only appeal to the Court of Cassation on matters of law. 
 
The New Labour Law is more in line with international standards as it aligns Bahrain's domestic law with several of the Arab and international labour treaties and conventions to which it is a signatory.  In this effort to introduce more efficient and cost effective employment regulations, it is expected that fewer disputes will be processed through the courts which will also in turn reduce the number of frivolous cases that are filed without merits by disgruntled employees.   
 
HATIM SHARIF ZU’BI, HON. G.B.E.
 
Received an LL.B. Hons. Degree from University College, London, in 1949 and was called as Barrister-at-Law by Lincoln’s Inn, 1950.  Licensed Advocate & Legal Consultant by Jordan, Bahrain, U.A.E., Oman, Qatar and Saudi Arabia since 1971.
 
1950-1954 as Advocate for Ministry of Finance in Jeddah and Dammam, Saudi Arabia and 1954-1955 Special Counsel to US Aid Mission, Jordan.
 
1955-1965 and then again 1969 Deputy Chairman of Cairo Amman Bank. Held many non-executive directorship of Jordanian companies.
 
1965-1969 Minister of National Economy, Minister of Finance and Acting Minister of Foreign Affairs and Jordan’s Governor at the World Bank.   
 
In 1971 established his law practice in Abu Dhabi and Bahrain straddling GCC countries, in 1973 onwards established law offices in Abu Dhabi, Qatar and Oman.
 
In addition to Hon. GBE, holds several Western and Arab high decorations.

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