Bahrain has announced important updates for private sector employers that impact social insurance contributions and wage compliance.
Effective 1 January 2026, the employer contribution rate for Bahraini employees will increase by 1% as part of the 2022 social insurance reform. The combined employer and employee contribution will reach 22% of pensionable salary, while the employee contribution remains at 8%. This annual increase will continue through 2028.
In addition, the Labour Market Regulatory Authority (LMRA) has extended the deadline for enhanced Wages Protection System (WPS) filings to the end of Q1 2026. Employers are required to appoint a Wages Responsible Person (WRP) by 1 February 2026 to oversee wage file preparation and submission through WPS-compliant banks.
Employer contribution increase
Effective 1 January 2026, the employer contribution rate for Bahraini nationals will increase by 1%, bringing the employer share to 18% while the employee share remains 8%, for a combined total of 22% of pensionable salary. This follows the government’s policy of annual 1% increases through 2028.
For Bahraini nationals working abroad, the employer contribution is capped at the local rate applicable in the country of employment. Where the local rate is lower than the Bahraini rate, the employee must cover the shortfall to reach 22%.
Wages Protection System (WPS) updates
The LMRA has extended the deadline for enhanced WPS filings to the end of Q1 2026, allowing employers additional time to open WPS-compliant bank accounts and prepare filings. Employers must appoint a WRP by 1 February 2026 to manage wage file preparation, submission, and overall WPS compliance.
Employers should confirm that their banking partners are WPS-registered, as any payments made outside WPS will be considered noncompliant. The first WPS filing under the extended timeline must occur by the end of Q1 2026. Failure to comply may result in restricted access to LMRA portal services, payroll delays, penalties, and reputational risk with regulators.
These updates reflect Bahrain’s ongoing efforts to strengthen social insurance contributions and ensure timely, transparent wage payments in the private sector. Employers operating across the GCC should anticipate slightly higher pension-related costs and ensure payroll systems are WPS-ready, including appointing a responsible person and coordinating with compliant banks. Proactive preparation will help mitigate compliance risks, operational disruptions and potential penalties.
If you have any questions about the increased employer contribution rates or the updated WPS compliance timeline and requirements, please reach out for tailored support. We can help you interpret the implications for your payroll and HR systems accordingly.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Anir Chatterji
Partner, EMEA Immigration
Jammy Mustafa
Director, Middle East Global Mobility
Cody Reeves
Senior Associate
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