Urgent call for legislative fix and business incentives

TDT | Manama

The Daily Tribune - www.newsofbahrain.com

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There is a need for legislative amendments to the Wage Protection System in Bahrain. This was based on a recent investigation conducted by our sister newspaper Al Ayam.

The report also calls for awareness campaigns and incentives for small businesses to encourage compliance. The Ministry of Labour, in a memo to the Shura Council, revealed that only 19.7% of small businesses are compliant with the system, which mandates salary transfers through banks. A staggering 80.3% of small businesses are not adhering to the regulations.

In contrast, 84.3% of large companies comply with the system, with only 16.7% failing to comply.

Ahmed Al Saloum, Member of Parliament and President of the Bahrain Small and Medium Enterprises Development Society, ruled out imposing penalties on those who are yet to comply to the new rule, adding that the Parliament will work on the introduction of other solutions to help businesses to live up to the new legislative amendments. He emphasised the need for the Wage Protection System to include provisions that consider the unique circumstances of small and medium enterprises (SMEs).

He stressed the significance for a specific framework for SMEs that doesn’t equate them with large corporations. “The situation of small and micro-enterprises is fundamentally different from that of large companies, especially in terms of workforce size and the responsibilities entrusted to each employee or worker,” Al Saloum explained.

Incentives

Meanwhile, Shura Council member Nancy Khadouri echoed this sentiment, advocating for incentives to encourage businesses to comply with the system.

“The Ministry of Labour is fulfilling its role and taking regulatory measures to motivate businesses to comply with the Wage Protection System. There is no lack of oversight mechanisms in place, but we can explore ways to offer more incentives for companies,” she said. “The law requires companies to transfer salaries through banks, and the compliance rate among large companies is very high.

“The legislative authority is keen to understand the extent of oversight on businesses to ensure they comply with the system of paying wages through banks.

This oversight is implemented through the Wage Protection System established by the Labour Market Regulatory Authority (LMRA) to guarantee that workers receive their wages as stipulated in their employment contracts.

“Under the Wage Protection System, employers are obligated to transfer their workers’ salaries through a bank or a financial institution licensed by the Central Bank of Bahrain.” Lawyer Fatima bin Rajab pointed out that the existing legislation lacks penalties, hindering enforcement efforts.

She proposed legislation that would impose various criminal penalties, especially since the amendment to Article 46 of the Labour Law did not include penalties for those who fail to transfer wages to banks.

Bin Rajab pointed to several reasons behind the low compliance rate with the wage system by small business owners, including renting out records to foreigners, trading in visa sales, and exploiting the wage support provided by Tamkeen.

The investigation underscored the possibility of some businesses manipulating salary amounts to avoid bank transfers.