Small firms, big relief : MP Al Salloom: New LMRA regulation eases financial burden for small businesses

TDT | Manama

The Daily Tribune - www.newsofbahrain.com

Email: editor@newsofbahrain.com

Recent amendments to the Labour Market Regulatory Authority (LMRA) regulations promise to shake up the penalty system for Bahraini businesses that employ workers without the required permits. The new rules, which replace the previous fixed fine approach, aim to ease the financial strain on smaller firms.

In a conversation with The Daily Tribune, MP Ahmed Al Salloom, President of the Bahrain Small and Medium Enterprises Society, expressed support for the revisions, describing them as a crucial move towards easing financial strains on businesses. “The old system, which slapped a standard 1,000-dinar fine on any breach, often placed an excessive load on smaller businesses,” Al Salloom said. “Smaller enterprises, given their limited resources, are more likely to make unintentional errors.”

The new regulation, enacted by royal decree, introduces a tiered penalty system where fines vary depending on how long it has been since the permit expired. For violations occurring between 10 and 20 days after the expiration, the fine is set at BD200. For violations between 20 and 30 days, the fine increases to BD300. This revised system allows for flexibility, including options for reconciliation or scaled fines, making compliance more manageable.

Flexible system 

“The updated regulations will deal with breaches based on their severity, offering a more flexible system that might include reconciliation or proportional fines,” explained Al Salloom. He continued, “Switching from a flat fine to a more tailored system will likely boost compliance and reduce the financial pressure on small businesses, which previously faced hefty fines that could have driven them out of business.” Also, the new fine structure starts with lower penalties that increase over time, allowing businesses to resolve issues before facing higher fines. “The tiered fines, beginning with a lower penalty that grows over time, will help ease the burden on businesses,” Al Salloom noted.

Revised approach

This revised approach is especially useful for small businesses grappling with cash flow problems and delays in renewing worker registrations. “Many small enterprises face cash flow and administrative challenges, leading to delays in renewing worker registrations. The new decree promises to address these matters with a more manageable fine structure,” he added. The shift towards graduated fines and reconciliation reflects broader legislative trends in Bahrain, including recent updates to the Traffic Law.

“The introduction of graduated fines and reconciliation is consistent with recent legislative changes, such as those seen in the Traffic Law,” Al Salloom observed.

Regulatory framework

The new regulation aims to encourage timely payments, reduce non-compliance, and enhance the effectiveness of the regulatory framework. “This approach is expected to promote prompt fine payments, reduce non-compliance, and improve overall adherence,” he concluded. The royal decree will be reviewed in future legislative sessions, which may lead to further adjustments in the labour market system Al Salloom remains hopeful that these changes will result in “a more balanced and effective regulatory environment, benefiting both businesses and government entities.”