MPs approve bill requiring employers to give advance notice or pay full compensation

TDT | Manama

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A proposal to compel employers to pay full compensation in cases of economic dismissal, unless they notify the Labour Ministry two months in advance and provide audited accounts, has passed through Parliament and now moves to the Shura Council for review.

During the debate, Acting Labour Minister Yousif Khalaf warned that the bill rests on a mistaken belief that financial losses are the only cause of workforce reductions.

He told MPs that firms may cut jobs for a range of reasons, including organisational changes, shifts in production, regulatory pressures, or events beyond their control.

He argued that the proposal does not capture these realities and would unfairly burden businesses, particularly smaller ones.

Khalaf pointed out that requiring proof of losses over three consecutive years would force companies to carry staff they could no longer afford, even where their operations were shrinking or struggling.

Audited accounts

Many microbusinesses, he said, do not maintain regular audited accounts and would find it impossible to comply with the new demands.

He warned that tying employers’ hands in this way might seem on the surface to protect Bahraini workers but would, in practice, discourage firms from hiring.

The aim, he said, should be to create a balanced working environment where both employee and employer interests are taken into account.

The minister also explained that workforce reductions are sometimes the result of factors such as falling demand, soaring costs, or a lack of administrative capacity, rather than wilful neglect or bad faith.

He said forcing small firms to hold on to workers under such conditions could push them closer to collapse.

The bill, which amends Bahrain’s Labour Law (Law No. 36 of 2012), was originally submitted as a revised proposal by Parliament.

It sets out stricter steps for ending contracts where economic reasons are cited, such as full or partial closure or the replacement of production methods.

Under the new terms, employers must notify the Labour Ministry 60 days before informing the worker.

Financial records

This notice must be backed by financial records covering the past three years or the most recent audited statement, depending on the circumstances.

In cases where both a Bahraini and a foreign worker hold the same job with similar experience and skill, the Bahraini must be kept on unless the company is closing entirely.

Failure to meet the notice requirement or the submission of inaccurate information would entitle the worker to full compensation under Article 111. Where procedures are followed correctly, only half that amount is payable.

The government voiced concerns that the bill would add to the burdens of struggling firms without offering any meaningful gain to either party in the employment relationship.