The Shura Council is currently considering an amendment to the Labour Law for the Private Sector (Law No. 36/2012) which will impact how employers will declare and implement redundancies.
Current Practice with Redundancies
The practice implemented today is regulated under Article 110, which stipulates as follows:
"The employer may terminate the contract of employment due to the whole or partial closure of his establishment, the reduction of its size of activity or the replacement of a production system with another in a manner that affects the quantity of manpower. This shall only be done after the notification of the Ministry of the reason for such termination before thirty days of the date of notifying the worker of the termination. In cases other than the whole closure of the establishment, due regard shall be given by not terminating the contract of employment of a Bahraini worker who has the same standard of efficiency and experience of a foreign worker who is working with him in the same establishment.
The worker shall be entitled in case of termination of the labour contract for any of the reasons specified in the previous paragraph to a reward equivalent to half the compensation specified in Article 111 of this Law."
Employers are currently required to notify the Ministry of Labour in writing of its intention to declare redundancies in the establishment no less than thirty (30) days prior to serving a notice to the employee. Employees dismissed on the grounds of redundancy are entitled to half the compensation provided under Article 111. In the implementation of said redundancies, pursuant to an amendment introduced in 2015, employers must exercise due regard for preserving the role of a Bahraini employee with similar competence and experience as a non-Bahraini worker in the same role and establishment.
Draft Reforms
The draft amendment, if approved and enacted in its current form, will require employers to submit evidence to confirm the financial position of the company, particularly the past three years, together with the written notice submitted to the Ministry of Labour, which shall be submitted no less than sixty (60) days before serving a notice to the employee.
If an employer fails to adhere to the new reforms, the employee shall be entitled to the full compensation provided under Article 111 as if the employee has been dismissed without just cause. This has been included in the draft amendment in light of the fact that the Court of Cassation has previously held under various judgments, including Challenge No. 51 J.Y. 2021, as well as Challenge Nos. 455 and 469 J.Y. 2015, that no penalty is applicable to employers for failing to notify the Ministry of Labour. As a measure of added protection to employees, legislators have explicitly included in the draft that a failure to notify the Ministry entails that full compensation shall be payable to the dismissed employee.
The amendment aims to safeguard the proper implementation of redundancies by ensuring that such decisions are both substantiated and implemented under the purview of the Ministry of Labour. To this end, draft Article 110 (bis) provides that a register shall be established before the Ministry of Labour wherein employers' notices of an intention to declare redundancies are to be submitted and registered, such that an online portal will be made available for employers to use and monitor the status of the notice. More guidance is anticipated in this regard, should the draft amendment be implemented.
Concluding Remarks
Various public and private bodies, including but not limited to the Ministry of Labour, the Legislation and Legal Opinion Commission, Bahrain Chamber and General Federation of Bahrain Trade Unions, have expressed their views on the draft amendment, commenting on the increased time frame for sending notices to employees. It is of note that the Council of Representatives has suggested amending the draft so as to retain the thirty days already in effect under Article 110, and it remains to be seen whether or not this will be incorporated in the final amendment. Article 110 (bis) is also a welcome development in that it ensures that the Ministry of Labour closely monitors redundancies on a case-by-case basis and that an employer's decision to declare redundancies is grounded and valid.
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