Hire Contractors in Bahrain

Bahrain, an island nation in the Arabian Gulf, has made immense strides in economic diversification and development. 

As a result, its job market has become immensely competitive, characterized by a skilled and expatriate workforce.

A recent report revealed that there are currently 650,000 expatriates in Bahrain from various nationalities, such as India, Sri Lanka, Filipino, Indonesia, and more. This has ultimately contributed to the country’s multicultural environment. 

The primary advantage of employing such workers is that it enables you to select the top talent in the hiring process. 

As they live among different cultures, expatriate staff members are also likely to possess important skills such as resilience and a broader outlook. 

While all these will undoubtedly prove to be advantageous when hiring contractors in Bahrain, there are quite a few international business challenges that you need to consider. 

This article will provide a detailed overview of how to hire contractors in Bahrain effectively and seamlessly.

How to Hire Contractors in Bahrain

You can hire contractors in Bahrain in any of the following ways,

1. Hiring contractors directly 

Hiring contractors directly, although one of the most commonly-followed methods, involves a lot of complexities. It includes 

• Understanding the requirements and necessary skills for the fulfillment of your projects,
• Hiring the top contractors either through job listing platforms such as LinkedIn or Indeed or via recruitment agencies, 
• Drafting locally compliant contracts, and making timely-accurate payments. 

Therefore, this technique is always recommended only if hiring for small-scale or short-term projects. 

2. Hiring via AOR Services

Seeking the services of contractor management software or an AOR is undoubtedly one of the best ways of hiring contractors compliantly in Bahrain. 

As your agency of record, they will handle all the administrative hurdles on your behalf and ensure a seamless and, most importantly, compliant hiring journey. 

Hiring Contractors Through Skuad AOR

• With Skuad AOR by your side, the entire international hiring process becomes streamlined. 
• It is a unified platform that enables you to draft contracts compliant with Bahrain's labor and tax laws, make hassle-free and accurate payments, and, most importantly, avoid the risk of misclassifying independent contractors.
• Skuad also features a built-in IP protection system that guarantees the safety of your company’s IP under Bahrain's laws. 
• Additionally, with Skuad, you can switch your contractors to employees by keeping your employment history and records intact.

How to Pay Contractors in Bahrain

The traditional way of paying contractors in Bahrain involves utilizing international payment platforms such as PayPal, Worldpay, or Wise. 

Although it might seem cost-effective initially, paying contractors directly usually involves many administrative hurdles. 

Your shoulders are full, and you are responsible for everything from ensuring contractors are paid on time and accurately to understanding currency exchange rates and more. 

This is why most companies seek the services of contractor management software or an AOR such as Skuad. 

From multi-currency payouts and compliance, Skuad guarantees effortless Bahrain contractor payments. It features,

• Automated and simplified expense tracking
• Regulatory compliance
• Multi-currency support and
• Flexible payment scheduling, among others

Hiring Contractors Directly vs Hiring Contractors via Skuad

Let’s look at this table, which highlights the differences between the two main ways of hiring contractors in Bahrain.

Cost of Hiring Contractors in Bahrain

Truthfully, there is no fixed cost to hire contractors in Bahrain. It ultimately depends on the industry you are operating in, the scope of your project, or the experience of the contractors themselves. 

For example, the average salary of a worker deployed in the construction industry is currently set at 7.54 Bahraini dinars per hour. 

On the other hand, an IT sector individual will likely charge you 9 Bahraini dinars. 

In addition, you will also have to bear the cost of the materials that need to be supplied to the contractors for work performance.

How to Convert a Contractor into an Employee in Bahrain

Converting a contractor into an employee essentially means switching from 1099 to W2. 

While the journey is relatively straightforward, it can get complicated if you do not follow the essential steps. 

To help you with the same, here is a step-by-step guide.

• Understand your options for employment

You need the legal mechanism to hire an independent contractor as a full-time employee. You can set up a local business entity or partner with an EOR like Skuad. 

• Know the local employment laws

When you convert an independent contractor in Bahrain to a full-time employee, they automatically become subject to a new hire's payroll and benefit obligations. 

Therefore, make sure that you understand and comply with all the provisions set by Bahrain's labor laws. 

• Issue a compliant contract

Draft a proper employment contract that complies with Bahrain's labor laws. For example, under Law No. 36 of 2012, a contract of employment needs to be in writing in Arabic. 

• Notify the worker and begin with onboarding

Communicate all employment details to your contractor-turned-employee, including their salary, working hours, and social security benefits. 

Then, begin the onboarding process, which will include running a background check and adding them to your company’s payroll system.

Challenges of Hiring Contractors in Bahrain

Let’s look at some of the many challenges you will likely encounter when you decide to hire contractors in Bahrain.  

1. Difficulty in Understanding the Civil Code of Bahrain

The legal responsibilities of hiring contractors in Bahrain can pose a significant obstacle for employers. It requires strict adherence to all the regulations and provisions, which can often get messy or complicated for most businesses. 

For example, the Bahrain Civil Code (Legislative Decree No. 19 of 2001) is the primary regulation that lays down guidelines for hiring contractors in Bahrain. 

Under this law, a contract is an agreement where a proposal is made and accepted to create a specific legal effect. It must contain two elements, namely,

• Consent: An explicit mutual agreement between both parties (the contractor and the employer) related to the terms and conditions of the contract. 
• Declaration of intention: It can be done verbally, in writing, or by signs in general use, as long as it upholds the true meaning unless otherwise stated by the law in specific circumstances. 

In addition, the Bahrain laws lay down the duties and obligations of contractors and employers. 

For example, contractors are mandated to perform the work according to the conditions and timeframe provided in the agreement. 

Employers, on the other hand, are responsible for the supply of materials that the contractor uses to perform their work. 

Understanding these requirements and, most importantly, the difference between an employee and a contractor in Bahrain is extremely vital to avoid the risk of worker misclassification. 

However, ensuring compliance with these regulations can prove extremely challenging unless you have solid contractor management software or the necessary legal expertise.

2. Decoding the Payroll Complications 

Payroll processing is different for employees and contractors. Bahrain regulations are limited regarding personal tax. 

No personal tax income law is currently implemented in the country, and no domestic legislative definition of personal tax residence exists. 

This denotes that no individual, including employees and contractors, is subject to any personal taxes in Bahrain and is, therefore, not issued a Bahrain Tax Identification Number (TIN). 

However, other laws govern the payroll system in Bahrain. 

For example, under the Wages Protection System developed by the Labor Market Regulatory Authority, all private sector employers are required to pay their workers' wages only through banks and financial institutions licensed from the Central Bank of Bahrain by specific dates. 

But this is just one of the many examples. You need powerful contractor management software to effectively manage your contractors' payroll. 

However, it usually comes at a great cost, which might not always be financially viable for small—to mid-sized businesses.

3. Lengthy Dispute Settlement Mechanisms

The Ministry of Labor handles disputes related to those covered under Bahrain's labor laws, including independent contractors and employees. 

Under the labor law, notices are issued both to the sponsor and the worker. If neither of the parties can turn up in response to the notice, then fresh notices are issued. 

This process is repeated two more times, at an interval of one week each. Following this, the matter is transferred to the Labor Court for settlement. 

This settlement of disputes between workers and employers in Bahrain has often proved to be a long and tardy process. Workers are sometimes forced to forego their claims and seek repatriation instead.

Hire Contractors in Bahrain with Skuad

With expertise in over 160+ countries, Skuad has enabled as many as 600+ companies worldwide to ensure a seamless and compliant contractor onboarding process. 

Skuad is a unified platform power-packed with robust features, such as automated contractor invoicing and payments, built-in IP protection, payroll in over 100+ currencies, and more.

Additionally, with Skuad’s in-house legal guidance, you can always stay up-to-date with Bahrain's labor laws, thereby reducing the chances of worker misclassification and other global hiring risks. 

‍Begin your journey with us today and transform your global hiring experience with customized and trustworthy solutions.

FAQs

Q1: Can I hire an independent contractor overseas?

Ans: Hiring contractors overseas is a common expansion strategy most businesses use. It offers many benefits, such as easy access to global talent, increased business flexibility, and reduced costs. 

Q2: Is it more expensive to hire an employee or an independent contractor?

Ans: Hiring contractors is far more cost-effective than hiring full-time employees. This is primarily because onboarding employees involves many extra expenses, such as employee benefits, taxes, and office space. 

Q3: How does Skuad help with hiring contractors in Bahrain?

Ans: Skuad is a unified platform consolidating every crucial aspect of the contractor onboarding process. This includes drafting locally compliant contracts, making accurate payments, managing expense approvals, and more. Furthermore, Skuad features built-in IP protection that guarantees the safety of your company’s IP under the laws of Bahrain.

Q4: How do I pay an independent contractor in Bahrain?

Ans: One of the best ways to pay an independent contractor in Bahrain is to utilize the services of contractor management software or an AOR, such as Skuad. Skuad runs payroll in 100+ currencies and boasts several fantastic capabilities, such as expensive management and real-time reporting. 

Q5: What is meant by contractor management in Bahrain?

Ans: Contractor management can be defined as a form of management used for projects in which all or some are contract workers. This is opposed to projects in which the entire workforce comprises individuals directly employed by the project’s owner.