INDEMNITY UNDER OLD AND NEW LABOUR LAW - BAHRAIN

1976 v/s 2012

 LABOUR LAW 23/1976

 Article 111

In respect of categories of workers to whom the provisions of the Social Insurance Law are not applicable –

Where Employer Terminates:

Leaving Indemnity will be calculated: fifteen days' wages for each year of the first three years of service and of one month's wages for each year of service thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit (what he has earned) in proportion to the period of his service completed within a year.

Where Worker Terminates:

Leaving Indemnity will be calculated: one third of the leaving indemnity if the period of his service is not less than three consecutive years and not more than five years. Full leaving indemnity if he resigns after the completion of five years of service, provided that such termination of a contract of service by the worker is not used by the worker as a means to avoid dismissal from employment in accordance with the provisions of Article 113 and provided also, that he shall notify the employer concerned of his intention of leave his employment in accordance with the provisions of Article 107 of this Law; the worker may, in lieu of such notice, pay to the employer an amount equivalent of the wages payable for the required period of notice.

(Article 113, allows termination without notice, compensation and indemnity where the employer dismisses the worker for: false identity or submitted false certificates or testimonials, caused serious material damage to the employer, despite a written warning fails to comply with written safety instructions, absents himself without reasonable cause for more than twenty days in one year or for more than ten consecutive days, fails to perform his essential duties, discloses the secrets of the establishment, sentenced for a crime or a misdemeanor involving dishonour, dishonesty or immorality, found during the hours of work to be under the influence of alcohol or drugs, assaults his employer or responsible representative or supervisors during the course of employment)

 

LABOUR LAW 36/2012

Article (116)

A worker who is not subject to the provisions of the Social Insurance Law shall be entitled upon the termination of his employment to a leaving indemnity at the rate of half month’s wage for each of the first three years of employment and one month’s wage for each of the following years in service. A worker shall be entitled to receive his leaving indemnity for fractions of the year in proportion to the period spent in the employer’s service.

The calculation of leaving indemnity under the New Labour Law would be the same irrespective of who terminated or why the employment relationship was terminated.

LIQUIDATION PROCEDURE - (Voluntary Liquidation) (Under Bahrain Commercial Law)

A company incorporated under the laws of the Kingdom of Bahrain shall be liquidated in accordance to the provisions of the Companies Commercial Law 21 of 2001 (the “Law”).

A company shall be dissolved / wound up for reasons stated under the Law thereafter the company shall be deemed to be in liquidation. Where the dissolution is voluntary, the liquidation of the company shall be in accordance to the liquidation procedure provided in the company’s memorandum of association; in absence of any such provisions the guidelines laid down in Law shall be followed.

During liquidation the company shall maintain its corporate entity to the extent required by the liquidation activities, however the phrase “under liquidation” shall be added to the name of the company till the completion of the liquidation procedure and the powers of the company shall thereafter vest with the appointed liquidator. Liquidation of the company shall require:

1. A resolution by an Extra-ordinary General Meeting approving the liquidation of the company. The resolution shall state:

(a) The reason for liquidation.

(b) The unanimous decision of all the members to liquidate the company.

 (c) The appointment of one or more liquidators (by simple majority), who can be director or a non-director of the company. Where there is more than one liquidator, the acts of the liquidators shall not be valid unless taken through a unanimous decision.

(d) The remuneration of the liquidator.

(e) The term of the liquidation process, within which the liquidation procedure shall be completed. This term may be extended upon submission of a report by the liquidator to the company’s management and the company through a resolution agrees to extend the same.

2. This resolution needs to be registered at the Company Registry, who shall thereon publish the same in a local newspaper. The Liquidator shall be responsible for following up with the Company Registry for the entry procedure. The appointment (or dismissal and reappointment) of the liquidator or the liquidation procedure shall not be effective against third parties unless published in a local newspaper.

3. Upon appointment the liquidator shall carry out an inventory of the assets and liabilities of the company, in agreement with the company’s directors. A detailed inventory and the balance sheet shall be prepared and signed by the liquidator, managers and the board of directors of the company.

4. The board of directors shall thereon submit the accounts of the company to the liquidator and shall also handover the books, properties and other documents of the company. The liquidator being the agent of the company shall be responsible for acting to safeguard the interest of the company.

5. The Liquidator will maintain a separate register to record the liquidation acts. Particularly the liquidator shall be responsible for:

(a) Representing the company against all third parties.

(b) Selling the companies movable and immovable properties (if required), but not without the prior consent of the company directors or the ordinary general assembly.

(c) Paying company’s dues and debts.

(d) The liquidator shall not initiate any new activities unless the same is necessary for completion of the previous activities.

6. All amounts received by the liquidator shall be deposited in the company’s accounts.

7. The liquidator shall notify (though registered latter or daily newspaper publication) all the creditors of the company of the commencement of the liquidation procedure and invite them to submit their claims.

8. Without prejudice to the rights of the privileged creditors the liquidator shall start paying company’s debts. Debts arising from the liquidation process shall have priority in payment from the company’s funds over the other debts.

9. The liquidator shall provide a liquidation report to the company’s management in every six months. The directors of the company reserve the right to initiate court proceedings against the liquidator for his malafide acts or where the liquidator fails to provide explanation.

10. The liquidator shall enter the completion of the liquidation in the Commercial Registry, who shall thereon publish it in the local newspaper so as to be effective against all third parties.

11. On completion of the liquidation process the liquidator shall apply for striking of the company’s name from the Commercial Registry.

12. The company’s books and register shall be maintained for a period of 10 years from the date of striking off the name of the company from the Commercial Registry.

 

LEGAL STRUCTURE – BAHRAIN

INTRODUCTION

Bahrain gained full independence from Britain in 1971, adopted a constitution in 1973, and substantially revised it in 2002. The al-Khalifa family has ruled Bahrain since 1783. The system of governance is democratic.

Bahrain is a constitutional monarchy, ruled by a King. The constitution states that the succession of the office of King automatically passes from ruler to son, unless the King appoints before his death one of his other Heirs to exercise his powers. The current King is Hamad Ibn Isa Al Khalifa.

The King appoints a prime minister and a cabinet (the Council of Ministers). The constitution also provides for a bicameral legislature, the National Assembly. The two houses of the National Assembly are

a) the Consultative Council: whose 40 members are appointed by the King; and

 

b) the Chamber of Deputies: whose 40 members are elected by direct popular vote by citizens 20 years of age or older.

Both appointed and elected legislators serve four-year terms. All legislation approved by the National Assembly must be ratified by the King in order to become law. The King is the protector of the legality of the government and the supremacy of law. He can propose constitutional amendments and initiates laws.

 

A bill is considered to have been ratified and promulgated by the King if a period of six months from the date of its submission from the Advisory Council and the Parliament has elapsed without the King returning it to any of the those councils for reconsideration. If the Parliament or the Advisory Council reconfirms the bill by a majority vote of two thirds of its members, the King shall ratify and promulgate the bill within one month from the date of reconfirmation.

LEGAL SYSTEM

Bahrain’s legal system draws its existence from:

a) Islamic religious law (the Sharia),
b) tribal law,
c) Egyptian codes
d) English common law, and

e) other sources like customs and in absence of customs the tenets of natural justice and good conscious are applied.
 
The court system consists of:

a) Sharia Law Courts
b) Military Courts
c) Constitutional Courts
d) Civil Law Courts

The administration of justice judges shall not be subject to any authority. No interference whatsoever shall be allowed in the conduct of justice. The law shall guarantee the independence of the judiciary and shall state the guarantees and provisions relating to the judges.

SHARIA COURTS

The personal status law is still not codified. The Shari’a law courts are divided into Sunni and Shi’i sections, with jurisdiction over disputes relating to Muslim personal status (except disputes over estates that fall under the jurisdiction of the competent civil courts, though those courts are obliged to divide estates in accordance with Islamic law).

There are three degrees of the Shari’a Courts:

a) Junior Shari’a Courts that hear personal status cases in the first instance,
b) Senior Shari’a Courts and
c) High Shari’a Court of Appeal having ultimate appellate jurisdiction.

The Shari’a Courts apply classical Islamic personal status law to Muslims without reference to state law. Each High Shari’a Court consists of a president and a number of judges; sittings are validly held in the presence of two judges, one of whom must be the President of the Court or his deputy. The Court of Cassation also has exclusive jurisdiction to decide cases filed simultaneously in Shari’a Courts or to settle any dispute arising from conflicting judgments between such courts.

MILITARY COURTS

The Military Courts have jurisdiction restricted to military crimes committed by members of the armed and security forces and shall not extend to others except during the time of martial law and within the limits determined by the law.

CONSTITUTIONAL COURT

The Constitutional Court, established pursuant to the Constitution, examines the conformity of the laws with the constitutional provisions. This Court is composed of a President and six members appointed by the King according to the recommendation of the Supreme Council of Judiciary (SCJ).

The decision declaring a law unconstitutional shall be retrospective and have immediate effect unless the Court specifies a date starting from which such decision shall have effect.

 

CIVIL COURTS

The Civil Courts have the power to settle commercial, civil and criminal cases, as well as all other cases related to the personal status law (family law) of non-Muslims. The personal status law is still not codified. The Supreme Court of Appeal, or the Court of Cassation, was created in 1989 and is the final Court of Appeal for commercial, civil and criminal cases. Recourse to Appeal against decisions with regard to the personal status is allowed before this Court for non-Muslims.

They are made of three levels:

a) Court of First Instance
b) Court of Appeal
c) Court of Cassation (Mahqamat At Tameez)

The concept of binding precedents in Bahrain is limited to the judgments of the Court of Cassation and Constitutional Court.

The Court Structure:

The Junior Court

The Junior Court has jurisdiction to hear both civil and commercial cases of claims involving small sums, and cases involving certain real property rights. Junior Court cases may be appealed to the High Court.

The High Court

The High Court has jurisdiction to hear all civil and commercial cases not falling within the jurisdiction of the Junior Court. The High Court is also authorized to hear cases concerning the personal status of non-Muslims and cases which are placed under its jurisdiction by law. The High Court also maintains jurisdiction over non-Bahraini citizens, including companies that are resident or domiciled in Bahrain except in cases involving real property situated outside Bahrain. The High Court has jurisdiction to hear appeals from the Junior Court and the Court of Execution. The High Court has exclusive jurisdiction over appeals of judgments from the Summary Actions Court. Judicial precedent followed by the High Court is set by decisions of the High Court of Appeal and the High Court of Justice sitting as a court of appeal.

The High Court of Appeal

The High Court of Appeal sits as a court of appeal regarding all appeals made from the High Court.

The Execution Court

The Execution Court has jurisdiction to execute all final judgments made by the Junior Court, the High Court and the High Court of Appeal.

The Summary Action Court

The Summary Action Court hears claims that may be adversely affected by the lapse of time. Hearings are usually set to take place not less than twenty-four hours after the filing of an application for a summary trial, although, in cases of extreme urgency, this period can be reduced.
 

THE SUPREME COUNCIL OF THE JUDICIARY

 

In September 2000, the Supreme Council of the Judiciary SCJ was created, and has a main mission of supervising the Judiciary. According to the Constitution of 2002, the King is the Chair of the SCJ. The President of the Court of Cassation as well as Judges from the Highest Courts of Appeal, applying the civil law and the Shari’a law, constitute the members of the SCJ.

 

BCDR – DISPUTE RESOLUTION

 

On June 2009 the Bahrain Chamber for Resolution of Economic, Financial and Investments Dispute (BCDR) in partnership with the American Arbitration Association (AAA) was established, to look into banking disputes above BHD500,000 (USD1,325,000). Furthermore, investors can bring a direct claim before the BCDR where the civil courts’ procedures will apply, or both parties can agree on arbitration whereby a panel within the BCDR will review the disputes.