Executive summary

On 21 October 2025, the Labour Market Regulatory Authority (LMRA)announced the mandatory implementation of the advanced Wages Protection System (WPS) for all private sector employers in Bahrain, effective from February 2026. The enhanced version of the existing WPS aims to enhance transparency, ensure timely wage payments and strengthen compliance with labor regulations.

Detailed discussion

Background

The current version of the WPS requires employers to pay workers' wages through licensed banks and financial institutions approved by the Central Bank of Bahrain and registered with the LMRA. The LMRA developed the electronic WPS to ensure transparency, accountability and timely wage payments, while enabling compliance monitoring.

The enhanced version of WPS is designed to safeguard the rights of all parties and guarantee timely salary payments, as well as to support contractual stability in the private sector. It prioritizes the protection of employees' rights and helps ensure their stability in a fair and safe work environment. The enhanced system will also help companies manage financial and administrative operations more efficiently.

Highlights of the LMRA announcement

Mandatory appointment of a WPS-authorized person: Employers must appoint a single Wages Responsible Person (WRP) to manage and monitor wage payments through the WPS. The WRP is responsible for processing, reviewing and confirming all payroll files and may assign up to five authorized persons in the "maker" and/or "checker" roles. The WRP and the authorized persons must have an advanced eKey. (Utilizing eKey gives individuals a single sign-on for all their digital services. It uses strong biometric security to keep user's identity safe. With eKey, individuals can quickly access services from both public and private sectors, all in one place.)

Centralized salary processing: All salaries must be processed and transferred exclusively through the WPS portal. Employers are required to upload a standardized salary file each month, even if there are no changes to salary data. The system supports batch uploads and allows for the inclusion of fixed, variable and social allowance components.

Automated salary transfers: Once the salary file is approved, all salaries will be transferred automatically from the company's local bank account or digital wallet via the WPS, through banks and payment service providers licensed by the Central Bank of Bahrain and registered with the LMRA.

Elimination of direct transfers: Upon implementation of WPS, direct salary transfers outside of the WPS portal will no longer be permitted. All wage payments must be routed through the WPS.

Monthly compliance and justification: Employers must upload the completed salary file every month. In cases of nonpayment or partial payment, employers are required to submit justifications and supporting documents through the WPS portal.

Penalties for noncompliance: Administrative measures and penalties will apply for failure to comply with WPS requirements.

Practical steps for employers

Steps for employers as a result of these changes include:

• Register establishments on the LMRA Expatriate Management System (EMS).
• Assign a Wages Responsible Person (WRP) and, if needed, authorized makers/checkers.
• Use the prescribed template to prepare monthly salary files, including all required employee and salary details.
• Ensure that all payroll processes align with the new WPS requirements.
• Communicate changes to human resources and payroll teams, as well as employees.

Implications

The WPS is expected to improve regulatory oversight and reduce the risk of penalties for noncompliance. Employers should update their payroll processes and internal controls to align with the WPS.