On 21 October 2025, Bahrain’s Labour Market Regulatory Authority announced the mandatory rollout of the Enhanced Wage Protection System (WPS) for all private sector employers from early 2026.1
WHY THIS MATTERS
The Enhanced WPS aims to improve transparency, ensure timely wage payments, and strengthen compliance with labour regulations. It expands the existing WPS framework by introducing centralized salary processing and stricter monitoring.
Context
The WPS was introduced by the Labour Market Regulatory Authority (LMRA) to ensure transparency and timely payment of wages in Bahrain’s private sector.
By requiring employers to process salaries through an LMRA approved platform, WPS has helped strengthen compliance with labour laws, protect employee rights, and reduce wage related disputes. Building on this foundation, the LMRA has now developed the Enhanced WPS in collaboration with the Central Bank of Bahrain, BENEFIT, and private sector stakeholders.
The upgraded system provides a centralized, automated platform for salary processing and reinforces oversight, paving the way for improved efficiency and regulatory compliance.
Key Highlights
Under the New System
- All salary payments must be processed exclusively through the LMRA WPS portal; direct bank transfers will no longer be permitted.
- Employers must upload monthly payroll files and assign WPS roles within the portal.
- Non-compliance will lead to penalties and restrictions on LMRA transactions.
The above does not apply to domestic workers.
Key Features of the Enhanced WPS
- Mandatory WPS Roles: Employers must appoint a Wages Responsible Person (WRP), who may assign up to five “maker” and “checker” roles. All users require an advanced eKey.
- Centralized Salary Processing: Salaries must be uploaded monthly using the prescribed WPS file format, even if there are no changes.
- Automated Transfers: Approved files will trigger automatic transfers through licensed banks and LMRA registered payment service providers.
- No Direct Transfers: All wage payments must go through the WPS portal.
- Compliance Justifications: Employers must provide explanations and supporting documents for any nonpayment or partial payment.
- Penalties: Administrative actions and fines will apply for noncompliance.
KPMG INSIGHTS
Considerations for Employers
The Enhanced WPS aims to strengthen oversight, protect employee wage rights and reduce compliance risks.
In light of the changes, KPMG in Bahrain states that employers may wish to consider the following steps:
- Register establishments on LMRA’s Expatriate Management System (EMS).
- Assign a WRP and authorized makers/checkers.
- Prepare monthly salary files using LMRA’s template.
- Align payroll processes with WPS requirements.
- Communicate changes to HR, payroll and employees.
KPMG in Bahrain recommends employers that choose to act do so promptly to achieve readiness before the changes take effect in 2026.
If assignees and/or their programme managers have any questions or concerns about the scope of the directive, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax or social security professional or a member of the GMS/People Services team with KPMG in Bahrain (see the Contacts section).
FOOTNOTE:
1 LMRA Launches the Enhanced Wages Protection System, Kingdom of Bahrain, Labour Market Regulatory Authority, posted on October 21, 2025.
Contacts
Disclaimer
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in Bahrain.
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