New Labour Law
A new labour law was ratified by the King of Bahrain on 26 July 2012, and replaces the previous labour law (Labour Law No. 23) issued in 1976. It came into effect one month after its publication in the Official Gazette, namely 2 September 2012.
Based on our review of the new labour law, the minister concerned with private sector labour affairs will have a maximum of six months from the date of issuance of the new labour law, to issue any resolutions necessary to bring into effect those provisions of the previous law which are not addressed under the new legislation. Until such time the existing implementing orders issued under the previous labour law would need to be read along with the new labour law.
The legislation’s primary objective is to align the rights of private sector employees with their counterparts in the public sector, and to encourage growth in the private sector labour market.
It will increase the rights of private sector employees in the fields of annual leave, sick leave, maternity leave, unfair dismissal, and salary withholding.
It also introduces stricter sanctions on employers who breach its provisions and has updated the procedure for settling labour disputes to encourage the amicable resolution of disputes.
Norton Rose is working with local counsel to understand the implications of this new law for Bahrain based businesses.
For more information please contact Joanne Emerson Taqi.
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Sustainable Construction
Legislation is currently being drafted to promote the use of eco-friendly best practices in the construction industry in Bahrain. The first draft of the proposed law was published for comment in July 2012, and is now being finalised by the government for a scheduled implementation date of January 2013.
These regulations will require new developments to be constructed in line with international environmental standards. For example developments must make better use of natural lighting, use more efficient air conditioning systems, use green building materials and so on.
New developments will also be required to incorporate a minimum of 50 per cent of greenery into their total land space.
It is hoped that the legislation will help promote the use of modern technology and materials in future construction projects, and will assist local and foreign firms in breaking into the highly competitive construction and materials market in Bahrain.
However, as the cost of implementing these regulations is high, many companies could prove reluctant to adopt them, due to a lack of short term financial benefits.
For more information please contact Joanne Emerson Taqi.
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FATCA
The US Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. It is designed to help combat tax evasion by US persons holding investments in offshore accounts.
In its current form it could affect a wide range of financial institutions both inside and outside the United States, and even potentially some non-financial corporations. Therefore any organisation involved in the financial sector, including Bahraini banks, should consider whether they will be required to be compliant.
The key principle of FATCA is that it requires US persons holding assets over a certain value outside the USA, to report these assets to the IRS on their annual tax return.
In tandem with this it also requires foreign financial institutions (FFI), or foreign entities in which the US taxpayer holds a substantial interest, to provide the IRS with information on these US persons.
If the Act is not complied with it will impose a 30 per cent withholding tax on payments made to it from US sources. This will be extended in 2017 to include a “passthru” withholding tax which will apply to payments made between financial institutions which came from an original US source.
The key deadline is 30 June 2013, by which each FFI to which this law applies must have finalised a reporting agreement with the IRS, to avoid being liable to pay the withholding tax which comes into effect from 1 January 2014.
For more information please contact Angela Croker.
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Petchem Arabia Conference
The Petrochem Arabian Conference was held in Manama in the first week of October 2012 and covered a number of basic topics relating to regional and international petrochemicals issues, with participation from a number of speakers including government ministers and senior management of national and international oil firms.
Joanne Emerson Taqi moderated a panel at the conference on downstream joint ventures. The discussion focussed on petrochemical investments, project financing, cross country and company partnerships, forward strategy and technology know how/ transfers.
Norton Rose is one of the leading legal practices acting in the petrochemicals sector and have extensive experience advising project developers, commercial and Islamic banks and export credit agencies on petrochemicals projects and refineries within the Middle East and internationally.
For more information about our petrochems experience, please contact Joanne Emerson Taqi.
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