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Employer of Record Iraq | Labor Laws and Employment Contracts in Iraq

Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax

Navigating the complex landscape of employer obligations in Iraq, including payroll cycles, employer and employee contributions, minimum wage requirements, hiring practices, background checks, employment contracts, onboarding procedures, employee benefits, social security, healthcare and insurance provisions, leave policies, public holidays, work permits and visas, probation and notice periods, as well as termination and severance regulations, all while ensuring compliance with personal income tax regulations, can be simplified with the assistance of an Employer of Record in Iraq.

Time zoneUTC+03:00
Total Time zones1
Working hours per week40
Working weekSunday–Thursday
Typical hours worked8
Personal Tax filing deadlineNA
Financial Year1st January to 31st December

Exploring Iraqi Labor Laws: An In-Depth Analysis of Employee Rights and Employer Obligations


In October 2015, the Federal Iraqi Labor Law No. 37 of 2015 (referred to as the "Federal Iraqi Law") was enacted, establishing regulations for the employment relationship between employers and employees within the private sector in Federal Iraq. On the other hand, the Kurdistan Region is in the process of developing a new Labor Law, which is expected to be published and enforced in the coming months, specifically addressing employment matters within the Kurdistan Region (KR).

The primary focus of this article is to examine the prominent features of the Federal Iraqi Labor Law, providing a comprehensive overview of its provisions and regulations. By doing so, our aim is to enhance understanding of the law's implications and deepen knowledge of labor relations regulation in Iraq.

It is crucial to emphasize that regardless of any agreements made between parties, the provisions of the Federal Iraqi Labor Law take precedence. All employees, whether domestic or international, working in Iraq, are subject to the national Labor Law, irrespective of their nationality or where the employment contract was concluded, as long as their services are rendered within Iraq.

Exploring Employment Agreements in Iraq

Employment agreements play a crucial role in establishing the terms and conditions governing the employer-employee relationship. Under the provisions of the Federal Iraqi Labor Law, these agreements can be either oral or in writing. However, when opting for a written agreement, it is essential to adhere to certain minimum requirements outlined by the Labor Law. These requirements encompass various aspects such as the employee's personal details (name, date of birth, qualifications, career, place of residency, and nationality), the nature and duration of employment, the employee's wages and bonuses, working hours, and the method of calculating them. Seeking the guidance of qualified legal counsel during the drafting process is advisable to mitigate potential disputes between the involved parties.

In alignment with the Federal Iraqi Labor Law, different types of employment contracts exist, each with its own distinct characteristics and advantages. Fixed-term contracts, for instance, have a predetermined duration and are terminated upon the expiry of the specified term (which should not exceed one year or be renewed more than once). Part-time or temporary employment contracts, on the other hand, define the number of working hours or the length of the assignment for the employee. Lastly, indefinite-term contracts do not have a stated period and can be terminated based on the consent of both parties, the employee's resignation or death, or other circumstances specified by the law.

Understanding Social Security in Iraq

In Iraq, it is mandatory for every employee to register with the Pension & Social Security Department to avail the benefits of social security. As per the regulations, employees are obligated to contribute 5% of their basic wage each month towards social security. Simultaneously, employers are required to contribute 12%, resulting in a combined monthly contribution of 17%. However, companies operating in the energy sector have an increased obligation, as they are expected to pay 35% of the monthly basic wage towards social security contributions. Compliance with these contributions ensures that employees are covered under the social security system, providing them with crucial financial protection and support.

Employee Entitlements upon Contract Termination

Upon the termination of their employment contracts, employees in Iraq are granted various entitlements in accordance with the Federal Iraqi Labor Law. These entitlements encompass the following provisions:

  • End-of-Service Gratuity: Employees are eligible to receive an end-of-service gratuity equivalent to two weeks' wages for their last working period, along with monetary compensation for any accrued but unused annual leave.
  • Work Certificate: Employees have the right to obtain a work certificate that outlines their employment history and performance within the organization.
  • Expenses for Return to Home Country: If stipulated in the contract, foreign employees are entitled to have their expenses covered for returning to their home country.
  • Compensation for Unused Annual Leave Days: As prescribed by the applicable labor law, employees are entitled to receive monetary compensation for any annual leave days that were not utilized during their employment tenure.
  • Registration with the Pension & Social Security Department: Employers are responsible for providing employees with a supporting letter addressed to the Pension & Social Security Department (PSSD), indicating the employee's registration number with the PSSD.

It is important to note that in accordance with Iraq Labor law, employers are obligated to bear the expenses of the return ticket for foreign employees. However, it should be emphasized that if an employee departs without a valid reason before the completion of the work period, the employer is not responsible for covering these expenses.

Terminating Employment Contracts

The termination of an employment agreement is a rigorous process that necessitates adherence to specific procedures and a comprehensive understanding of the rights and obligations prescribed by the Federal Iraqi Labor Law. Both the employee and employer bear the responsibility of ensuring compliance to avoid potential legal complications. The Labor Law confers the right to terminate employment contracts to both parties, subject to certain conditions.

This article primarily focuses on employer-initiated termination of employment, which encompasses various circumstances such as serious illness or incapacity, poor performance, misconduct, reaching retirement age, providing false identity or fraudulent documents, and the expiration of a fixed-term employment agreement. It is crucial for employers to have a valid and substantiated reason for termination, as terminating an employee's contract without justifiable grounds may lead to claims of unfair dismissal by the employee.

Employers must meticulously follow the appropriate procedures stipulated in the Federal Iraqi Labor Law when terminating an employee's contract. By doing so, they can ensure compliance and mitigate the risk of legal repercussions.