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Employment in Iraq

Iraqi labour law does not require employers recruit a specified proportion of Iraqi nationals for employment, except where an investment license is required for a project. Iraqi nationals are required to be given priority over foreigners, unless there are no suitable Iraqis for the position. Employment regulations in Iraq are overseen by the Social Security Law. The laws surrounding termination can become increasingly complex, and are expected to experience significant reform in the coming years. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Iraq.

Key points on employment in Iraq

There are several key areas to be aware of within Iraq’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. Iraq’s labour law is known for not being updated regularly and furthermore, difficult to access, particularly as it is almost entirely provided in Arabic. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    Employment contracts in Iraq, under Article 10 of Law No. 71/1987, requires that employer/employee relationships, contracts, register and instruments of work should be provided in Arabic, although Kurdish is also acceptable for labour contracts entered into in the Kurdistan area. Contracts must be in writing, and specify wage amounts and the type of work to be carried out. Salaries and wages must be paid in IQD. Contracts for employment may specify either fixed or indefinite terms, depending of the type of work.

  2. Probation Periods

    The Labour Law allows employers to hire employees on a probationary basis for a period of up to three months, and must be specified in writing through the employment contract.

  3. Termination Periods

    The process through which employment contracts may be terminated in Iraq is complex. There are several authorised grounds of terminations stipulated in the Labour Law, including:

    • A mutual written agreement
    • The contract term expiration
    • Of the employee’s own will
    • Where the employee is incapacitated for more than 6 months, due to illness
    • Where the employee is incapacitated to excess of 75% of their ability
    • Decline in the company’s business, provided that the Labour Minister is informed

    It is possible to also terminate an employment contract if in accordance with the Civil Code.

    In the case of a dispute between employer and employee, the parties must inform the Minister of Labour and Social Affairs and the President of the General Federation of Employee Unions, then begin to seek conciliation with the assistance of both to reach a mutually acceptable solution. If this fails, employees and employers may submit their dispute to the Labour Cases Tribunal, which makes a decision within 15 days that is final.

  4. Statutory Leave

    There are laws that regulate leave periods based on years of service and the type of leave requested, including:

     

    1. Annual Leave: 20 days paid leave, or 30 days if the employee is undertaking dangerous work. After 5 years of employment, annual leave is increased by 2 days per extra 5 years of employment.
    1. Maternity Leave: Female employees are entitled to not less than 72 days of paid maternity leave.
    1. Sick Leave: Employees are entitled to a maximum of 30 days of paid sick leave each year. After these 30 days are used up, the employee is entitled to another 180 days sick leave, paid by the insurance provider rather than the employer. Sick leave is conditional on valid documentation by medical evidence provided by a doctor.
  5. Pensions and Benefits

    The system of welfare and benefits in Iraq is known for being complex and unclear, particular for foreign employers. Contributions are as follows:

    • 12% of the employee’s salary is paid by the employer to cover health insurance, work injuries and pension collectively
    • 5% is deducted directly from the employee’s salary
    • For the oil and gas industries, the employer contributes 25%.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Iraq. For companies which intend to employ their staff directly through their incorporated Iraqi entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Iraq.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Iraq.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Iraq

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Iraq

– the company needs help with tax, employment, immigration and payroll compliance in Iraq

Shield GEO can contract directly with the company to employ and payroll their staff in Iraq. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits. Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

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