Employer of Record in Iraq

Businesses can only operate smoothly in Iraq if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Iraq below, to avoid any compliance issues.

Employment Contract Requirements

In Iraq, employment contracts must be in Arabic. However, in autonomous areas of Kurdistan, contracts can be drafted in Kurdish. It is common practice for contracts to include:

• Identification of both parties
• Commencement date
• Job duties and responsibilities
• Location of job

Onboarding Process

We can help you get a new employee started in Iraq quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Iraq

In Iraq, regular working hours are 48 hours per week. Employees can work eight hours a day for six days each week.

Overtime in Iraq

Working hours may be increased in some cases. The increase is treated as overtime, for which the wage must be increased by 50% to 100%, depending on the type and nature of the work.

Probation Period in Iraq

Iraqi Employers can hire employees on probation for up to three months.

Fiscal Year in Iraq

January 1st - December 31st is the 12-month accounting period that businesses in Iraq use for financial and tax reporting purposes.

Payroll Cycle in Iraq

The payroll cycle in Iraq is usually Monthly, with employees being paid by the last day of the month.

Minimum Wage in Iraq

The minimum wage for employees in Iraq is typically 1,302 IQD per hour, amounting to ~ 250,000 IQD per month for a typical 48 hour work week.

Bonus Payments in Iraq

There is no mandatory law for a 13th-month salary payment in Iraq.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 12% on top of the employee salary in Iraq.

Employee Payroll Tax Contributions

In Iraq , the typical estimation for employee payroll contributions cost is around 5%.

Individual Income Tax Contributions

Iraq operates a progressive income tax rate, ranging from 3% to 15%. Individual income tax is calculated based on annual income brackets.

Pension in Iraq

Pension in Iraq is funded by social security contributions. The pension benefits are calculated based on the employees salary history and years of service. The system provides various types of benefits, including retirement pensions, disability pensions, and survivor pensions for dependents.

Mandatory Leave Entitlement in Iraq

The annual leave entitlement in Iraq is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Iraq

There are 14 recognised national holidays in Iraq:

Paid Time Off in Iraq

Employees qualify for annual leave after completing a full year of employment. The annual holiday entitlement starts at 20 days per year and grows by two days for every five years of service. Employees who are engaged in dangerous or hazardous work are eligible for 30 days of paid vacation annually, which is more than the standard allowance.

Maternity Leave In Iraq

Eligible employees in Iraq are entitled to at least 14 weeks of paid maternity leave annually, with key details as follows:

• Pre-birth leave: Up to 8 weeks of paid leave can be taken before the due date with a medical certificate.
• Post-birth leave: At least 6 weeks of leave must be taken after childbirth.
• Extended maternity leave: Maternity leave can extend up to 9 months due to complicated childbirth, multiple births, or pre/postnatal complications, as determined by medical authorities.
• Unpaid leave: An employee may take up to one year of unpaid maternity leave to care for a child under one year old, with the employer's approval.

Paternity Leave In Iraq

The Iraqi Labor Law does not mandate paternity leave for fathers.

Sick Leave In Iraq

Employees receive 30 days of sick leave per year of service, capped at 180 days covered by insurance. Sick leave is paid as follows:

• The first 30 days are fully paid and funded by the employer.
• Should the employee fail to recover within 30 days, the retirement and social security fund will reimburse the employer for wages.

Parental Leave In Iraq

Iraq provides specific maternity leave entitlements but does not include provisions for shared parental leave or paternity leave.

Termination Process in Iraq

In Iraq, employment can be terminated by both the employer and the employee. The employer can terminate based on substantial grounds or must pay severance if termination occurs without cause.

Notice Period in Iraq

A 30-day notice is mandatory for permanent employees (unless there is a justified cause of immediate dismissal). For termination during probation, at least seven days notice must be provided. Failing to do so would result in the employer compensating the employee with wages equivalent to the notice period.

Severance in Iraq

In Iraq, severance pay is typically two weeks' salary for each year of service. An employee is entitled to this end-of-service gratuity, except in specific cases such as:

• Employee sentenced to over one-year imprisonment by court judgment
• Employees using false identities or forged documents
• Employee breaching contractual obligations
• An employee making a severe error causing significant damage to work, workers, or production