Local Expertise, Global Standards
Iraq|UAE|KSA

Demystifying Iraqi Labor Laws: Your Essential Guide to Understanding Employee Rights and Employer Obligations

employees working in an open space office.
Post By: Mustafa Muayad - Founder & Managing Partner mustafa.muayad@muayadandassociates.com Print Post

Demystifying Iraqi Labor Laws: Your Essential Guide to Understanding Employee Rights and Employer Obligations

The Federal Iraqi Labor Law No. 37 of 2015 (“Federal Iraqi Law”) entered into force in October 2015. The Federal Iraqi Law governs the employment relationship between employers and employees within the private sector in Federal Iraq, whereas in Kurdistan Region, there is a newly drafted Labor Law, which will be published and come into force in the upcoming months, regulates employment matters within the Kurdistan Region (KR).

 

This article shall focus on examining the salient features of the Federal Iraqi Labor Law. The purpose of this analysis is to provide a comprehensive overview of the provisions and regulations contained within this legislation, with a view to deepening the understanding of its provisions and implications for the regulation of labor relations in Iraq.
Before proceeding with the discussion of the Federal Iraqi Law, it is important to clarify a critical point that regardless of any agreement between the parties, the provisions of the Federal Iraqi Labor Law shall prevail. All employees, domestic or international, working in Iraq are subject to the national Labor Law, regardless of their nationality or the place where the contract was concluded, as long as the services are rendered in Iraq.

Employment Agreements

Employment Agreements Employment agreements are legally binding documents that outline the terms and conditions of the employer-employee relationship. Pursuant to the Federal Iraqi Labor Law, employment contracts may be oral or in writing. In the case of a written agreement, the Labor Law imposes minimum requirements that must be met in drafting the contract, including but not limited to the employee’s name, date of birth, qualifications, career, place of residency, and nationality; the nature and duration of the employment; the employee’s wages and bonuses; and working hours and the method of counting them. It is advisable to seek the assistance of qualified legal counsel when drafting a written employment contract to avoid future disputes between the parties.

Types of Employment Contracts In accordance with the Federal Iraqi Labor Law, there are several types of employment contracts, each with its own unique nature and benefits. The most common types of employment agreements include: fixed-term contracts, which are ended after a defined term expires (not exceeding one year or renewed more than one time); part-time or temporary employment contracts, which specify the number of hours an employee will work or the length of the assignment; and indefinite-term contracts, which do not have a stated period and may be terminated by the parties’ consent, the employee’s resignation or death, or other circumstances stipulated by the law.

 

Social Security

Social Security Every employee in Iraq is required to register with the Pension & Social Security Department. The employee must contribute 5% of their basic wage each month to social security, while the employer must contribute 12%, for a total monthly contribution of 17%. Companies operating in the energy sector must pay 35% of the monthly basic wage in social security contributions.

 

Employees’ Entitlements Upon Termination

Employee Entitlements Upon termination of their contracts, employees are entitled to several benefits under the Federal Iraqi Labor Law, including the following:

  1. An end-of-service gratuity equal to two weeks’ wage for the last working period and monetary remuneration for unused annual leave.
  2. Employees are also entitled to a work certificate, which details their employment history and performance, and the expense of the foreign employees’ return to their home country, if provided for in the contract.
  3. Compensation for Unused Annual Leave Days The employee shall be entitled to receive a monetary compensation for annual leave days not taken during the course of the employment, as prescribed by the applicable labor law.
  4. Registration with the Pension & Social Security Department The employer shall provide the employee with a supporting letter addressed to the Pension & Social Security Department (PSSD), indicating the employee’s registration number with the PSSD.
  5. Assuming the expense of the foreign employees’ return to their countryThe return ticket for the foreign employee must be paid by the employer, according to Iraq Labor law. However, it should be noted that if the employee leaves without a justifiable reason and before the end of the work period, the employer is not responsible for paying these expenses.

 

Termination of Employment Contracts

Termination of an employment agreement is a stringent process that requires both the employee and employer to follow specific procedures and understand their rights and obligations under the Federal Iraqi Labor Law to avoid legal issues. The Labor Law grants the right to terminate employment contracts, under specific conditions, to both the employee and employer. In this article, the focus shall be on termination of employment initiated by the employer, which includes, among other things, serious illness or incapacity, poor performance, misconduct, reaching retirement age, providing fake identity or fraudulent documents, and the expiration of a fixed-term employment agreement. If an employer terminates an employee’s contract without a valid reason, the employee may challenge the decision and claim unfair dismissal. Employers must ensure that they have a clear and valid reason for termination and follow the appropriate procedures as outlined in the Federal Iraqi Labor Law

Hire a Labor Law Attorney

At Muayad & Associates, we have a solid grasp on employment matters and labor laws in Iraq as we are one of the largest and fastest-growing employment groups of lawyers in the region. Our skilled attorneys provide high-quality advice and litigation services to our clients on all facets of labor and employment issues.

Muayad & Associates have the in-depth socioeconomic and legal expertise required to resolve numerous employment law matters and our considerable combined experience in dispute settlement can help clients with various labor law issues. Get in touch with us today for an initial consultation