Are you looking to expand your business to Iraq? Crossing borders can open up a new world of opportunities, but it can also come with many challenges. Navigating a unique set of recruiting, hiring, onboarding, and payroll regulations is often complicated, and failing to meet specific in-country laws can lead to legal issues. A global expansion in Iraq also means managing various cultural and business norms.
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Partnering with Globalization Partners as your Employer of Record in Iraq will help you mitigate these risks and expand with ease and peace of mind. As a global PEO, we will be responsible for hiring your employees through our own in-country subsidiary. We leverage our experienced team of HR and legal experts to help you recruit and onboard new staff members while ensuring your employee payroll and benefits remain fully compliant.
Let us take care of the details so you can continue focusing on your big-picture expansion goals.
Doing Business in the Country
The Republic of Iraq, more commonly known as Iraq, is located in the Middle East. Known for its heavy oil production, cultural diversity, and rich artistic heritage, the country is a popular choice for an overseas company expansion. While the gas and oil sector is the highest producing segment of the country’s gross domestic product (GDP), many other industries — including textiles, metal fabrication, and food processing — are also thriving. As Iraq continues to stabilize politically, its strategic location and incredible natural resources position the country as a land of limitless business opportunity.
International companies intending to carry out business in Iraq must establish a legal presence in-country, such as a branch office, subsidiary, or company. Failure to properly register your company can lead to hefty fines and penalties. However, working with Globalization Partners allows you to avoid this lengthy process and start working in as little as a few days.
Below are some details to consider during your expansion.
Employment contracts must be written in Arabic — or Kurdish for labor contracts entered into Kurdistan. Contracts must be in writing and include specific information covering wages and the nature of the position. Salaries must be written and paid in Iraqi dinar (IQD). Employment contracts may refer to either fixed or open employment terms, depending on your arrangement.
All employment contracts must meet the minimum wage payment of IQD 250,000 per month.
Iraq’s labor laws include strict restrictions on employee working hours. Workers have a cap of eight working hours per day and 48 hours per week. Any labor time over this cap is considered overtime.
Additional limitations exist for certain work situations, including:
- Work performed at night.
- Work considered to be strenuous.
- Work considered dangerous to an employee’s health.
Overtime is capped at one to four hours per day, depending on the nature of the work. Additionally, overtime is limited to 40 hours per 90 days and 120 hours per 12 months. Overtime performed during the day is paid at a rate of 50%, while overtime pay is doubled at night.
These restrictions and regulations are strictly governed. However, there are a few rare exceptions to the limits on working hours and overtime. The following workers are exempt from restrictions:
- Managers and supervisors
- Confidential positions
- Agricultural workers
After one year of employment, workers are entitled to 21 days of fully paid leave annually. This amount of leave increases incrementally the longer an employee works at your company. Employees working in difficult or dangerous conditions, such as work environments with health hazards, are entitled to 30 days of paid vacation each year.
You must also give employees full pay for feast days and official holidays that do not fall on a Saturday.
Employees are eligible to claim 30 days of fully paid sick leave for every year of service, with a maximum cap of 180 days. After the 30-day mark, social insurance will cover any paid sick leave. Employees must show documented medical evidence to claim paid sick leave.
Female employees should receive fully paid maternity leave for 14 weeks each year. This can include up to eight weeks of leave before the expected due date and at least six weeks following the delivery.
These employees can also request additional unpaid maternity leave for up to one year to provide child care if the child is under a year old. However, this request is subject to your consent. After completing maternity leave, employees should return to the same position or an equal position that provides the same wages.
The country’s labor laws do not grant paternity leave to fathers. However, both female and male parents are entitled to request up to three days of unpaid leave to take care of an ill child under 6 years old.
You must recognize the following national celebrations with a paid day off:
- New Year’s Day
- Armed Forces Day
- Spring Day
- Labor Day
- Eid al-Fitr
- Republic Day
- Eid al-Adha
- Islamic New Year
- National Day
- Victory Day
- Christmas Day
Termination and Severance
Termination is permitted but highly regulated. According to the nation’s labor laws, you must provide 30 days’ termination notice. Lawful grounds of termination include:
- A mutual agreement in writing.
- Formal resignation by the employee.
- The expiration of a contract’s term.
- An employee’s incapacitation from a long-term illness for more than six months.
- An employee’s incapacitation to more than 75% of their ability.
- A proven downturn in your company’s business and revenue.
Employment contracts can also be terminated due to a dispute. In this case, both parties must seek conciliation with the Iraqi Ministry of Labor and Social Affairs and the General Federation of Trade Unions.
Income tax is a flat rate of 15%. You must contribute 12% to social security, while employees contribute 5%.
Both you and your employees have to contribute to a social security system that includes health insurance and sick leave. Employees using more than 30 days of sick leave are covered by their insurance provider.
Bonuses and Additional Benefits
Your company typically determines any additional employment benefits, such as accommodation, car allowances, and meals. The government does not regulate these benefits, so you may choose to offer benefits and bonuses as you see fit to attract top talent to join your company.
Expand Your Business to Iraq With the Help of Globalization Partners
Grow your company with exceptional fresh talent — no borders or limits required. Globalization Partners can transform the way you conduct your overseas expansions through our global PEO, also known as Employer of Record, services.
Contact us today to discover more.