Iraq PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Iraq to companies willing to enter the Iraq market or recruit local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Iraq.  However our Employer of Record solution allows you to start the operations in Iraq within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Iraq fast facts

Population, million: 40,222,493
Land area: 434,320 km²
Capital: Baghdad
Local currency: Iraqi dinar (IQD)

GDP per capita:$ 5350.00
GDP in currency:$ 200 billion

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.

The main sources of employment law are:

1. LABOR LAW
2. Foreign investment law
3. The Social Security Law
4. Civil Code
5. Penal Code

Hiring, Negotiating and Doing Business in Iraq

Necessity of written employment contract

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.

Iraq Employment Contract

Types of employment agreements

The Iraqi Labour Law does not distinguish between employees and contractors. The law permits temporary or seasonal work for a fixed term, but any work which is permanent in nature generally cannot be considered a fixed-term contract. This makes termination of such a contract difficult.

Iraq working hours

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.

Overtime

The wage must be increased by 50% to 100%, depending on the type and nature of the work.

Vacation leave in Iraq

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.

Iraq Maternity Leave

Generally, there are several types of leave of absence:

• Maternity leave: Female employees are entitled to not less than 72 days of paid maternity leave.
• 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.

Iraq Severance Laws

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:

1. A mutual written agreement
2. The contract term expiration
3. Of the employee’s own will
4. Where the employee is incapacitated for more than 6 months, due to illness
5. 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.

Iraq Tax

There are specific rules for payroll and taxation in Iraq, depending upon whether your company employs foreign nationals or local Iraqi employees. The primary concerns for a foreign company that needs to comply with tax laws in Iraq are: Individual income tax (IIT) for employees in Iraq, social security costs, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.

Iraq has some unique rules regarding employment, for example there is no government pension system, although both employers and employees make contributions to health insurance and their sick leave.

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

1. 12% of the employee’s salary is paid by the employer to cover health insurance, work injuries and pension collectively
2. 5% is deducted directly from the employee’s salary
3. For the oil and gas industries, the employer contributes 25%.

Health Insurance Benefits in Iraq

Employees are entitled to fully paid sick leave of 30 days for every year of service, up to a total of 180 days. If a sick employee exhausts this period of sick leave without recovering, he or she shall be subject to the Social Security Law. The retirement and social security fund shall reimburse the employer for any wages paid to the insured employee for that period of sick leave exceeding 30 days per year of service.

Additional Benefits in Iraq

The government does not regulate benefits, so you may choose to offer benefits and bonuses as you see fit to attract top talent to join your company.

Iraq Holidays

• New Year’s Day
• Armed Forces Day
• Spring Day
• Labor Day
• Eid al-Fitr
• Republic Day
• Eid al-Adha
• Islamic New Year
• Ashura
• National Day
• Mawlid
• Victory Day
• Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.