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Employment of Record In Iraq

Employment of Record In Iraq

Skuad's Iraq EOR (Employer of Record) solution helps your business expand into Iraq without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team and manage their payroll, benefits, and compliances, etc. We help you streamline the global expansion process with the able assistance of our international network.

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Iraq At A Glance

Population: 38,433,600 (2018 Estimate)

Currency: Iraqi Dinar

Capital City: Baghdad

Languages spoken: Arabic, Kurdish

GDP: $399.4 Billion (2020 Estimate)

Iraq has always been lucrative for business organizations. The government in Iraq is taking many initiatives to facilitate an entrepreneurial atmosphere in the country and boost the ease of doing business here. If you are looking to expand your business operations in Iraq, you should know that the oil sector drives the economy of Iraq. All prominent multinational companies in the oil business have set-ups here. Whether you are a budding entrepreneur or an experienced business, you need a good local partner to tackle the complexities of employment in Iraq.

Employment In Iraq

The Iraq employment laws aim to safeguard the employment of workers in Iraq. These laws have several provisions for pension, benefits, and leaves, etc. All employment contracts in Iraq have different clauses, terms, and conditions that all employees and employers should follow.

According to a 2011 survey, an average worker works for about 10.3 hours per week. However, this has increased with corporations expanding into Iraqi territories.

The employment agreements in Iraq also have some laws concerning the employer to ensure the wellness of the employees. The policies also safeguard the employees from unjust practices.

Some of these employee entitlements are as follows:

Employee Entitlement Explanation
Medical Leave In Iraq, an employee can take a maximum of 30 days as sick leave or medical leaves each year. Employees can also take another 180 days of sick leave that the insurance provider will cover. Sick leaves are conditional, and the employees will have to furnish a medical report or a doctor certificate to the company.
Public Holidays Like every other country, people in Iraq are also entitled to full-day leaves on public holidays. These days are celebrated as:
  • New Year’s Day
  • Iraqi Army Day
  • Eid Norooz
  • Baghdad Liberation Day
  • Labour Day
  • Eid-ul Fitr (5 days)
  • Republic Day
  • Eid-Al Adha (4 Days)
  • Islamic New Year
  • Ashura
  • Independence Day
  • Mawlid Al-Nabi
  • Victory Day
  • Christmas

If an employee works on any of the above days, he can take a leave on any working day instead.

Annual Leave Accrual Entitlement In Iraq, employees can take 20 days of paid casual leave a year. However, if the employee is involved in some hazardous activity like heavy equipment operation, etc., he will be entitled to 30 days of paid leave. Once the employee completes five years with the organization, the number of paid leaves will increase by two. The employees are rewarded with two additional paid leaves per year for every extra five years of employment.
Maternity Leave You can take 72 days of paid maternity leave if you are working in a company operating in Iraq. However, the number of days can be increased based on the requirements of the employee.
Paternity Leave The Labor Law does not grant fathers paternity leave. However, any parent (male or female) is entitled to unpaid leave for up to three days to tend to a sick child under six years of age.
Bereavement Leave and Marriage Leave Employees can take leaves to fulfill their commitments. Employees can take leaves for marriage as well as if there is a death in their family. Also, employees can take a leave even if their children are getting married. These leaves can be extended but would be unpaid.
Pension

Once an employee retires from an organization, he starts receiving a regular pension. However, both the employee and the employer have to make a monthly contribution toward the pension fund. The contribution is as follows:

  • The employer will pay 12% of the employee's salary. This amount will cover all health insurance, work injuries, and the amount for pension.
  • 5% of the employee’s salary is deducted toward their pension.
  • If the employee is working in the oil and gas industry, the employer will have to contribute 25% of the employee's pay, given the risk that comes with the industry.

The system of employee health benefits in Iraq is complex. Companies provide several health benefits to their employees, like insurance cover, etc. The cost of all of this forms a part of the total compensation figure given in the employment contract. Make sure that you read the entire document very carefully before signing it.

An EOR like Skuad handles all the policies related to employee entitlements. Skuad also helps employees who might be confused about the employee entitlements. Book a demo with Skuad to know how it can help you navigate Iraq labor laws and employment contracts.

Contractors vs. Full-Time Employees

While the work of a contractor and a full-time employee can be similar, the laws that protect the full-time employees are very different from the few rules that safeguard the interests of the contractors. Full-time employees have an employment contract with an indefinite period. So, they can fight for their rights in a court of law if they are terminated without a reason. On the other hand, for a contractual employee, the contract may be dissolved as soon as the work is over irrespective of the end date mentioned in the contract. These employees won’t have a case to make if this kind of termination happens.

A contractual employee might get into a standard fixed contract for one year for a job in Iraq. The company can easily withdraw this offer. However, the company will have to intimate the employee at least 30 days in advance that he will no longer be a part of the organization. Every employee, be they contractual or full-time, should have a valid written or typed contract. Verbal contracts are not binding in the court of law. Contracts should specify if they are fixed or indefinite. The status of the contract will depend upon the kind of work, period of employment, etc.

As regular full-time employees, contractual employees can also take leave based on the policy of the company. Therefore, read through the documents carefully to ensure that you are safeguarded against injustice.

Hiring In Iraq

If you want to hire employees in Iraq, you can look for local talent to become a valuable resource for your company. You can surf websites like Trabajos.com, Stepstone, or LinkedIn to connect with the right people. After the pandemic kicked in, people are mostly relying on these websites to look for jobs. However, posting jobs on these sites and finding the right talent can become a little challenging.

There are several hiring companies in Iraq providing EOR services and other related services. These EOR companies are experienced in delivering best-in-class solutions for human resources management. Collaborate with a reputed EOR in Iraq for your hiring needs and give your business valuable resources.

Probation & Termination

Probation

In simple terms, probation is a trial period to assess the employee’s performance and behavior. Once the probation period is over, the employee is absorbed as a full-time resource in the organization. Therefore, employees are kept under scrutiny during their probation period.

The standard probationary period in Iraq is up to three months, i.e., it can be a month or two, but not more than three. The duration of the probation period is explicitly mentioned in the contract. Employees must go through the agreement carefully.

Termination of employment in Iraq

Iraq has a very complex system when it comes to the termination of employment. Like any other country, there are several guidelines for termination of employment in Iraq. Therefore, you need to have a comprehensive knowledge of the system and its implications.

Following are the grounds of termination laid down by the Labor Law of Iraq:

  • A mutual agreement between the two parties, i.e., the employer and the employee.
  • Expiration of a fixed contract.
  • Will of the employee.
  • In case the employee becomes incapacitated for more than six months due to an illness.
  • In case of some significant deformities or if the employee becomes more than 75% incapacitated, he will be terminated.
  • The downfall of the company.

Skuad specializes in managing the termination of employees, handling severance pay, etc. Talk to an expert from Skuad today to ensure that the process is carried out without hassle.

EOR Solution

An Employer of Record is the perfect way to access the Iraqi workspace without setting up a subsidiary unit. It has many benefits, including eliminating the need to create a separate entity, opening up time and money to concentrate on other facets of growth plans, and simplifying legal compliance.

With Skuad’s experience, company expansion becomes a cost-saving and quicker process without creating a separate team responsible for all workforce management processes. Although companies may set up an organization to engage their personnel, the management of employees, payroll management, and navigating regulatory obstacles can be time-consuming.

If you cannot choose out of the several employers of record companies in Iraq, book a demo now to know how Skuad solutions can give you a competitive edge. Your company will save a lot of time and effort by subscribing to the services of Skuad. It can help you with tailor-made employment contracts, process compliances, compliance with the legal laws, etc.

You can partner with Skuad if:

  • Your company is looking to hire talented staff and employees from around the globe.
  • If your company is new and has not been appropriately incorporated in Iraq
  • If you have a definite budget in place to work with
  • If you want to try out a specific alternative in Iraq
  • If you need help with payroll, taxation, immigration, recruitment, etc.

Register yourself on the Skuad platform to figure out the best possible course of action for your company's growth.

Types Of Visas In Iraq

Applying for an Iraq work visa is not very complicated. You have to adhere to the Iraq work visa requirements and submit documents like proof of birth, passport, passport-size photographs, etc. As a company, you can also apply for an entry visa on behalf of your employee. The form has to be submitted to the Iraqi embassy of the employee's resident country.

Types of Work Visas

There are two primary kinds of work visas in Iraq:

Types of Visa Explanation
1.Entrepreneur Visa These visas are given to people who want to come to Iraq and remain self-employed. In this case, the person will have to apply for a regular visa then a resident permit granted for a year.
2.Employee Visa This visa is required by foreign nationals who are employed in Iraq. In this case, the employee will have to furnish the employer's letter of sponsorship and copies of the employment contract.

Get in touch with Skuad to understand the requirement of visas and which kind of visa to be taken.

Work Permits

Getting a Work permit in Iraq can be cumbersome. When a company stationed in Iraq hires a foreign national employee, it has to take care of the work permit for its employees. However, Arab employees do not require a work permit in Iraq, unlike non-Arab foreign nationals, who need a work permit. Getting an Iraq work permit without a job offer is extremely difficult. Therefore, it is recommended to look for a job first and then apply for a work permit. You do not require a work permit if you are a citizen of Iraq and are working in a branch of a foreign company. Skuad can help you obtain a work permit in Iraq and handle all the documentation and the paperwork without any hassles. Book a demo now!

Payroll & Taxes In Iraq

Iraq’s taxes include a corporate tax that the companies need to pay after being registered in the country. Several rules and regulations are imposed on payroll management of a company with both Iraqi and foreign nationals as employees. Both the regional and foreign companies have to take care of the Iraq payroll tax rates as the taxes must be paid by all kinds of organizations.

Handling the payroll of multiple employees can be tedious. Your company can go ahead with payroll outsourcing in Iraq to manage all the formalities, paperwork, and management of your company's payroll.

Type of payroll Explanation
Remote Payroll A citizen of Iraq is employed in Iraq by a non-resident company. In this case, companies are forced to opt-in for outsourced services like GEO (Global Employment Organisation), FESCO (Foreign Enterprise Service Company), etc.
Local Payroll Administration The company registers itself in Iraq under any of the forms available out of RO (Regional Office), WFOE (wholly foreign-owned enterprise), or JV (Joint Venture) but gets another company on board to manage its payroll. This can be any company that provides employer of record services. The EOR company will have to abide by all the country's laws, rules, and regulations.
Internal Payroll Multinationals and larger companies who want to control all of their systems might choose to manage payroll internally. They will onboard human resource professionals who will take care of the payroll management of the company.
Fully Outsourced Payroll In this case, an outsourcing company becomes the one-point contact for all the HR-related activities. From onboarding employees to managing the payroll of employees, these companies will take care of everything.

Iraq payroll tax rates

Taxes are an integral part of any organization.

Type Rate
Corporate Income Tax charged at the rate of 15%
Employers Social Security and Statutory Contributions

12% of the employee's income by the employer

5% of the employee’s income by the employee

Iraq follows a flat Income tax rate system where everyone has to pay 15% of their income as tax.

About 312 hours are given to the employees to prepare and pay the taxes.

Employers of Records companies like Skuad can even handle the tax element for companies. They have been in space for quite a while now, and they know the subject's intricacies. Learn more.

Incorporation

There are abundant opportunities for business in Iraq. Once you decide the industry and the business model, you can incorporate a holding company in Iraq. You can scan the environment and business opportunities in Iraq and then set up your business here.

It is not necessary to open a new business. You can even expand your existing business in Iraq. While you are setting up your business in Iraq, you need to consider the following factors:

  1. Business factors such as the industry and the type of the business, trade documents between two countries, etc.
  2. Location of the business as in the city, locality, etc. You can take help from advisors before deciding a location for your business, as the location is a crucial aspect of any business.
  3. Regional languages or the languages are spoken in the country.

Under Companies law 21 of 1997, Foreign nationals can come to Iraq and incorporate a company. You can also register a branch of a foreign company under Regulation no 5 of 1989. Obtaining an authorization certificate from the ministry of trade is essential. You can get in touch with an expert from Skuad who can help you understand the law of the land, etc.

Professional Employer Organization (PEO)

A professional employer organization (PEO) collaborates with medium- and small-sized organizations to provide HR services. A PEO handles various HR services such as recruitment, payroll, training, and other HR tasks. An EOR also provides similar HR services; however, the difference lies in the arrangement or association between the outsourcing company and the business.

A PEO acts as your co-employer, whereas an EOR acts as the legal employer of your employees. The latter assumes all the responsibilities and liabilities of your remote team. You can outsource a specific HR function or end-to-end activities.

Furthermore, EORs allow organizations to expand their workforce without setting up a business entity. It handles payroll management, worker’s compensation, and unemployment claims and reports. It files taxes under its file ID number.

Skuad serves as both Employer of Record as well as a professional employer organization in Iraq. Talk to a Skuad expert today to understand the benefits of the two kinds of services offered by Skuad.

Conclusion

Setting up a new entity or expanding into new economies can be a draining process. Though Iraq presents a plethora of opportunities for business expansion, the employment system in the country is complex, especially with regards to employee benefits, termination, and payroll management. Instead of delving deep down into all the nitty-gritty yourself, collaborate with a trusted EOR that has rich expertise in onboarding and managing employees in compliance with the local laws that govern the HR policies of a company.

Your search for a reputed EOR ends with Skuad, a company with a global presence and the best team to help your company scout the best employees in Iraq. Contact Skuad experts to know more.

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