In This Guide
How to Hire Employees In Iraq
Hiring in Iraq presents unique challenges due to security concerns, a complex regulatory environment, and frequent changes in labor laws. However, with growing opportunities in oil, infrastructure, telecom, and tech, more international companies are entering the Iraqi market. Whether you’re testing the market or building a local team, it’s essential to stay compliant. SOURCEitHR’s Employer of Record (EOR) model can help you hire in Iraq quickly and legally—without setting up a local entity..
Companies can hire employees in Iraq in three main ways:
- Establishing a Local Entity
Ideal for long-term operations, this approach involves registering with Iraq’s Ministry of Trade, opening local bank accounts, securing tax IDs, and complying with labor and visa laws. It’s time-intensive and resource-heavy. - Partnering with an Employer of Record (EOR)
An EOR like SOURCEitHR becomes the legal employer of your local workforce, managing all HR, payroll, tax, visa, and compliance obligations. It enables you to hire in Iraq without opening a local company. - Engaging Independent Contractors
Contractors offer flexibility but come with legal risks, especially in Iraq’s regulated environment. Misclassification can lead to fines and back payments if the contractor is deemed an employee.
Using an Employer of Record in Iraq
An EOR in Iraq handles full legal employment responsibilities while you retain operational oversight of your hires. It supports you with:
- Employment Contracts
Legally compliant bilingual contracts (Arabic + English) that meet Iraq’s Labor Law No. 71 of 1987, as amended. - Work Permits & Visas
For expatriates, the EOR manages visa applications, work permits, and security clearances in coordination with the Ministry of Labor and Social Affairs (MoLSA) and the Ministry of Interior. - Payroll & Tax
Payroll processing includes tax withholding, social security, and employee entitlements. EORs ensure compliance with Iraq’s complex tax system and reporting requirements. - Benefits Administration
Manages sick leave, paid time off, maternity leave, and social contributions for Iraqi employees.
Good To Know
Labor Laws & Employment Contracts in Iraq
Contract Requirements
- Must be in writing and in Arabic (or bilingual Arabic/English)
- Must include:
- Name and ID of both parties
- Job title and location
- Salary and payment terms
- Working hours and leave
- Notice and termination rules
Probation Period
- Maximum of 3 months
- Termination during probation requires reasonable cause
Working Hours & Overtime
- Working hours: 8 hours/day or 48 hours/week
- Overtime pay:
- 150% of hourly wage on weekdays
- 200% on rest days and public holidays
- Friday is the weekly rest day
Payroll, Taxes & Social Security in Iraq
Payroll Cycle
- Salaries are typically paid monthly through bank transfer or cash
- Salary payments must be documented for labor inspection purposes
Minimum Wage
- As of 2025, the minimum wage is:
- IQD 350,000/month (approx. USD 240)
- Higher wages are expected in oil and private sector contracts
Social Insurance Contributions
| Contribution Type | Employer Share | Employee Share |
|---|---|---|
| Social Security (Pension + Insurance) | 12% | 5% |
Contributions go to Iraq’s Public Pension and Social Security Authority (PPSSA)
Income Tax (Payroll Tax)
| Income Level (Monthly IQD) | Tax Rate |
| Up to 1,000,000 | 3% |
| 1,000,001 – 2,000,000 | 5% |
| 2,000,001 – 4,000,000 | 10% |
| Above 4,000,000 | 15% |
- The employer is responsible for withholding and remitting taxes
- Expatriates are subject to the same tax rates
Leave & Benefits in Iraq
Annual Leave
- 20 working days of paid leave after one year of service
- Increases to 30 days after 5 years of continuous service
Public Holidays
Iraq observes 10–15 public holidays annually, including:
- New Year’s Day (January 1)
- Army Day
- Eid Al-Fitr (3–4 days)
- Eid Al-Adha (4 days)
- Ashura
- National Day (October 3)
- Religious holidays may vary by region
Sick Leave
- 30 days of paid sick leave/year
- Can be extended with half pay for serious illness, upon medical certification
Maternity Leave
- 72 days of paid leave (100% pay)
- Employer pays for maternity leave and may not terminate the employee during this period
Paternity Leave
- No statutory paternity leave, though private employers may provide 3–5 days
Hajj Leave
- Unpaid leave may be granted once during employment
Termination & End-of-Service Benefits
Notice Period
- 30 days required unless termination is for gross misconduct
- Shorter notice may apply during probation
Severance & End-of-Service
- Employees are entitled to gratuity if terminated without cause
- Compensation is usually calculated based on:
- Years of service
- Type of contract
- Reason for termination
- Iraqi labor law favors employee protection, especially in unjustified terminations
Why Use SOURCEitHR's EOR in Iraq?
- Legal employer of record with deep understanding of Federal and Kurdistan Region labor laws
- Full management of payroll, social insurance, and taxation
- Visa and work permit sponsorship for expatriates
- Fast and compliant onboarding within 7–14 working days
- Transparent cost structure and ongoing support
DISCLAIMER
This content is prepared for informational purposes only and is subject to change. It does not constitute legal or tax advice. Please consult a local legal advisor or the SOURCEitHR team before making any employment-related decisions.