Employer of Record in Iraq

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Iraq if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Iraq below, to avoid any compliance issues.

Employment Contract Requirements

In Iraq, employment contracts must be in Arabic. However, in autonomous areas of Kurdistan, contracts can be drafted in Kurdish. It is common practice for contracts to include:

• Identification of both parties
• Commencement date
• Job duties and responsibilities
• Location of job

Onboarding Process

We can help you get a new employee started in Iraq quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Iraq

Iraqi Employers can hire employees on probation for up to three months.

In Iraq, regular working hours are 48 hours per week. Employees can work eight hours a day for six days each week. A minimum meal interval of 30 minutes must be observed by employees who work more than 5 hours in a day. In typical working hours, Monday through Friday, the hours are 8:00 AM to 5:00 PM.

Iraqi labor law limits overtime to no more than 4 hours per day and 12 hours per week under normal circumstances. This means the absolute maximum working time should not exceed 60 hours in any given week. Employers in Iraq must compensate overtime work at a premium rate. The standard overtime rate is 150% of the normal hourly wage (time-and-a-half) for additional hours worked on regular workdays. This rate increases to 200% (double time) for work performed on weekly rest days and public holidays.

Setting up a local legal entity in Iraq can be time-consuming and expensive. It often involves complex paperwork, local representation, banking, registrations, and ongoing tax filings, which isn't cost-effective if you're simply looking to hire a few employees or test the market. An Employer of Record removes these barriers entirely. Instead of spending months establishing a presence, an EOR lets you hire and onboard employees within days while staying fully compliant.

This enables faster market entry and greater agility. Whether you’re launching a pilot program, supporting a regional client, or adding specialized talent, you don't need to commit to long-term infrastructure to explore new business opportunities. The EOR handles local employment logistics while you retain day-to-day oversight of your hires. This model lets you scale up or down based on business needs, giving you more flexibility with less overhead and risk.

Fiscal Year in Iraq

January 1st - December 31st is the 12-month accounting period that businesses in Iraq use for financial and tax reporting purposes.

Payroll Cycle in Iraq

The payroll cycle in Iraq is usually Monthly, with employees being paid by the last day of the month.

Minimum Wage in Iraq

As of January 1, 2025, Iraq does not have a nationwide minimum wage. Wages are determined by individual employers and can vary significantly depending on the industry and region.

Bonus Payments in Iraq

There is no mandatory law for a 13th-month salary payment in Iraq.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 12% on top of the employee salary in Iraq.

Employee Payroll Tax Contributions

In Iraq, the typical estimation for employee payroll contributions cost is around 5%.

Individual Income Tax Contributions

Iraq operates a progressive income tax rate, ranging from 3% to 15%. Individual income tax is calculated based on annual income brackets.

Pension in Iraq

Pension in Iraq is funded by social security contributions. The pension benefits are calculated based on the employees salary history and years of service. The system provides various types of benefits, including retirement pensions, disability pensions, and survivor pensions for dependents.

One of the biggest risks in global hiring is payroll mismanagement. In Iraq, even small errors in tax reporting or social contribution payments can trigger audits, fines, or reputational damage. For companies without in-country expertise, the risk isn’t worth taking. An Employer of Record removes this burden by owning the legal responsibility of payroll, executing every step with built-in compliance.

Key Ways an EOR Supports Payroll in Iraq:

• Mitigates Compliance Risk: Oversees all legal obligations for payroll, tax filings, and recordkeeping.
• Local Regulatory Expertise: Interprets and applies Iraq’s latest labor and tax changes in real time.
• Free Processing: Reduces mistakes in wage calculations and reporting through built
• Payroll Record Management: Maintains compliant payroll audit trails and documentation for each employee.

In Iraq, work permits and visas are essential for employers hiring foreign workers. The process involves securing labor approval, gathering required documents such as valid passports and employment contracts, and meeting health and security clearances. Employers must apply for the appropriate visa type, such as the Work Visa for long-term employment, the Temporary Work Visa for short-term projects, or the Business Visa for non-employment-related activities. Once the foreign employee arrives in Iraq, the employer must follow up with the Ministry of Labour within seven days to complete the work permit process to ensure legal compliance. Work permits are typically valid for one year and must be renewed at least one month before expiration.

Mandatory Leave Entitlement in Iraq

The annual leave entitlement in Iraq is 21 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Iraq

There are 14 recognised national holidays in Iraq:

Paid Time Off in Iraq

Employees qualify for annual leave after completing a full year of employment. The annual holiday entitlement starts at 21 days per year and grows by two days for every five years of service. Employees who are engaged in dangerous or hazardous work are eligible for 30 days of paid vacation annually, which is more than the standard allowance.

Maternity Leave In Iraq

Eligible employees in Iraq are entitled to at least 14 weeks of paid maternity leave annually, with key details as follows:

• Pre-birth leave: Up to 8 weeks of paid leave can be taken before the due date with a medical certificate.
• Post-birth leave: At least 6 weeks of leave must be taken after childbirth.
• Extended maternity leave: Maternity leave can extend up to 9 months due to complicated childbirth, multiple births, or pre/postnatal complications, as determined by medical authorities.
• Unpaid leave: An employee may take up to one year of unpaid maternity leave to care for a child under one year old, with the employer's approval.

Paternity Leave In Iraq

The Iraqi Labor Law does not mandate paternity leave for fathers.

Sick Leave In Iraq

Employees receive 30 days of sick leave per year of service, capped at 180 days covered by insurance. Sick leave is paid as follows:

• The first 30 days are fully paid and funded by the employer.
• Should the employee fail to recover within 30 days, the retirement and social security fund will reimburse the employer for wages.

Parental Leave In Iraq

Iraq provides specific maternity leave entitlements but does not include provisions for shared parental leave or paternity leave.

In Iraq, benefits play a central role in attracting and retaining top talent. Employees often expect more than just a paycheck – they're looking for stability, healthcare coverage, pension plans, and other perks that show a company is invested in their well-being. If you're not familiar with what’s standard or required, you risk falling short. An Employer of Record helps bridge that gap by administering a locally competitive benefits package that meets both legal requirements and employee expectations.

An EOR doesn't just check boxes, they make sure your employees receive benefits that are timely, properly communicated, and well-managed from the moment they’re onboarded. From managing healthcare contributions to adjusting for regional differences in leave or bonus entitlements, an EOR acts as both a legal and operational partner. The result is a better employee experience, less administrative burden on your internal team, and greater confidence that your offer is aligned with what top candidates in Iraq actually want and need.

Termination Process in Iraq

In Iraq, employment can be terminated by both the employer and the employee. The employer can terminate based on substantial grounds or must pay severance if termination occurs without cause.

Notice Period in Iraq

Notice periods in Iraq vary based on length of service: 30 days for employees with less than 5 years of service, 60 days for 5-10 years of service, and 90 days for 10+ years of service (unless there is a justified cause of immediate dismissal). For termination during probation, at least seven days notice must be provided. Failing to do so would result in the employer compensating the employee with wages equivalent to the notice period.

Severance in Iraq

In Iraq, severance pay is typically two weeks' salary for each year of service. An employee is entitled to this end-of-service gratuity, except in specific cases such as:

• Employee sentenced to over one-year imprisonment by court judgment
• Employees using false identities or forged documents
• Employee breaching contractual obligations
• An employee making a severe error causing significant damage to work, workers, or production