If you are interested in hiring employees in Iraq, be it Locals or Expatriates, understanding the rules and regulations surrounding local recruitment in Iraq is very important. The Labour Law No. 37 (2015) and the recent update on foreign employment, local recruitment, and employment regulations will determine the ways in which an employer must manage the contracts, work permits, and recruitment of employees, where the contract of employment is deemed to be local or not.
Overview of Iraq Labour Laws for Hiring
Labour law in Iraq is mainly determined by Labour Law No. 37 of 2015. This law deals with the activities of the private sector, which includes both local and foreign workers in Iraq. The law provides the very basics in terms of contracts, working hours, wages, termination, leave, and dispute resolution, and it is enforced by labour courts that are present in every governorate.
The law is valid for all regions of federal Iraq; however, there are distinctive provisions for foreign employees and local quotas in the Kurdistan Region of Iraq (KRI). Thus, employers should check which jurisdiction applies to their employment before proceeding.
Local Hiring Priorities and Quotas
In recent years, Iraq has increased its efforts to hire locally. Iraq’s Ministry of Labour (MOL) has implemented and is enforcing the 80/20 Rule, which requires that an oil and gas company hire a minimum of 80% Iraqi nationals, with 20% of their workforce consisting of Foreign Nationals.
In the Kurdistan Region, a similar policy states that a minimum of 75% of the companies’ workforces must consist of local employees and that any company that hires Foreign Nationals must prove they have attempted to recruit local employees.
Because of this requirement, companies should:
- Design their workforce models around hiring predominantly Iraqi nationals.
- Clearly justify why an expat position is specialised and cannot be filled by a local employee.
- Be prepared to have their staff make-up reviewed by the government when applying for or renewing work permits and/or work licensing.
Employment Contracts and Core Hiring Rules
According to Law No. 37 of 2015, employment contracts can be either written or verbal; however, it is highly recommended that the contracts be written to provide proper documentation of the employment agreement, particularly for foreign workers. As a result, it is common practice to have written contracts in most cases. The key points to consider about written contracts include:
- Written contracts must contain the following information: – Job title. – Place of employment. – Salary amount. – Working hours. – Period of probation (if applicable). – Period of time (fixed-term or indefinite).
- The length of the period subject to probation must be stated in writing and must not exceed a reasonable time for a probation period.
- The legislation also prohibits Discrimination and establishes several protections, such as Maternity Leave (14 weeks on full pay), etc., etc., and also provides for Maternity Leave, etc.
When you are hiring employees in Iraq, all offer letters and written contracts should meet the Iraqi labour laws, not just your own country’s written templates.
Rules for Hiring Foreign (Expat) Workers
Iraqi recruitment for expatriate personnel is strictly governed by law. Employers are:
- Not able to employ foreign nationals unless they have received a valid work permit from the Ministry of Labour and Social Affairs (MOLSA).
- Required to submit a formal application form for every foreign employee they intend to hire and pay the requisite registration and work permit fees.
- Required to demonstrate that there is a true need for a foreign employee and that no suitable local employee could be found, particularly under the new quota enforcement that is currently in effect.
Work permits are issued to the specific employer and are usually limited to specific sectors, while foreign nationals are subject to Iraqi income tax regulations regarding their earnings.
Practical Recruitment Rules in Iraq
Companies should establish procedures that have the following elements from a “recruitment Iraq rules” standpoint:
- Pre-recruitment Verification: Verify the applicant’s IDs, credentials, and professional licenses. Foreign workers must have a certified work history from their home country (some may occasionally require consular endorsement of this certification).
- Bilingual Job Offer and Contract: Most employers in Iraq provide both Arabic and English versions of the Job Description (JD) to avoid misunderstandings. If the JD is ever under contention, the Arabic version is typically given precedence.
- Social Security and Registration: All Iraqi workers must be registered with the appropriate social security agency; failure to register may result in sanctions.
- Working Hours and Pay Structure: The Labour Law outlines standard working time, overtime, rest periods, and minimum wage requirements for all workers in Iraq.
Due to the intricate nature of the recruitment process in Iraq, as well as the ever-changing requirements for enforcing quotas, many foreign companies are enlisting the assistance of local recruiters or hiring organisations to ensure compliance with recruitment laws in Iraq.
Why Many Employers Use Local HR/Outsourcing Partners
Under the conditions set by Iraq’s regulations—Labour Law No. 37, local hiring quotas, and complicated work permit processes—managing all of these functions independently is challenging and risky for many organisations (companies). For example, potential pain points companies face include:
- The time it takes to obtain a Work Permit.
- Penalties for not adhering to the local-to-expat employee ratio; and
- Contractual language that is inconsistent with Iraqi laws and therefore unenforceable.
Because of these obstacles, an increasing number of companies are participating in HR outsourcing, using Employer of Record (EOR) services, or utilising staffing partners to manage permits, payroll, and compliance with local laws while allowing them to focus on their core business.
How 6 Pence Can Support Hiring in Iraq
For businesses that are just beginning to enter the Iraq market, it can be quite complex to understand Iraq recruiting laws, as they relate to hiring foreign workers and how they can support these “foreign nationals” by helping them through the processes required to legally recruit a worker in Iraq. 6 Pence Recruitment is a regionally based staffing and workforce solutions business that can provide you the following services regarding the recruitment of Iraqi nationals:
- Supplying you with a supporting document for the compliant recruitment of Iraqi Nationals in compliance with the Regional Hiring Quotas (80/20 Rules).
- Coordination of all the work permit and registration processes for the approved foreign specialists.
- Delivery of locally compliant employment contracts and payroll/HR administration for your new hires to ensure full compliance with Labour Law No. 37 of 2015 and all applicable regional regulations.
- Acting as a single point of contact for your team concerning questions and issues related to your employees, so they can continue to focus on delivering value to their customers through the continued growth of their company.
Having the proper partner will enable you to manage the requirement of understanding and complying with Iraq’s local labour laws to support the expansion of your business into Iraq, rather than act as a hindrance to your expansion plans.
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