Building a remote team in Iraq: How an EOR can help

Iraq offers opportunities for companies looking to access local talent, support projects in the country, or expand their presence in the Middle East. But hiring employees in Iraq involves more than finding the right people.

Companies need to consider employment contracts, payroll, tax, social security, working hours and termination requirements. They also need to understand an important distinction: Federal Iraq and the Kurdistan Region operate under different employment frameworks.

For overseas companies without a local entity, an Employer of Record (EOR) can provide the employment infrastructure needed to hire workers locally. For businesses already operating in Iraq, an EOR can also provide additional payroll, compliance, and workforce support as teams grow.

Here is what employers should consider when building a remote team in Iraq in 2026.

Key takeaways

• Federal Iraq and the Kurdistan Region operate under different employment laws, so employers need to establish where each employee will work before hiring.
• Companies should decide whether to use their own local infrastructure or an Employer of Record before building their workforce.
• Employees working remotely from Iraq still require locally appropriate contracts, payroll, tax, social security, and working arrangements.
• Work permits, residency requirements, localisation rules and jurisdiction-specific requirements need to be considered when employing expatriate talent.
• Whether entering Iraq for the first time or expanding an existing operation, strong payroll, HR and compliance processes help businesses grow their workforce sustainably.

What does building a remote team in Iraq mean?

A remote team in Iraq can take several forms.

Employees might work from home while supporting an international business, operate as part of a distributed team across Iraq or work locally while reporting to managers based overseas.

Whatever the arrangement, the employee's physical working location matters.

An employee working remotely from Baghdad, for example, is still working in Iraq. Their employment arrangement, therefore, needs to reflect applicable Iraqi employment, payroll, tax, and social security requirements.

Companies should establish practical expectations around:

• Where employees are permitted to work
• Working hours and availability
• Equipment and business expenses
• Data security and confidentiality
• Health and safety responsibilities
• Performance management
• Travel to offices, client locations or project sites

These arrangements should be documented clearly in the employment contract or supporting policies.

Companies also need to establish which Iraqi employment jurisdiction applies before hiring.

Federal Iraq is primarily governed by Labour Law No. 37 of 2015, while the Kurdistan Region continues to apply Labour Law No. 71 of 1987. This can create differences in areas such as contracts, leave, working hours and termination. 

Building a remote team in Iraq: Opportunities and challenges

Building a remote or distributed workforce can give companies greater flexibility when entering or expanding in Iraq.

What are the opportunities?

One advantage is access to local knowledge and specialist skills.

Companies operating in sectors such as energy, engineering, infrastructure and construction may need people who understand the local market, speak relevant languages and can work effectively with customers, suppliers and other stakeholders in Iraq.

Hiring locally can also reduce reliance on internationally mobile employees for roles that can be performed by Iraqi professionals.

For companies exploring the market, a remote team can provide another benefit: the ability to build local capability gradually.

Rather than immediately establishing a large office and employment infrastructure, a company may begin with a smaller team supporting sales, operations, projects or customers.

Distributed teams can also support projects spread across different locations. Airswift's experience in Iraq, for example, has included sourcing Iraqi and expatriate personnel and supporting payroll, immigration, mobility and contractor care.

What are the challenges?

The biggest challenge is often not remote working itself. It is making sure the employment structure behind the team is appropriate.

Employers may need to navigate:

• Different requirements in Federal Iraq and the Kurdistan Region
• Employment contracts and documentation
• Payroll calculations
• Income tax withholding
• Social security contributions
• Working-time and leave requirements
• Employee termination procedures
• Work permits and residency requirements for foreign nationals
• Local workforce requirements

These considerations become particularly important when a company is hiring its first employee in Iraq or expanding into a part of the country where it does not already have employment infrastructure.

What must employers consider when hiring employees in Iraq?

Employment requirements when hiring in Iraq should be reviewed for each worker rather than applying one global policy across an Iraqi workforce.

Here are some of the main areas employers should consider.

Which employment law applies?

One of the first questions is where the employee will actually work.

Federal Iraq and the Kurdistan Region have separate employment frameworks.

Federal Iraq primarily operates under Labour Law No. 37 of 2015, while the Kurdistan Region continues to apply Labour Law No. 71 of 1987.

That distinction can affect areas including:

• Employment contracts
• Working hours
• Leave entitlements
• Payroll administration
• Termination
• Employment disputes
• Foreign-worker requirements

Companies hiring across both jurisdictions should therefore avoid assuming that a contract or HR policy designed for an employee in Federal Iraq can automatically be used for someone working in the Kurdistan Region.

What should an employment contract include?

A clear employment contract provides the foundation for the working relationship.

Depending on the role and jurisdiction, employers should consider documenting:

• Employer and employee details
• Job title and responsibilities
• Place of work
• Remote-working arrangements
• Start date
• Contract duration
• Salary and allowances
• Working hours
• Leave entitlements
• Probation
• Confidentiality requirements
• Equipment and expenses
• Termination provisions

For remote employees, the place of work deserves particular attention. The contract should make it clear where the employee is expected or permitted to work and whether they may be required to attend an office, client location or project site.

Arabic or bilingual Arabic-English documentation may also be appropriate where employment documents need to be recognised locally.

How do payroll, tax and social security work?

Hiring an employee also creates payroll and statutory obligations.

Employers may need to calculate gross-to-net pay, withhold applicable income tax, administer social security contributions and maintain appropriate payroll records.

Federal Iraq's Workers' Retirement and Social Security Law No. 18 of 2023 introduced significant changes to the social security framework.

Airswift's 2026 internal guidance identifies typical Federal private-sector social security contributions of 12% from the employer and 5% from the employee, although different treatment can apply in certain sectors, including oil and gas.

The position in the Kurdistan Region should be assessed separately.

Because tax and social security rules can change—and calculations may depend on the employee, sector and location—companies should confirm current rates, salary bases and filing requirements before running payroll.

What are the working-time and leave requirements?

Working-time rules are another area where global policies should not simply be copied into an Iraqi employment arrangement.

For Federal Iraq, Airswift's current guidance records a general working limit of eight hours per day and 48 hours per week, with additional requirements around overtime.

It also records a general annual leave entitlement of 21 days and at least 14 weeks of maternity leave. 

Employers should confirm the applicable requirements for employees in the Kurdistan Region separately.

Remote working does not remove these obligations. Companies still need reliable processes for recording working time, approving leave and managing overtime where applicable.

What should employers know about termination?

Ending employment can carry significant compliance risk if the process is not handled correctly.

Before terminating an employee, companies should consider:

• The reason for termination
• Contract type
• Length of service
• Required notice
• Supporting documentation
• Outstanding salary and benefits
• Final payroll calculations
• Applicable local employment law

Federal Iraq and the Kurdistan Region should again be considered separately.

Rather than applying a standard global termination process, employers should review the circumstances of each case before communicating a decision to the employee.

What about foreign workers?

Companies building teams in Iraq may combine Iraqi nationals with expatriate employees.

Foreign nationals generally require the appropriate authorisation to work and reside in Iraq. Requirements can differ between Federal Iraq and the Kurdistan Region, and employers may also need to consider local workforce requirements.

Airswift's 2026 compliance material references Federal Instructions No. 1 of 2026 relating to foreign workers, alongside separate considerations in the Kurdistan Region. 

Because localisation and foreign-worker requirements can depend on the project, sector and jurisdiction, companies should verify the latest position before mobilising international employees.

How can an Employer of Record help companies hire compliantly in Iraq?

An Employer of Record is an organisation that legally employs workers on behalf of another company.

The employee performs their day-to-day role for the client company, while the EOR provides the local employment infrastructure and manages agreed employment responsibilities.

Depending on the arrangement, this can include:

• Preparing locally appropriate employment contracts
• Employee onboarding
• Payroll processing
• Tax administration
• Social security administration
• Statutory benefits
• Leave administration
• Employment records
• Ongoing HR support
• Immigration and work authorisation coordination
• Offboarding and final payroll

Hiring in Iraq without a local entity

For a company making its first hires in Iraq, establishing a legal entity solely to employ a small number of people may not always be the most practical starting point.

An EOR can provide an alternative employment route, allowing the company to build a local team while the EOR manages the agreed employment and payroll responsibilities.

The client still manages the employee's role, objectives and day-to-day work.

Expanding an existing operation

EOR services are not limited to companies entering Iraq for the first time.

A business with an existing Iraqi operation may need additional support when:

• Scaling a project quickly
• Hiring in another Iraqi jurisdiction
• Adding temporary or project-based workforce capacity
• Managing local and expatriate employees
• Supporting payroll and HR teams during rapid growth

In these situations, an EOR can complement existing infrastructure rather than replace it.

When might an EOR be appropriate for your Iraq hiring plans?

There is no single employment model that works for every company.

An EOR may be worth considering if your business:

• Does not currently have an entity in Iraq
• Wants to make a small number of initial hires
• Needs to mobilise a team quickly
• Is entering a new Iraqi jurisdiction
• Needs additional payroll or compliance support
• Is hiring for a defined project
• Wants local support managing employment administration

For companies planning a large, permanent operation, establishing their own entity and internal employment infrastructure may eventually make more sense.

The important step is to compare the options before hiring rather than trying to correct the employment structure afterwards.

Frequently asked questions about hiring a remote team in Iraq

Can a foreign company hire employees in Iraq without setting up a local entity?

Potentially. One option is to use an Employer of Record that provides the local employment infrastructure and legally employs workers on the company's behalf. The appropriate arrangement will depend on the worker's location, role and the company's existing presence in Iraq.

Does Federal Iraqi labor law apply in the Kurdistan Region?

Not necessarily. Federal Iraq primarily operates under Labour Law No. 37 of 2015, while the Kurdistan Region continues to apply Labour Law No. 71 of 1987. Employers should determine the applicable jurisdiction before preparing contracts or payroll arrangements.

Can employees work remotely from home in Iraq?

Remote arrangements are possible, but employers should document the working arrangement clearly. Contracts or policies should address the employee's work location, hours, equipment, expenses, confidentiality, health and safety and any requirement to attend offices or project sites.

Who manages payroll when using an EOR?

Depending on the service agreement, an EOR can typically manage payroll calculations, statutory deductions, social security administration, payslips and payroll records while the client provides information such as approved working hours, allowances and expenses.

Can an EOR support foreign workers in Iraq?

An EOR may be able to coordinate immigration, work authorisation and related mobility processes. However, requirements differ between Federal Iraq and the Kurdistan Region and can depend on the employee, sector and project.

Establish the right employment structure before making the hire

Building a team in Iraq can give companies access to local expertise and provide a flexible way to support projects or expand into the market.

But flexibility should not come at the expense of compliance.

Before hiring, companies should establish where employees will work, which employment framework applies, and who will manage contracts, payroll, tax, social security, and ongoing employment administration.

If you're considering your first hire in Iraq or expanding an existing team, learn how an Employer of Record in Iraq can support your growth.