Hiring in Iraq can give international companies access to experienced engineering, energy, infrastructure, and technical talent. But complying with employment requirements takes more than understanding a single national labour code.
First, employers need to know that Federal Iraq and the Kurdistan Region of Iraq (KRI) operate under different employment frameworks.
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. Employers also need to navigate social security, payroll, immigration, work permits, and workforce localisation requirements.
Companies hiring in Iraq should determine the employee's jurisdiction before drafting contracts or configuring payroll, understand the rules governing Iraqi and foreign workers, and establish a compliant employment structure before making hires.
Federal Iraq and the Kurdistan Region have distinct employment laws, making jurisdiction-specific compliance essential.
Employment contracts, payroll, and HR policies must be tailored to local legal requirements.
Employers must manage tax, social security, and payroll obligations in line with evolving regulations.
Foreign hiring requires careful coordination of work permits, residency, and localisation requirements.
Choosing the right employment model before hiring is key to long-term compliance and workforce success.
Here are a few key employment laws to consider when hiring in Iraq:
One of the easiest mistakes to make is treating Iraq as a single employment jurisdiction.
In Federal Iraq, the Labour Law No. 37 of 2015 framework is supplemented by other legislation and regulations covering areas such as social security, residency, and foreign workers.
The Kurdistan Region operates separately and continues to apply Labour Law No. 71 of 1987. This means employment contracts, leave entitlements, termination procedures, and other HR policies may need to be adapted depending on where an employee works.
The distinction also matters when disputes arise. Federal Iraq and the Kurdistan Region have separate final appellate courts, so employers should not assume that an interpretation or precedent in one jurisdiction will automatically apply in the other.
For companies operating across Baghdad, Basra and the Kurdistan Region, the practical takeaway is simple: build employment processes around the employee's actual jurisdiction rather than creating one generic "Iraq" policy.
Written employment contracts are an important foundation for compliant hiring.
Under Federal Iraq's Labour Law, contracts should clearly establish essential employment terms including:
Contracts may be fixed-term or indefinite. Under Federal Iraqi law, fixed-term arrangements are generally intended for genuinely time-limited work or projects rather than continuously recurring roles.
For international employees, Arabic or bilingual Arabic-English documentation is particularly important because employment and immigration processes may require locally recognised documentation.
Employers should also avoid simply importing a global employment agreement and changing the country name. Clauses covering probation, termination, leave, and working time should be reviewed against the law applying in the employee's location.
Working-time rules should be built into payroll and workforce planning from the beginning.
Federal Iraqi employment law generally provides for an eight-hour working day and a maximum 48-hour working week, although working patterns can vary by industry and operational requirements. Overtime is subject to additional compensation and limits.
Employees are also entitled to statutory leave, including annual and sick leave. Under Federal Iraqi law, annual leave is generally 21 days per year, with enhanced entitlements applying in certain circumstances, including some hazardous work.
Maternity leave under Labour Law No. 37 of 2015 is at least 14 weeks, with additional provisions applying in certain medical circumstances.
The Kurdistan Region has its own rules under Labour Law No. 71 of 1987, so employers operating in both jurisdictions should avoid configuring leave policies solely around Federal Iraqi requirements.
Payroll compliance is another area where seemingly small errors can become expensive.
Under Federal Iraq's Workers' Retirement and Social Security Law No. 18 of 2023, the standard contribution for most private-sector employers is 12% of wages, with employees contributing 5%.
Higher employer contribution rates apply in certain sectors, particularly oil and hydrocarbon-related activities.
Employers also need to account for personal income tax withholding and reporting.
These obligations make payroll more than a monthly payment exercise. Employers need processes for:
Companies operating in the Kurdistan Region should separately confirm the applicable payroll, tax and social insurance requirements rather than assuming Federal Iraqi rules apply unchanged.
Ending employment can be considerably more complicated than hiring someone.
Federal Iraqi labour law restricts the circumstances in which employment can be terminated and establishes procedural requirements around notice and employee entitlements.
The appropriate process can depend on factors including the reason for termination, length of service, and type of employment contract.
Employers should therefore avoid relying on termination clauses copied from another jurisdiction. A contractual right to terminate does not necessarily override statutory employee protections.
The Kurdistan Region again requires separate consideration because Labour Law No. 71 of 1987 applies rather than the Federal 2015 law.
For HR teams, the safest approach is to review the legal basis, documentation, notice, and final-pay calculations before communicating a termination decision.
Hiring an expatriate introduces another compliance layer.
Foreign workers in Federal Iraq require appropriate authorisation to work and reside in the country. Instructions No. 1 of 2026, issued by Iraq's Ministry of Labour and Social Affairs (MOLSA), introduced updated requirements governing the recruitment and employment of foreign workers.
Among other requirements, foreign workers must hold valid work authorisation before beginning employment, while employers may need to demonstrate why foreign expertise is required.
Federal Iraq has pursued policies designed to increase Iraqi participation in the private-sector workforce. However, employers should obtain current advice before setting workforce ratios because recent rules require careful interpretation. A 2024 Council of Ministers measure promoted an 80% Iraqi workforce requirement, while Instructions No. 1 of 2026 state that foreign workers should not exceed 50% of workers on a project.
The interaction between these requirements should be verified with current MOLSA guidance before hiring decisions are made.
The Kurdistan Region has separate rules. Recent KRI regulations reinforce a 75% local workforce requirement, effectively limiting foreign employees to 25% in relevant circumstances. Employers hiring foreign workers may also need to advertise roles locally before demonstrating that suitable local talent is unavailable.
Understanding the law is one thing. Turning it into a workable hiring process is another.
A contract suitable for an employee in Basra may not be appropriate for someone working in Erbil.
This becomes particularly challenging for regional HR teams trying to standardise policies across multiple locations.
International hiring can involve several interconnected processes, including work authorisation, residency, medical requirements, and government approvals.
In the Kurdistan Region, foreign nationals now require a work permit in addition to relevant residency documentation, and health insurance requirements have also been introduced.
For energy and infrastructure projects, mobilisation can become more complex still because workers may require additional site or security clearances.
The challenge is often not one individual requirement, but coordinating every requirement in the correct sequence.
Iraq's employment environment continues to evolve.
The 2023 social security reform, workforce localisation measures, and 2026 foreign-worker instructions illustrate how quickly compliance assumptions can become outdated.
Employers, therefore, need a process for monitoring regulatory developments rather than treating an employment guide or payroll configuration as permanently accurate.
Some projects require specialist technical expertise that may not immediately be available locally.
Successful workforce planning involves more than meeting a percentage target. Employers may need to combine local recruitment with training, succession planning, and carefully justified expatriate hiring.
Global HR systems are not always designed around local Iraqi requirements.
Arabic documentation, statutory contributions, tax calculations, and jurisdiction-specific employment terms can create additional administrative work.
For companies hiring only a small number of employees, building an entire local HR, payroll, and compliance infrastructure may be disproportionate to the size of the workforce.
A company creates one Iraqi employment contract and uses it everywhere.
The problem is that Federal Iraq and the Kurdistan Region operate under different labour laws.
How to avoid it: Determine the employee's jurisdiction first, then configure contracts, leave, payroll and termination processes accordingly.
Finding the right candidate can create pressure to move quickly, particularly for project-critical roles.
But making an unconditional offer before confirming how the person will legally be employed and, where relevant, sponsored, can create delays later.
How to avoid it: Decide whether the worker will be employed through an established local entity, an appropriately licensed local employment structure, or an Employer of Record before finalising the hire.
An EOR can be particularly useful when a company needs to employ a small team or enter the market without immediately establishing its own employment infrastructure.
Localisation should not be addressed after expatriate hiring decisions have already been made.
Federal Iraq and the Kurdistan Region both have policies designed to prioritise local employment, although the applicable requirements differ.
How to avoid it: Build Iraqi national recruitment into workforce planning from the beginning and document why expatriate expertise is required where local skills are unavailable.
Social security and employment requirements have changed in recent years.
A payroll model based on an old Iraq hiring guide can therefore produce incorrect employer costs or deductions.
How to avoid it: Validate tax, social security and payroll rules before implementation and establish a process for reviewing them whenever regulations change.
Global consistency is useful, but employment law remains local.
Policies covering probation, working hours, leave, disciplinary procedures, and termination may conflict with mandatory Iraqi requirements if they are copied directly from another country.
How to avoid it: Maintain global HR principles while creating jurisdiction-specific schedules or policies for Federal Iraq and the Kurdistan Region.
Private-sector employment in Federal Iraq is primarily governed by Labour Law No. 37 of 2015, alongside the Workers' Retirement and Social Security Law No. 18 of 2023. The Kurdistan Region continues to apply Labour Law No. 71 of 1987, so employers should distinguish between the two jurisdictions.
Companies need an appropriate local employment structure to employ workers compliantly. Depending on their circumstances, this may involve establishing an Iraqi entity or using an appropriately licensed local employment partner or Employer of Record.
Yes, but foreign workers require appropriate work and residency authorisation. Employers must also consider workforce localisation requirements and demonstrate compliance with the rules applying in Federal Iraq or the Kurdistan Region.
Under Federal Iraq's Workers' Retirement and Social Security Law No. 18 of 2023, the standard private-sector contribution is generally 12% for employers and 5% for employees, although different requirements can apply to certain sectors, including oil and gas.
Hiring in Iraq starts with choosing the right employment model. Whether you're expanding into Federal Iraq, the Kurdistan Region or both, understanding the legal, payroll, immigration, and workforce localisation requirements is essential before making your first hire.
Airswift has supported workforce requirements in Iraq since 2010, with local operations in Baghdad and Basra. We can support areas such as employment contracts, payroll, tax administration, immigration, and ongoing employment compliance, allowing companies to choose an employment model that fits their expansion plans rather than building infrastructure before they need it.
Speak with our EOR team to explore the employment solution that best fits your workforce plans.