Every figure in this guide is based on Iraq Labour Law No. 37 of 2015 and Income Tax Law No. 113 of 1982 (as amended), cross-verified against PwC, Deloitte, ILO, and Al Tamimi & Company publications.
Leaves & Vacations
Annual Leave (Article 75)
- 20 working days of paid annual leave per year
- Federal Iraq mandates 21 days; Kurdistan Region mandates 20 days
Tenure Increase (Article 78)
For every 5 years of continuous service, annual leave increases by 2 additional days:
- 0–4 years of service: 20 days
- 5–9 years: 22 days
- 10–14 years: 24 days
- 15–19 years: 26 days
- 20–24 years: 28 days
- 25+ years: 30 days
Sick Leave (Article 80)
- 30 days at full pay per year
- Medical certificate required
Maternity Leave (Article 87)
- 98 days (14 weeks) at full pay
- Aligned with ILO Convention No. 183 recommendations
Bereavement Leave
- 3 days of paid leave for the death of an immediate family member
Hajj Leave
- Unpaid leave for performing the Hajj pilgrimage, once per employee. Duration per company policy.
- Granted once during the employee's tenure with the employer
- Available to Muslim employees
Probation Period (Article 36)
- Maximum 3 months
- Either party may terminate with 7 days' written notice during probation
Overtime
Standard Working Hours (Article 65)
- 8 hours per day, 48 hours per week
- At least one rest day per week (typically Friday)
Overtime Rates
- Regular weekday overtime: 150% of normal hourly wage (Article 69)
- Weekend overtime: 200% of normal hourly wage (Article 70)
- Public holiday overtime: 200% of normal hourly wage (Article 70)
Overtime Limits (Article 69)
- Maximum 4 hours of overtime per day
- Maximum 120 hours of overtime per year
- Overtime must be compensated financially; it cannot be replaced with time off unless the employee agrees
Salary Calculation
Social Security Contributions (Law No. 18 of 2023)
- Employee contribution: 5% of gross salary, capped at 1,750,000 IQD per month
- Employer contribution (non-oil/gas sectors): 12% of gross salary
- Employer contribution (oil & gas sector): 25% of gross salary
Income Tax Exemptions
- Single employee: 2,500,000 IQD per year (Personal Exemption only)
- Married employee: 4,500,000 IQD per year (2,500,000 Personal + 2,000,000 Family Exemption)
Progressive Tax Brackets (Law No. 113 of 1982, as amended)
After deducting social security and applicable exemptions from annual income:
- First 250,000 IQD: 3%
- Next 250,000 IQD (up to 500,000): 5%
- Next 500,000 IQD (up to 1,000,000): 10%
- Above 1,000,000 IQD: 15%
Monthly Payroll Calculation Steps
- Start with gross monthly salary
- Deduct Social Security: 5% of gross, capped at 1,750,000 IQD
- Annualize the remaining amount (multiply by 12)
- Subtract the applicable exemption: 2,500,000 IQD for single employees or 4,500,000 IQD for married employees
- Apply the progressive tax brackets to the taxable amount
- Divide the annual tax by 12 to get the monthly income tax deduction
- Net salary = Gross salary − Social Security − Monthly Income Tax
Termination & End of Service
- Minimum 30 days' written notice for termination by either party
- End of Service Gratuity: 2 weeks' pay for each year of service
- Employees dismissed for gross misconduct may forfeit their end of service benefits
Compliance Checklist
- Annual leave configured at 20 working days with +2 days every 5 years of tenure
- Sick leave set at 30 days full pay per year
- Maternity leave set at 98 days (14 weeks) full pay
- Overtime capped at 4 hours/day and 120 hours/year
- Overtime rates applied: 150% weekday, 200% weekend and holiday
- Social security deducted at 5% (employee) with 1,750,000 IQD monthly cap
- Tax exemptions configured: 2,500,000 IQD for single / 4,500,000 IQD for married
- Progressive tax brackets applied: 3%, 5%, 10%, 15%
- 30-day written notice period enforced for terminations
- End of service gratuity calculated at 2 weeks' pay per year of service
Managing compliance manually across tenure-based leave entitlements, marital status exemptions, and progressive tax brackets is time-consuming and error-prone. Modern HR platforms can automate leave accrual, salary calculation, and overtime tracking to keep your organization compliant without the spreadsheet overhead.