A Legal Overview of the Labor Code of Federal Iraq
Thomas W. Donovan
As the security situation in Iraq has eased, the amount of interest in international direct investment has greatly increased. One consistent reluctance many international corporations have expressed is the desire not to be subject to the general laws in force regulating domestic employment relationships. With its socialist background, Iraqi Labor Law is generally highly protective of employees, creates difficulty in terminating, and the Iraqi Labor office takes a very regulated and aggressive approach in its enforcement.
In Federal Iraq (defined as the Governorates not associated with the Kurdistan Regional Government), all employment relationships in Iraq are governed by the Iraqi Labor Law, No. 71 of 1987 (“Iraqi Labor Law”). The Iraqi Law is very broad and defines an employee as any person who performs work in exchange for wages, and who, in performing his/her work, is subject to the administration and supervision of the employer. An employment contract is any agreement between an employer and an employee whereby the employee agrees to perform a certain work for the employer, and the employer agrees to pay the employee a certain wage for that work (Article 29). The law applies to any employer employing so much as a single employee.
The Labor Office and its various circuits in each governorate regulate employment relationships. When hiring Iraqi employees, the employer must inform the Labor Office of the employment, by copy of the employment contract, within 10 days of the employment (Article 17). When hiring non-Iraqi Arab employees, this period is extended to 30 days (Article 18).
The Law prohibits the employment of foreign (defined as non-Iraqi and non-Arab) workers without obtaining a work permit prior to the employment, and in accordance with the instructions and decrees issued by the Ministry of Labor and Social Affairs.
Form of Contract
Further to the definition of the employment contract stated above, the law requires that the employment contract follow a certain form. Employment contracts must be written, and must specify in them the type of work to be performed, and the wages to be paid. In the event the agreement is not documented in writing, the burden of proof falls on the employee to prove its existence and its terms and conditions (Article 30).
Employers may test their employees for a period not to exceed three months. During this time they may unilaterally terminate the employment relationship without cause or notice.
Terms of Contracts
Employment contracts may be of two kinds: limited period contracts, or unlimited period contracts. Limited period contracts are defined by Article 32(2) as contracts for work that is, by its nature, limited in time, or seasonal. Article 32(1) prohibits an employer from defining, as a limited period contract, any contract for work that is, by its nature, unlimited in time. Unlimited period contracts may be difficult to terminate and hence it may be advisable to employ people on limited period contracts within a “project” context.
Article 34 of the law establishes the obligations of the employer. These include enabling the employee to perform his work by providing him with the necessary tools and conditions to do so; payment of the employee’s wages according to the law; establishing the necessary health and safety conditions, including the necessary safety precautions, to enable the employee to perform the work; provide the employee with the opportunities and tools to improve him/herself both technically and culturally; returning to the employee, upon conclusion of the work, any documents taken from him/her during the hiring process; providing the employee with a certificate of experience; providing the employee with a no-claims certificate at the end of the employees employment, certifying that the employer holds no claims against the employee.
Employers are prohibited from transferring, or firing, any employee who holds syndicate (union) responsibilities, without the prior approval of the syndicate involved.
The obligations on the employer noted above are balanced by obligations on the employee, specified in Article 35 of the law, and which are as follows:
• The employee may not reveal any secrets of which s/he becomes aware by virtue of his/her employment;
• The employee may not keep any documents or records belonging to the employer, outside the place of work;
• The employee may not work for another employer during the specified work times;
The employee may not use the employers work tools which s/he has not be authorized to use by the employer;
• The employee may not present for work while drunk or under the influence of narcotics;
• The employee may not be armed at work, unless the nature of his/her work requires it;
• The employee may not associate with agents or contractors working with the employer, outside the scope of his/her work requiring such association;
• The employee may no engage in collective organization within the work place without the permission of the employer or the relevant syndicate (union).
As stated earlier, the basis for the labor law in Iraq lies in socialism. The Labor Law is thus predisposed to continued employment, making it difficult for employers to terminate an employment relationship. According to Article 36, an employment agreement may only be terminated in one of the following ways:
1. by written, mutual agreement between the parties;
2. by the running of the period of the limited period contract;
3. if the employee wishes to terminate the unlimited period contract, on condition that the employee provides the employer with at least thirty days notice (note that the employee has the right to terminate the contract unilaterally without notice under certain strict conditions detailed in Article 37 of the Law);
4. if the employee is taken ill for a period of more than 6 months, as documented by medical certificates;
5. if the employee is injured and rendered disabled by more than 75%, as documented by medical certificates;
6. if the employment conditions in the project render the employee redundant, on condition that notice is given to the Ministry of Labor and Social Affairs.
The employer may close the project providing employment provided that notice is given to the Ministry of Labor and Social Affairs.
The employee’s wages are his/her only compensation arising from the employment relationship. The parties are free to negotiate the fair wage for the work, and the method of payment, on condition that the wages should be paid at least once per month, and should, in no case, be less than the minimum wage for unskilled labor, as established by the Minister of Labor and Social Affairs. Benefits provided to the employee may be considered part of the wages, and therefore a right that may not be taken away, if the law, the employment contract, or the internal regulations of the employer, so provide, or if the employee has received the benefits for a continuous period of three years.
The law provides for a working day of a maximum of 8 hours, and a working week of a maximum of six days. The number of hours to be worked and the length of the week may be shortened in cases of hard labor. The law requires that employees be allowed a break of not less than one half hour, and not more than one hour during the working day. Employees are not required to work more than 5 hours continuously without a break. In the event the employee works two shifts during the day, the break between the two shifts must not be less than 1 hour and not more than 4 hours. In working two shifts, the employee may not be required to remain at the place of work for more than twelve hours during the day. In certain limited conditions, the number of hours to be worked may be extended, particularly in the case of emergencies or force majeure. (Articles 55 to 63).
When an employee is asked to work longer hours, s/he shall be entitled to overtime as determined by the law in Article 63. Similarly, in the case of work stoppages by the employer due to emergencies or force majeure, the employee is entitled to receive their full pay up to a maximum period of 60 days.
Vacations and Sick Leave
Employees are entitled to an annual paid vacation of 20 days per year worked. For employees working in difficult conditions, or performing work that is hazardous to the health, the entitlement is for 30 days per year worked. Employees serving more than 5 years with the same employer are entitled to an additional two days for every five years of seniority they obtain with the same employer. Employees are not permitted to work for another employer during their vacation. The employer may control when the employees take their vacation, by specifying so in the internal regulations of the company.
Employees are entitled to up to 30 days per year paid sick leave. Thereafter the employee may take up to a total of 180 days sick leave, but such time will be paid by the social insurance, and not by the employer. Sick leave is afforded when documented by medical evidence provided by a doctor.
Employees are obliged to strictly and completely follow the provisions of the law, and any decrees or instructions issued pursuant thereto, the provisions of their employment contract (whether individual or collective), and the internal regulations of the place of employment. The employee must perform their duties under such provisions in good faith and with due loyalty. The employee has a duty to preserve the employer’s money entrusted to him/her, and to maintain any tools or machines under his/her control for the purpose of performing his/her work. In doing so, the employee is held to a standard relative to his/her technical skills and the conditions of the work. An employee may be held judicially accountable for any damage s/he may cause by negligence or mistake.
The Minister of Labor and Social Affairs has issued model code of conduct provisions to guide employers. Any employer employing more than 10 employees must have a code of conduct, which must highlight the violations and the disciplinary action to be taken for each violation. When not using the model code of conduct provided by the Ministry, the employer must present their code to the Labor Office in their governorate for approval. The Labor Office may modify and amend the code presented by the employer. If no response is received from the Labor Office within thirty days of presentation of the code of conduct, the code is deemed to be accepted and may be implemented. Article 126 of the law specifies the disciplinary actions to be taken in order of degree, which include warnings, docking of pay, delay in receipt of annual raise, forgoing the annual raise, and termination.
Article 127 specifies that the penalty of termination may not be imposed except in the following cases:
1. If the employee commits gross negligence which causes material damage, on condition that the employer informs the Labor Office within 24 hours of the event;
2. If the employee discloses the employer’s secrets resulting in damage to the employer;
3. If the employee violates the instructions of the employer with regard to occupational safety more than once, on condition that these instructions be in writing and clearly posted;
4. If the employee is found, more than once, in a state of intoxication or under narcotic influence, while at work;
5. If the employee behaves, more than once, in a manner unbecoming to the status of the employer and the work;
6. If the employee assaults the employer or his representative or any of his superiors at work or outside the work place, on condition that the employer inform the Labor Office in the relevant governorate within 24 hours of the event;
7. If the employee commits a misdemeanor or a felony against any of his/her fellow workers, during work, and is duly convicted thereof;
8. If the employee is sentenced to imprisonment of more than one year and the conviction is final;
9. If the employee is absent from his/her work for a period of 10 days continuously, or 20 days non-continuously, without prior notice or acceptable explanation, on condition that the employee has been warned by the employer of his/her absences prior to termination.
The law provides for dispute resolution mechanisms to resolve collective labor disputes. The provisions create an incremental dispute resolution system and require the parties to negotiate and to involve the Minister of Labor and Social Affairs and the relevant syndicate.
Employment disputes are to be heard before a specially created labor court. The Court is made up of a single judge appointed by the Minister of Justice based upon the recommendation of the head of the appeals court. At the cassation level, a committee of three judges exists to hear appeals from the labor court. All employment cases brought before the labor court are considered urgent cases. Employment claims must be brought within three years from the date they arise, or else they are considered expired by proscription.
Collective Bargaining and Collective Labor Agreements
Collective organization is a right strongly protected by law in Iraq. Collective labor agreements are agreements between a particular syndicate (union) on behalf of the members of a particular profession or industry which they represent with the employer. Such agreements organize the relationship between the employees and the employer in that profession, and within that project only, or within the entire profession and within all projects of a similar kind that are related to one kind of production/activity.
As with collective bargaining in other jurisdictions around the world, there are rules for proper representation by the syndicate of the employees, and for the acceptance by the employees of the agreement duly negotiated with the employer. Where there is a discrepancy between individual employment agreements, and a collective labor agreement, the most advantageous provisions for the employees of either of the two agreements shall be applied, and any agreement to the contrary shall be null and void.
Collective action is currently somewhat dormant in Iraq. Many syndicates are poorly organized and need to hold elections, which prevent them from being active in their field at the moment.