How to Hire and Pay Employees in Iraq: A Legal and Payroll Guide for Global Employers

You’re thinking about Iraq, and you’re onto something. While others chase overcrowded markets, you’ve spotted an opportunity most are missing—a young workforce hungry for international opportunities, booming sectors from energy to telecom, and cities like Baghdad and Erbil transforming faster than Western media notices.

But once you start looking into the logistics of hiring someone there, it looks complicated and time-consuming. The complexity isn’t just bureaucratic—it’s cultural, financial, and legal all rolled into one. Without someone who knows which rules matter and which forms to file first, you’re looking at months of delays. Or worse, compliance issues that shut down your whole operation before it starts.

This guide gives you the insider knowledge that usually takes years to acquire. We’ll walk through exactly how to hire and pay employees in Iraq—legally, efficiently, and without the expensive detours. Because when you’ve found an untapped market, the last thing you need is red tape keeping you from it.

Understanding Iraq’s hiring environment

Hiring in Iraq means following the rules—closely. And when you do that, it helps you build trust with candidates, avoid fines, and make smarter decisions from day one.

Let’s start with the basics. Iraq’s Labor Law No. 37 of 2015 governs most employer-employee relationships. It applies to both locals and foreign nationals. All contracts must be written (verbal doesn’t cut it), and they have to be in Arabic—even if your employee speaks perfect English.

Employment contracts should include:

• Job title and description
• Working hours and salary
• Duration (fixed or open-ended)
• Termination clauses

Foreign nationals need both a work permit and a residency permit, approved by Iraq’s Ministry of Labor and Social Affairs. Expect to provide:

• A valid job offer
• A notarized contract
• Medical and police clearance
• Passport copies

Until those approvals come through, they can’t legally start. And if they do? You could be looking at fines—or worse. Need help navigating permits and paperwork? Check out our blog on the Iraq work visa and legal authorization process.

In-demand roles often include petroleum engineers, logistics managers, and IT professionals. Iraq’s official minimum wage is IQD 350,000 (US$267.18) per month, but skilled positions typically offer much more.

In cities like Baghdad, Basra, and Erbil, candidates are starting to expect more from employers: structured workweeks (Sunday to Thursday), transportation stipends, annual bonuses, and clear contracts. According to a World Bank update, the push for private-sector jobs is growing, especially among young, educated professionals.

Want more regional context? Our post on doing business in the Middle East breaks down cultural and regulatory norms you’ll see across the region.

How to legally hire employees in Iraq: A step-by-step guide

Here’s your simple roadmap:

1. Register a legal entity in Iraq—or partner with an Employer of Record (EOR) who already has one.
2. Advertise roles locally, in Arabic or Kurdish.
3. Send a formal offer letter—in writing.
4. Draft a bilingual employment contract (Arabic required).
5. Apply for work and residency permits for foreign hires.
6. Register the employee with the Social Security Authority.
7. Onboard them with all required documentation and workplace training.

It’s paperwork-heavy, but each step sets you up for smooth operations and avoids problems later.

How payroll and compensation work in Iraq

Paying employees in Iraq comes with its own set of rules. But once you know the process, it’s easier to stay compliant and build trust with your team.

• Most salaries are paid via bank transfer in Iraqi Dinar (IQD).
• In rural or unbanked areas, cash payments are still common.
• Mobile money options are emerging, but adoption is slow.

Now for the taxes. Employers contribute 12% of an employee’s salary to Social Security. Employees chip in 5%. Income tax is tiered, ranging from 3% to 15%, and you’re responsible for withholding it.

Every month, you’ll need to submit payroll reports to the General Commission for Taxes (GCT). Late filings could mean fines or extra fees.

To keep things running smoothly, many companies team up with local payroll experts—or better yet, use a global payroll service that’s already wired into Iraq’s systems.

Tips and resources for a successful application

Here’s how to avoid missteps and keep things moving:

• Give yourself time. The permit process can take weeks. Don’t rush it.
• Translate everything into Arabic. Contracts, job offers, supporting docs—it’s required.
• Stay on top of filings. Payroll, tax, and permit reporting aren’t optional.

Need help navigating it all? You’re not alone. That’s where EORs come in.

How EOR providers help

An employer of record is a partner that hires employees on your behalf in another country. Think of them as your HR and compliance team on the ground—without you having to open an entity in Iraq.

An EOR will:

• Hire your employee legally under their local entity
• Handle work permits, contracts, and social security registration
• Run payroll and make sure you file taxes correctly
• Keep you compliant with Iraqi labor laws

If you’re not ready to set up shop in Iraq but still want to build a local team, an EOR is your solution—with legal peace of mind built in.

Want to scale globally beyond Iraq? Our country explorer hub shows how you can hire, pay, and manage talent in 185+ countries with compliance built in.

How Pebl helps you hire in Iraq (without losing sleep)

Pebl makes global hiring feel like less of a puzzle and more of a plan. That’s because, as an employer of record in Iraq, we handle everything from contracts to compliance, so you can hire confidently without opening a legal entity.

With our services, you can legally employ talent in 185+ countries, including Iraq. We manage onboarding, payroll, tax reporting, and labor compliance. You focus on tapping into the best talent and growing your business.

Expanding into Iraq? Let’s make it simple.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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