Iraq update: New Labour Law starting February 2016

The Iraqi Parliament has recently issued a new Iraqi labor law, which determines the rights of employees and workers in the region. The new law, number 37/2015 (the “New Labour Law”) replaces the old labour law, number 71 of 1987. The new law will enter into force on 7 February 2016.

Although in principle the New Labour Law should apply across the entirety of Federal Iraq, what remains to be seen is whether the Kurdistan Region of Iraq will follow in the application of this New Labour Law, or it would issue its own. In fact, a draft local labour law has been subject to review for some time before the regional parliament of the Kurdistan Region, and we are continuing to monitor developments.

In terms of its content, the New Labour Law appears to be more detailed than its predecessor and aims, as described by the Iraqi Parliament, to address the old law’s shortcomings and align Iraq’s labour regulations with international labour principles ratified by Iraq.

For the purpose of this update, we have reviewed the Arabic text of the New Labour Law and noted a few important provisions, particularly in relation to scope of application, the recruitment process, and the termination of employment contracts.

Scope:

• The New Labour Law applies to any person employed in Iraq (i.e. including Iraqis and foreigners) except public sector employees and security forces. (Article 3)
• An Iraqi court has the discretion in determining whether a working relationship is an employment relationship, i.e. governed by the New Labour Law, or otherwise, irrespective of the label given by the parties. (Article 13)
• It is not possible to contract out of the New Labour Law. (Article 14.2)

Recruitment process:

• The Ministry of Labour and Social Affairs shall establish regional employment offices where job-seekers would register in order to be assisted, free of charge, with their job search. (Articles 18 and 19)
• Employers are under an obligation to notify the relevant regional employment office when a position becomes vacant within 10 days, after which a set process will occur. In case the employment office cannot fill the vacant position, the employer may then do so by way of direct recruitment. (Article 21)
• If an employer is in breach of the above recruitment process, such employer may be subject to imprisonment and/or a fine calculated per vacancy and may be doubled in case of a repeated breach. (Article 24)
• Employers are prohibited from employing non-Iraqi people, in any capacity, without a work permit issued by the Ministry of Labour and Social Affairs (Article 30). A non-Iraqi employee cannot be engaged with any work prior to obtaining this work permit (Article 31). Violations may lead to a fine.

Termination of Employment due to employee misconduct or other fault:

• The employer may take a number of disciplinary penalties against an employee. These penalties are listed exhaustively and include issuing a simple warning notice, disqualifying the employee from yearly salary raises, and terminating the employee’s contract (Article 138.2). The choice of disciplinary penalty must be proportionate to the gravity of the violation, and the employer may not apply more than one penalty per violation (Articles 138.3 and 138.4). Disciplinary penalties may be imposed only within 15 days of the date on which the employer or its representative became aware of the violation (Article 138), and subject to offering the employee the opportunity to defend himself in the presence of the workers’ representatives (Article 140).
• In any case where conduct or under-performance might lead to termination, the employee has the right to be assisted, in his defense, by the workers’ representative, the trade union representative, or any other person of his choice (Article 143.3).
• The employer may not end employment by reason of discipline unless one of the following conditions are met (Article 141):

• Employee committing a significant violation causing the employer significant material damage;
• Employee disclosing confidential information obtained through his work, provided the employer can evidence that such disclosure has caused significant damage to its interests;
• Employee violating health and safety regulations;
• Employee being found under the influence of drugs or alcohol on more than one occasion during working hours;
• Employee engaging, on more than one occasion, in a conduct that is not compatible with the work ethics;
• Employee having physically attacked the employer, one of his supervisors or colleagues;
• Employee having been absent from work without valid justification for 10 consecutive days, or for 30 non-consecutive days in a given year;
• Employee being found guilty by final judicial decision of a misdemeanor or a crime committed against one of his colleagues; or
• Employee being sentenced by final judicial decision to imprisonment for a period of more than one year.

• In case of termination by way of disciplinary penalty, the employee may appeal such termination before the Employment Court within 30 days. The decision of the Employment Court may be further appealed before the Court of Cassation. (Article 145.2)
• Other reasons for termination (under Article 43), following a 30-day notice (Article 44), include:

• If an employee commits a breach of his obligations under the employment contract; or
• Subject to a final judicial decision, if an employee is found to have committed gross fault causing material loss either to the work itself, the other employees or the production.

• A termination decision made subject to Article 43 may be appealed by the employee, within 30 days, before either (i) a special committee to be established based on instructions issued by the Minister of Labour or (ii) the Employment Court (Article 46.1). The decision of the special committee may be further appealed before the Employment Court (Article 46.2). If an appeal is upheld, an employee may be reinstated to his job and have to be paid his wages as accrued following the termination notice. If it is accepted that reinstatement is not possible, financial damages will be payable (at 4 weeks pay per year of service), with the employment contract being treated as terminating as of the decision of the special committee/Employment Court (Article 47).
• There may be cases where there is not a right to terminate for misconduct under the New Labour Law. In these cases the employer would only be able to terminate where the violation has been repeated and a written warning had previously been notified to the employee (Article 143.1).
• The employer may not terminate the contract for unsatisfactory performance by the employee unless the employee has received necessary instructions from his employer and has failed to meet satisfactory performance for a period of 30 days after having received a written warning (Article 143.2).

For any advice or further information, please do not hesitate to get in touch with us directly.