Hire Employees in Iran

Start with sanctions, not payroll. Exposure, payment routing and counterparty screening determine whether an engagement can proceed at all, and they sit entirely outside the scope of this guide. Obtain legal clearance before committing to anything described below.

Where an engagement is cleared, two routes exist. Registering an Iranian entity gives direct employment, followed by enrolment with the Social Security Organisation. An Employer of Record removes that setup, with the EOR acting as legal employer and handling payroll, contributions and withholding.

All employees working in Iran must be covered by the employer under the contributory social security scheme.

Total social security is a rate to confirm with your GX adviser, applied to salary: a share to confirm with your GX adviser from the employer and a share to confirm with your GX adviser from the employee. The employee share is deducted at source and paid to the SSO directly by the employer.

Expatriate employees attract a lower employer rate, which is a figure to confirm with your GX adviser, rather than the standard rate (confirm with your GX adviser), one of the few systems where the employer pays less for a foreign national than a local one.

The employer contribution divides across branches. Roughly a share to confirm with your GX adviser of monthly payroll funds old age, disability and survivors’ benefits, and also finances sickness, maternity and work injury. A further share to confirm with your GX adviser funds unemployment insurance, entirely employer-borne, with no employee contribution to that branch.

The state carries part of the cost. Government contributes a share to confirm with your GX adviser of earnings for employed, self-employed and voluntarily insured persons, and a share to confirm with your GX adviser for commercial drivers. It also pays the employer’s contributions outright, for up to five employees, for companies in certain strategic industries.

Break-even rule of thumb: EOR fees begin to exceed the running cost of an Iranian entity somewhere between 10 and 18 employees, though sanctions considerations usually dominate the decision. See EOR vs Entity for the general framework.

The contribution ceiling is expressed per day, not per month. That is the mechanical detail most likely to be missed by a payroll system built for other markets.

Because the Iranian calendar has months of differing length, the monthly ceiling takes three different values across the year: one for the 31-day months, one for the 30-day months, and a lower figure for the final 29-day month.

In preparing each monthly payroll, the number of days in that Iranian calendar month must be taken into account when calculating the social security premium. Confirm the current daily ceiling with the SSO, since it is revised.

There is a floor as well as a ceiling. The minimum monthly earnings used to calculate contributions for salaried employees are the legal monthly minimum wage of an unskilled worker.

Iran operates a Pay-As-You-Earn system for remitting payroll social security contributions.

Participation is mandatory for employees under the Labour Law, while certain self-employed groups may participate voluntarily. Separate pension systems exist for civil servants, the armed forces, law enforcement and the Revolutionary Guard.

Salary benchmarks are omitted here. Multiple exchange rates operate simultaneously and inflation has been severe, so a converted figure would mislead more than it informs. Model in local currency against the current ceiling.

Benchmarks are omitted here because multiple exchange rates operate simultaneously and inflation has been severe. Model in local currency against the current contribution ceiling rather than a converted figure.

Payroll runs monthly on the Iranian calendar, which is what drives the varying contribution ceiling.

Income tax is progressive, reaching a top rate to confirm with your GX adviser at higher levels, with an annual tax-free threshold applied before the taxable bands begin. Employers withhold and remit, with recurring filings through the fiscal year and penalties for late or missing returns.

Bands, rates and thresholds are reviewed annually, so a schedule carried forward from a prior year should not be relied on.

Tax residents are taxed on worldwide income; non-residents only on locally sourced income.

Recent budgets have raised personal income taxes, with reported increases of a figure to confirm with your GX adviser for minimum wage earners and up to a figure to confirm with your GX adviser for higher-income groups.

Progressive bands to a figure to confirm with your GX adviser after an annual exemption. Confirm the current schedule, since it is revised each year.

The Labour Law was ratified on 24 September 1989 and runs to twelve chapters. The Social Security Law dates from 1975 and is likewise structured in twelve chapters.

Contributions are calculated on a floor set by the minimum wage of an unskilled worker, which is revised annually.

The retirement age has been raised from approximately 30 to around 40 years of service, as part of an effort to address imbalance in the pension fund.

The Social Security Organisation is a non-governmental public institution financed primarily through contributions shared between insured individuals, employers and the state in proportions defined by statute.

Contracts should record pay, hours, leave, notice and termination terms.

Enrol the employee with the SSO before the first payroll run, and establish nationality at that point since it determines both the contribution rate and unemployment coverage.

Configure payroll to read the Iranian calendar month length when applying the contribution ceiling.

Because the ceiling is calculated on a daily basis, the point at which additional pay stops attracting contributions shifts between months, it is higher in a 31-day month than in the final 29-day month.

A payroll system that applies a single fixed monthly ceiling will over-contribute in short months and under-contribute in long ones.

The contribution floor based on the unskilled minimum wage applies regardless, so low-paid or part-period employment still attracts contributions at that level.

Iran observes Nowruz in March alongside national and religious holidays. Many religious dates follow the lunar calendar and shift each year relative to the solar calendar used for payroll.

Iran observes Nowruz in March alongside national and religious holidays. Many religious dates follow the lunar calendar and shift each year. Dates are set out below.

SSO cover includes retirement, disability, survivors’ benefits, sickness, maternity, work injury and unemployment.

Unemployment benefit requires at least six months of contributions before the date of unemployment, registration at an employment office, and being capable of and available for work. It is not payable where the unemployment resulted from voluntary leaving, misconduct, or refusing a suitable job offer.

Foreign citizens are excluded from the unemployment branch, alongside self-employed persons, public-sector employees and the voluntarily insured.

The system is under visible strain. Government debt to the SSO has been estimated at a figure to confirm with your GX adviser (in billions of tomans), and a decline of roughly one million contributors has been cited by labour specialists as an indicator of wider deterioration.

Severance is a statutory entitlement under the Labour Law. On termination of an agreement, completion of definite works, or expiry of a definite agreement, an employer must pay a worker who has served one year or more an amount equivalent to one month’s salary for each year of continuous or alternate service, calculated at the rate of the last salary.

That applies to alternate as well as continuous service, so broken periods with the same employer aggregate.

Final pay including accrued leave is due on separation and must appear in the SSO remittance and tax withholding for the period.

Because severance is calculated on the last salary rather than an average, late increases raise the whole accrued liability.

Expatriates cost the employer less in contributions but receive less cover. The employer rate is a figure to confirm with your GX adviser rather than the standard rate (confirm with your GX adviser), and foreign citizens are excluded from the unemployment insurance branch.

That trade-off should be explained at offer stage rather than discovered later.

Work authorisation is employer-sponsored; confirm current requirements before committing to a start date.

Currency handling requires care. Multiple exchange rates operate simultaneously and inflation has been severe, so the basis on which any foreign-currency element of a package is converted must be agreed explicitly in the contract.

Sanctions exposure is the threshold question. It determines whether an engagement can proceed at all, sits outside payroll compliance entirely, and requires legal clearance before commitment. Nothing in this guide addresses it.

Treating the contribution ceiling as a fixed monthly figure is the main technical error. It is set per day and takes three different monthly values across the Iranian calendar year.

Applying a rate to confirm with your GX adviser to an expatriate over-contributes, the rate is a figure to confirm with your GX adviser, and the unemployment branch does not apply to foreign citizens.

Note also that severance accrues at one month per year on the last salary; that the contribution floor is the unskilled minimum wage; and that tax bands are revised annually.

Obtain sanctions clearance first. Everything else is contingent on it.

Where an engagement is cleared, configure payroll to read the Iranian calendar month length for the ceiling, set the correct rate by nationality, apply the unskilled minimum wage as the contribution floor, and confirm the current tax schedule rather than carrying one forward.

Agree the currency basis for any foreign-currency element explicitly in the contract.