Definitive Guide to Hiring in Iran

Hiring in Iran

Hiring employees compliantly in Iran means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Iran so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Iran; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Iran

Employment laws in Iran are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Iran employment laws and Iran policies here.

Employee Probation Period

Annual Leave in Iran

Holidays in Iran

Maternity Leave Iran

• Women employees are entitled to 90 days of maternity leave.
• The employee's salary during maternity leave will be paid according to the provisions of the Social Security Act.

Paternity Leave Iran

Sick Leave in Iran

Working Hours in Iran

• The workweek in Iran is based on a 44-hour week. 
• Typically, employees work from Saturday to Wednesday (8 hours per day) and half a day on Thursday (4 hours).

Overtime in Iran

• The Law mandates a payment of 40% above the hourly wage to employees for any accrued overtime. 
• The employee must consent to overtime work

Termination of Employment in Iran

• The employment agreement may be terminated in any of the following cases:
  • Death of worker
  • Retirement of worker.
  • Total disability of worker
  • Expiry of duration of definite employment agreements and their non-renewal explicitly or implicitly.
  • Completion of work in the contracts for specific task.
  • Resignation of worker.
• Upon completion of work, all claims arising out of the employment agreement and the period of employment in the above cases shall be paid to the worker, and in the event of his death, to his legal heirs.
• Any worker who resigns shall be required to provide his employer with written notice of his registration, and to continue to work for one month.
• In the event of termination of the agreement, completion of definite works or expiry of definite agreements, the employer shall be required to pay to a worker who has worked on the job for one year or in excess of it under an agreement, an amount equivalent to one-month salary for each year of continuous or alternate service at the rate of the last salary as severance benefits.

Notice Period in Iran

Severance in Iran

In the event of termination of the agreement, completion of definite works or expiry of definite agreements, the employer shall be required to pay to a worker who has worked on the job for one year or in excess of it under an agreement, an amount equivalent to one-month salary for each year of continuous or alternate service at the rate of the last salary as severance benefits.

Iran Salary and Wages

13th/14th Month Salary in Iran

• No
• There is no statutory requirement to pay the 13th or 14th month salary.
• Employees are entitled to standard holiday allowance.

Social insurance and social assistance system

• An insured person makes contributions of 2% of earnings; 4% for commercial drivers; 9% for voluntarily insured persons. 
• Employers contribute 6% of earnings

Immigration Iran

• Temporary Work (type F) visa: - Visa for foreign citizens who have the intention to work in Iran
• The following can apply for a type ‘F’ visa: -
  • Skilled workers
  • Specialists in the fields of medical, industrial
  • Engineers
• Investment (type I) visa: - Visa for foreign investors whose investment permit is approved by the Organization for Investment Economic and Technical Assistance of Iran.
• The following can apply for a type ‘I’ visa: -
  • Merchants
  • Investors

Value Added Tax (VAT) in Iran

• The standard rate of VAT is 7%
• Excise duties on tobacco products and petrol taxed at rates of 12% and 20%, respectively.

Payments And Invoicing

• The fiscal year begins on March 21 and ends on March 20 of the next year according to Iranian calendar. 
• The Ministry of Finance and Economic Affairs is the government agency authorized to levy and collect taxes.

Payroll Accrual in Iran

Country Accruals Additional Information

Description

Termination terms should be laid out in an employee’s contract of employment. There are strict requirements for dismissals, and employers generally need to have a justifiable reason to terminate any employment contract or may risk legal action.

Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Iran PEO can mitigate risk for foreign companies and provide guidance through this process. 

Payroll Accruals Additional Information

Accrued Benefits in Iran

Why use Global Expansion to hire in Iran

Establishing a branch office or subsidiary in Iran can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Iran labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Iran law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Iran. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Iran Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.