The comprehensive Labor Law covers all labor relations in Iran, including hiring of local and foreign staff. The Labor Law provides a very broad and inclusive definition of the individuals it covers, and written, oral, temporary and indefinite employment contracts are all recognized.
The Iranian Labor Law is very employee- friendly and makes it extremely difficult to lay off staff. Employing personnel on consecutive six- month contracts is illegal, as is dismissing staff without proof of a serious offense. Labor disputes are settled by a special labor council, which usually rules in favor of the employee.
The Labor Law provides the minimum standards an employer must adhere to when forming an employment relationship. The minimum age for workers in Iran is 15 years.
Provisions of employment contrat
1. Type of work, vocation or duty that must be undertaken by the worker;
2. Basic compensation and supplements thereto;
3. Working hours, holidays and leaves;
4. Place of performance of duties;
5. Probationary period, if any;
6. Date of conclusion of contract;
7. Duration of employment; and
8. Any other terms and conditions required according to nature of employment.
The employer may require the employee to be subject to a probationary period. However, the probation time may not exceed one month for unskilled workers and three months for skilled and professional workers. During the probation period, either party may immediately terminate the employment relationship without cause or payment of severance pay. The only caveat being that if the employer terminates the relationship, he must pay the employee for the entire duration of the probation period.
Suspension of employment contract
1. The period of military service (active,contingency and reserve), as well as voluntary enlistment during conflicts. This period shall be considered part of the employee’s service record at place of employment;
2. The closure of a workshop or parts thereof due to force majeure;
3. Educational leave for up to four years; and
4. The period of detention that does not lead to conviction;
Once the conditions giving rise to the suspension of the contract are removed, the employer must allow for return of the employee to work. If the position is filled or eliminated, the employer is obligated to provide a similar position for the employee. Failure to do the above is considered wrongful discharge and subject to legal action.
1. Death of employee
2. Retirement of employee
3. Total disability of employee
4. Expiration of the duration of the employment contract
5. Conclusion of work in task specific contracts; and
6. Resignation of the employee.
The employer is bound to pay benefits under all of the above scenarios according to the years of service.
Dismissal of an employee
Severance & termination benefits
1. Suspended Employee – Where an employee is suspended without cause the employer must reinstate the employee and pay for all damages and compensation resulted from the wrongful suspension
2. Terminated Employee – An employer is under legal obligation to provide thirty (30) days salary for every year of service for employees made redundant or retired
3. Disabled Employee – The employer must pay 30 days salary for every year of service. Moreover, if disability of an employee is due to working conditions, the employer must pay 60 days salary for every year of employee’s service period.
Working hours & overtime
Holidays & leave
Employees are entitled to leave on all official state holidays (approximately 22 days a year) and Fridays. Any employee working during these holidays will be entitled to overtime pay. Additionally, employees are entitled to one- month holiday per annum. The annual leave for those employees engaged in hard and hazardous employment shall be five weeks per year. Employees are entitled to save up to 9 days of their annual leave.
In case of termination, disability or redundancies, employees must be compensated for any accrued leave. Finally, employees are entitled to 3 days of paid vacation for marriage or death of a spouse, father, mother or child.
Women employees are entitled to 180 days of maternity leave. The employee’s salary during maternity leave will be paid according to the provisions of the Social Security Act. Maternity leave must be considered part of an employee’s service record. Employers must provide returning employees with the same position.
Health care & Social protection
The Iranian constitution entitles Iranians to basic health care, and most receive subsidized prescription drugs and vaccination programs. An extensive network of public clinics offers basic care at low cost, and general and specialty hospitals operated by the Ministry of Health provide higher levels of care. In most large cities, well- to- do people use private clinics and hospitals that charge high fees. Specialized medical facilities are concentrated in urban areas, but rural communities have relatively good access to primary care physicians at clinics in villages, where the government- sponsored primary health care system has raised the level of health education and prenatal care since the late 1990s.
Iran has a comprehensive social protection system with some 28 social insurance, social assistance, and disaster relief programs benefiting large segments of the population. These programs include training and job- search assistance, health and unemployment insurance, disability, old- age and survivorship pensions, and in kind- or in- kind transfers including subsidies (e.g., housing, food, energy), rehabilitation and other social services (e.g. long- term care services for the elderly), and even marriage and burial assistance.
Employer paid – social insurance contributions is 23% (gross salaries)
Employee paid – social insurance contributions is 7% (gross salaries)