Federal Iraq or Kurdistan Region? Which Labour and Social Security Rules Apply

Two regimes in one country

Iraq's 2005 Constitution allows a region to amend how national legislation applies within it. Where regional and national legislation conflict on a matter outside the federal government's exclusive powers, the regional authority may amend the application of the national law in the region (Article 121/Second). In employment matters, this means that a company with staff in Baghdad, Basra and Erbil should not assume that one set of contracts, policies and contribution calculations works everywhere.

The federal governorates, including Baghdad, Basra, Nineveh, Kirkuk, Anbar and the southern governorates, apply federal law. The Kurdistan Region (Erbil, Sulaymaniyah, Duhok and Halabja) applies its own set of rules, described below.

Labour law

Federal Iraq. Labour Law No. 37 of 2015 (Official Gazette No. 4386, 9 November 2015) governs private-sector employment. It repealed Labour Law No. 71 of 1987 for federal Iraq, while keeping regulations issued under it in force where consistent (Article 172). The 2015 Law has not been amended since enactment. A proposed First Amendment Law (seven articles) had its first reading in the Council of Representatives on 25 July 2026 and remains under study as at October 2026.

Kurdistan Region. The Region continues to apply Labour Law No. 71 of 1987. The Kurdistan Parliament approved a new labour law on 1 March 2023, but it was not published in the Region's gazette. On 30 May 2023, the Federal Supreme Court ruled that the Parliament's self-extension was unconstitutional, and laws passed after 6 November 2022 were treated as invalid. Paul Hastings describes the 2023 law as effectively nullified. In July 2026, the head of labour inspection at the Region's General Directorate of Labour and Social Security said that the Region's regulations still rest on legislation from 1971 and 1987 and that draft amendments are ready for Parliament (Kurdistan24, 16 July 2026). A foreign practitioner guide published on Lexology states that the Region has begun applying Law No. 37 of 2015 in practice without its Parliament formally adopting it. We found no KRG source confirming this, and KRG publications in 2026 refer to Law No. 71 of 1987. Any reliance on a federal provision in the Region should therefore be checked issue by issue.

Examples of differences. The two laws share many concepts, but the details differ. Some examples confirmed in the texts and official sources:

• Annual leave. The federal law provides at least 21 days after one year of service, or 30 days for arduous or harmful work (Law No. 37 of 2015, Article 75). Law No. 71 of 1987 provides 20 days, or 30 days for arduous or harmful work (Article 67). A KRG report published in March 2026 also states that workers are entitled to 20 days of paid annual leave.
• Downsizing. Federal law allows termination for a reduction in work only with the Minister's consent (Law No. 37 of 2015, Article 43/Second/d). The published consolidated text of Law No. 71 of 1987 refers to notifying the Minister (Article 36/Sixth).
• Minimum wage. The KRG has set a minimum monthly wage of IQD 450,000 for unskilled workers (KRG Department of Media and Information, March 2026).

These differences are illustrative, not exhaustive. The consolidated text of Law No. 71 of 1987 available online may include federal amendments made after 1991 that do not apply in the Region, or omit amendments made by the Region. The text applied by Kurdistan Region courts should be confirmed for each issue. Employers should not assume that federal concepts such as the two-weeks-per-year gratuity in Article 45 of the 2015 Law, or the termination-committee route in Article 46, apply in the same form in the Region.

Social security

Federal Iraq. Law No. 18 of 2023 applies. It sets contributions of 5% from the employee and 12% from the employer (25% in the oil and hydrocarbon sector), and the employer also bears the State's 8% share for foreign workers (Article 14). It imposes a work fee of IQD 2,000,000 per foreign worker entering Iraq (Article 106). It is administered by a federal department that may open offices in governorates not organised into a region (Article 4/Second).

Kurdistan Region. Workers' social security remains governed by Law No. 39 of 1971 as amended by Kurdistan Region Law No. 4 of 2012. The 2012 amendment extends coverage to informal and self-employed workers. The ILO reported in August 2025 that the Region has drafted a new pension and social security law, expected to align with federal Law No. 18 of 2023. The KRG states that registered workers' contributions total 17% of salary: 12% paid by the employer and 5% deducted from the worker (KRG Department of Media and Information, March 2026).

Moving between the two. Law No. 18 of 2023 requires the federal Department and the Region's General Directorate of Labour and Social Security to coordinate the transfer of insured service and paid contributions when workers move between the centre and the Region (Article 39/Fifth).

Foreign workers and local-workforce quotas

In federal Iraq, the Labour Law itself sets no ratio. Ministry of Labour officials stated in December 2025 and again in September 2026 that projects must employ 80% Iraqi and 20% foreign workers, applying a 2024 Council of Ministers decision (INA, 3 December 2025; 964media, 28 September 2026). The 80/20 ratio is the basis for planning (see the third article in this series). Licensed investment projects must also have at least 50% local labour (Investment Regulation No. 2 of 2009, Article 30/First).

KRG sources state that the Decree requires at least 75% of the workforce in all projects to be citizens of the Region, and that projects that did not comply have been referred to the courts (KRG report, March 2026). At the Council of Ministers meeting of 20 September 2022, the Prime Minister also called for mechanisms to offer training to young people across the Region (GOV.KRD, 20 September 2022). In 2023, Fragomen reported that the Region's Ministry required a social security clearance letter, reflecting the 25% ratio and registered employment contracts, with each work-permit application. In September 2026, an adviser to the Region's Ministry of Labour and Social Affairs said that joint committees continue field inspections and that violators face fines and, in some cases, closure (Kurdistan24, 7 September 2026).

Courts

Federal labour courts sit in each governorate (Law No. 37 of 2015, Article 165, whose provisions adding worker and employer representatives were struck down by Federal Supreme Court decision No. 67/Federal/2021), and appeals go to the Federal Court of Cassation (Articles 167–168). The Kurdistan Region has its own court system, including its own Court of Cassation. Practitioners note that rulings of one cassation court are not binding on the other, so a precedent from Baghdad may carry little weight in Erbil, and the reverse is also true.

Which rules apply to a given employee?

Iraqi legislation does not set out a single conflict rule between the two regimes for employment contracts. In practice, the starting point is the place where the work is actually performed: a worker based in Erbil is generally treated under the Region's rules, and a worker based in Basra under federal law. The position is less clear for employees who rotate between sites, are seconded, or are hired by an entity registered in one area to work in the other. These cases should be analysed individually, taking account of where the employing entity is registered, where social security registration is made, and where the work permit is issued.

Practical steps for multi-site employers

1. Map every employee to a primary work location and the applicable regime.
2. Keep separate contract templates, internal regulations and disciplinary rules for federal Iraq and the Kurdistan Region.
3. Register staff with the correct social security authority and avoid double registration. Use the coordination route in Article 39/Fifth when staff transfer.
4. Run two foreign-worker quota calculations: federally, plan to 20% foreign (the 80/20 ratio); in the Region, a 25% maximum.
5. Track legislative developments in the Region, including the draft labour and social security laws.
6. In disputes, build the strategy around the relevant court system and its own case law.

Frequently Asked Questions

Does Labour Law No. 37 of 2015 apply in Erbil?

No. The Kurdistan Region applies Labour Law No. 71 of 1987. A 2023 regional labour law did not take effect.

Which social security law applies in the Kurdistan Region?

Law No. 39 of 1971 as amended by Regional Law No. 4 of 2012. Federal Law No. 18 of 2023 applies in the rest of Iraq.

What is the foreign-worker limit in each area?

Federal Iraq: 80% Iraqi and 20% foreign under a 2024 Council of Ministers decision. Kurdistan Region: at least 75% local workforce under Decree No. 172 of 2022.

Is Basra subject to federal or regional rules?

Basra is a federal governorate, so Law No. 37 of 2015, Law No. 18 of 2023 and Instructions No. 1 of 2026 apply.

Related reading

• Iraqi Labour Law on our website
• Hiring Foreign Workers in Iraq: Work Permits under Instructions No. 1 of 2026
• Social Security Obligations for Employers in Iraq under Law No. 18 of 2023

Sources

1. Constitution of the Republic of Iraq 2005, Article 121 (Constitute Project): https://www.constituteproject.org/constitution/Iraq_2005
2. Labour Law No. 37 of 2015 (Arabic text, incl. Articles 75, 165, 172): https://cm.qu.edu.iq/?page_id=17299
3. Labour Law No. 71 of 1987 (Arabic consolidated text): https://wiki.dorar-aliraq.net/iraqilaws/law/10659.html
4. Peace and Freedom Organization, "The Situation of Workers' Rights in Iraq and the Kurdistan Region": https://pfo-ku.org/images/2017/pdf/workerEN.pdf ; Zoom News on the Federal Supreme Court ruling: https://zoomnews.info/en/21209/ ; Paul Hastings, "Kurdistan": https://www.paulhastings.com/insights/practice-area-articles/kurdistan
5. Kurdistan24, 16 July 2026: https://www.kurdistan24.net/en/story/926134 ; Kurdistan24, 7 September 2026: https://www.kurdistan24.net/en/story/937879
6. KRG Department of Media and Information, 17 March 2026: https://gov.krd/dmi-en/activities/news-and-press-releases/2026/march/krg-creates-230-000-jobs-as-social-security-enrolment-reaches-303-000/ ; KRG report "Job Creation and Workers' Rights in the Kurdistan Region": https://www.iraq-businessnews.com/wp-content/uploads/2026/03/KRG-Job-Creation-and-Workers-Rights-in-the-Kurdistan-Region.pdf
7. ILO policy brief (August 2025): https://www.ilo.org/sites/default/files/2025-08/KrFiODIPolicyBriefDOI_English.pdf
8. Workers' Retirement and Social Security Law No. 18 of 2023, official English translation: https://www.moj.gov.iq/upload/pdf/%D9%82%D8%A7%D9%86%D9%88%D9%86%20%D8%A7%D9%84%D8%AA%D9%82%D8%A7%D8%B9%D8%AF%20%D9%88%D8%A7%D9%84%D8%B6%D9%85%D8%A7%D9%86%20%D8%A7%D9%84%D8%A5%D8%AC%D8%AA%D9%85%D8%A7%D8%B9%D9%8A%20-%20Copy_102.pdf
9. Instructions No. 1 of 2026, official English translation (Official Gazette No. 4863): https://moj.gov.iq/upload/pdf/2154e6b57c1825d4_%D8%AA%D8%B9%D9%84%D9%8A%D9%85%D8%A7%D8%AA%20%D8%A7%D8%B3%D8%AA%D9%82%D8%AF%D8%A7%D9%85%20%D9%88%D8%AA%D8%B4%D8%BA%D9%8A%D9%84%20%D9%88%D8%A7%D8%AC%D8%A7%D8%B2%D8%A9%20%D8%A7%D9%84%D8%B9%D9%85%D8%A7%D9%84%20%D8%A7%D9%84%D8%A7%D8%AC%D8%A7%D9%86%D8%A8%20%D9%81%D9%8A%20%D8%A7%D9%84%D8%B9%D8%B1%D8%A7%D9%82%20-%20Copy.pdf
10. KRG, "Council of Ministers discusses private sector employment" (20 September 2022): https://gov.krd/english/news-and-announcements/posts/2022/september/council-of-ministers-discusses-private-sector-employment/ ; Fragomen, "Iraqi Kurdistan: New Requirements for Work Permit Issuance" (6 March 2023): https://www.fragomen.com/insights/iraqi-kurdistan-new-requirements-for-work-permit-issuance.html
11. Lead Counselors, "Navigating the Dual Compliance Imperative": https://www.leadcounselors.com/blogs/navigating-the-dual-compliance-imperative-labor-law-and-judicial-interpretation-in-federal-iraq-vs-the-kurdistan-region-kri
12. Lexology, "Employment & labour law in Iraq" (practitioner guide, undated): https://www.lexology.com/library/detail.aspx?g=8fc1dc22-85ab-453a-b833-d4de286f9ff9
13. Iraqi News Agency (3 December 2025): https://ina.iq/en/local/43964-iraq-sets-80-local-hiring-requirement-as-labour-ministry-issues-rules-for-foreign-workers.html ; 964media (28 September 2026, Arabic): https://964media.com/721045/
14. Investment Regulation No. 2 of 2009, Article 30 (Arabic text): https://wiki.dorar-aliraq.net/iraqilaws/law/21175.html
15. Supreme Judicial Council note on Federal Supreme Court decision No. 67/Federal/2021: https://www.sjc.iq/view.69977/ ; Iraqi Parliamentary Observatory, Proposed First Amendment Law to Labour Law No. 37 of 2015 (first reading only): https://www.miqpm.com/2026/Legislation_Details.php?ID=44&lang=ar

This article is general information, not legal advice.