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اقرأ بالعربية

Social Security Obligations for Employers in Iraq under Law No. 18 of 2023

The Workers' Retirement and Social Security Law No. 18 of 2023 replaced Law No. 39 of 1971 in federal Iraq and came into force in November 2023. This article explains, with article references to the official English translation, who is covered, the contribution rates (5% employee, 12% employer, 25% for oil and hydrocarbon businesses), and the additional costs for foreign workers. It also covers the registration and reporting duties, the clearance-certificate and contractor rules, and the penalties for non-registration, including compensation of five times the unpaid contributions. The law is stated as at October 2026; the Kurdistan Region applies a different social security law.

Othman Al-JubooriOthman Al-Juboori, Iraqi lawyer, expert in Iraqi labour lawIraqi lawyer, expert in Iraqi labour law

The law and its entry into force

Law No. 18 of 2023 was published in the Official Gazette (No. 4734) on 28 August 2023. It came into force 90 days after publication (Article 109), on 26 November 2023. It repeals the Workers' Retirement and Social Security Law No. 39 of 1971. Regulations and instructions issued under the old law remain in force until replaced (Article 108). The Ministry of Justice has published an official English translation. The Law is administered by the Workers' Retirement and Social Security Department in the Ministry of Labour and Social Affairs, which has its headquarters in Baghdad and may open departments in governorates not organised into a region (Article 4).

Who is covered

The Law applies to workers in the mixed, private and cooperative sectors, to self-employed persons covered by the Labour Law, and to workers in State departments and the public sector who are not permanent staff (Article 3/First). The social security branches also apply to Iraqi workers employed by diplomatic bodies, organisations and companies operating in Iraq (Article 3/Third/d). Foreign companies, international NGOs and missions with local staff should take note of this provision.

A "worker" is defined by reference to the Labour Law: any person working under an employer's direction and supervision for a wage, under a written or oral, express or implied contract (Article 1/Seventh). Where Law No. 18 is silent, the Labour Law applies (Article 97).

Contribution rates

Article 14/Second sets the contributions:

  • Employee 5% of total wages and allowances, deducted by the employer and allocated to the retirement branch.
  • Employer (general rate) 12% of total wages and allowances. Of this, 8% goes to retirement, 1% to work injury, illness and occupational disease, 1% to unemployment, and 2% to health insurance, social services and maternity.
  • Employer (oil and hydrocarbons) 25% for private and mixed-sector employers whose profits come from selling oil and other hydrocarbons produced in and exported from Iraq, or rights and interests in them. Of this, 15% goes to retirement, 3% to work injury, 3% to unemployment and 4% to health and maternity.
  • State 8% of wages and allowances. The State share does not apply to the 25% category or to foreign workers. For foreign workers, the employer bears the State's share in addition to its own contribution (Article 14/Second/c).

Contribution base. Contributions are calculated on wages and allowances. The base may not be lower than the applicable minimum wage and may not exceed five times the minimum wage (Article 15/First). "Wage" covers everything the insured person receives in cash and in kind, including all allowances (Article 1/Eleventh).

Paying contributions

  • The employer deducts the employee's share from each wage payment. Contributions for a month are payable during the following month (Article 16).
  • The employer must pay its own and its workers' contributions to the Fund within 30 days after the month they fall due. If payment is more than 120 days late, a fine of 1% of the contributions per month applies, capped at 100% of the original debt. The Minister may waive the fine once, for a convincing excuse, on the Board's recommendation (Article 17).
  • Amounts deducted from wages are held in trust and may not be used for any other purpose (Article 19).
  • Contributions remain payable during periods when the contract is suspended for illness, childbirth, arrest or another legitimate excuse (Article 18).

Registration, reporting and records

  • The employer must insure covered workers with the Department and pay the contributions (Article 23/First).
  • It must notify the Department of a worker's start date within 30 days (Article 93).
  • It must submit data on insured workers (names, dates of birth, wages, trainees) that matches the books it keeps under the Labour Law (Article 22). It must also file annual data at the start of each year and update it when changes occur (Article 23/Second).
  • It must keep registers and a separate social security file for each insured worker. The Department may review the employer's tax accounting documents to verify headcount and wages (Article 23/Fifth and Sixth).
  • The registering employer remains responsible for contributions after a worker leaves until it notifies the Department that the service has ended. Construction workers are excluded from this rule (Article 24).

Clearance certificates and contractors

Two provisions affect transactions and supply chains:

  • Clearance certificate (Article 20). No sale, transfer of ownership, registration, renewal, lease, permit, occupational licence or other legal action may be made for an entity employing workers without a clearance certificate from the Department. Bankruptcy or liquidation requires prior notice to the Department.
  • Contractors (Article 21). An employer that engages a contractor, entrepreneur or investor must notify the Department of the contractor's name and address and the nature and cost of the work at least seven days before work starts. The principal and the sub-contractor are jointly and severally liable for obligations under the Law. State financial departments may not release payments to an employer, contractor or investor without proof of clearance (Article 21/Second).

Penalties and enforcement

An employer that fails to register its covered workers, or registers fewer than its actual workforce, faces a fine of IQD 1,000,000 to 5,000,000. The Department is also awarded compensation equal to five times the unpaid contributions (Article 92/First). A worker who colludes with the employer loses social security rights for the period concerned (Article 92/Second).

Periods without contributions do not count as insured service (except in cases of injury and death), and the worker may sue the employer for the unpaid contributions (Article 32). Social security cases fall within the jurisdiction of the labour courts. The worker may file where the workplace is or where the defendant is domiciled or resident (Article 102).

Salt & Associates has reported a Federal Court of Cassation decision (No. 3449/H.M., 23 March 2025) holding that a general amnesty did not relieve an employer of unpaid contributions. We cite it as reported and have not reviewed the judgment itself.

Foreign workers: the additional costs

  • Work fee IQD 2,000,000 per foreign worker who enters Iraq, payable by the employer and collected by the Fund (Article 106/First). A one-time fee of IQD 750,000 applied to foreign workers whose status was regularised during the year of enactment (Article 106/Second).
  • State share the employer pays the 8% State share on top of its own contribution (Article 14/Second/c).
  • Unemployment compensation does not apply to non-Iraqi insured persons (Article 68).
  • Departure dues payable to a foreign insured person who leaves Iraq follow the reciprocity rule or international labour conventions, whichever is more favourable (Article 25). A worker who leaves Iraq permanently without qualifying for a pension may receive a lump-sum reward (Article 46).
  • Home-country schemes Fragomen reported in November 2024 that employers must now contribute for foreign workers covered by a home-country scheme, which were previously exempt (3% of salary, or 7% in oil and gas). We have not located the underlying instrument. Employers should confirm the current practice with the Department.

The Kurdistan Region

Kurdistan Region The Region applies Labour Law No. 71 of 1987; the federal Labour Law No. 37 of 2015 has not been adopted there.

Law No. 18 of 2023 is applied in federal Iraq. In the Kurdistan Region, workers' social security remains governed by Law No. 39 of 1971 as amended by Kurdistan Region Law No. 4 of 2012, and a new regional law is in draft (ILO policy brief, August 2025). Law No. 18 provides for coordination between the federal Department and the Region's General Directorate of Labour and Social Security when insured workers move between the two (Article 39/Fifth).

Compliance checklist

  1. Register every covered worker and notify start dates within 30 days.
  2. Calculate contributions on wages and allowances, within the minimum-wage floor and the five-times ceiling.
  3. Pay monthly, within 30 days after the month they fall due.
  4. Reconcile social security data with payroll and tax records.
  5. Notify the Department before any contractor starts work, and require proof of the contractor's registration.
  6. Obtain a clearance certificate before licence renewals, transfers and exits.
  7. Budget for the foreign-worker fee and the additional 8%.
  8. If there are historic gaps, take advice early. The Article 17 fine waiver is discretionary and available once.

Frequently Asked Questions

What are the social security rates in Iraq?

5% from the employee and 12% from the employer, or 25% for businesses selling Iraqi oil and hydrocarbons. The State adds 8% for Iraqi workers outside the 25% category (Article 14).

Do foreign employees have to be registered?

Law No. 18 covers workers as defined by the Labour Law and makes specific provision for foreign workers. The employer pays the State's 8% share for them in addition to its own contribution (Article 14/Second/c), and a work fee applies (Article 106).

What is the penalty for not registering workers?

A fine of IQD 1,000,000 to 5,000,000 plus compensation to the Department of five times the unpaid contributions (Article 92/First). Late payment over 120 days also attracts 1% per month, capped at 100% (Article 17).

Does the law apply in Erbil?

No. The Kurdistan Region applies Law No. 39 of 1971 as amended by Regional Law No. 4 of 2012.

Related reading

Sources

  1. Workers' Retirement and Social Security Law No. 18 of 2023, official English translation, Official Gazette No. 4734 (28 August 2023), Ministry of Justice: 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
  2. Ministry of Justice announcement of the English translation (12 September 2024): https://www.moj.gov.iq/view.8466/
  3. Al Hadeel Al Hasan Law (HHL), legal update on Law No. 18 of 2023 (entry into force 26 November 2023): https://hhl-iq.com/workers-retirement-and-social-security-law-no-18-of-2023/
  4. Salt & Associates, "Social Security Law in Iraq: Employer Compliance Risks": https://saltandassociates.net/iraq-social-security-law-employer-compliance-risks/
  5. Fragomen, "Iraq: New Social Security Contribution Obligations" (4 November 2024): https://www.fragomen.com/insights/iraq-new-social-security-contribution-obligations.html ; Fragomen, "Iraq: New Law Changes Retirement Age, Adds Registration Fees for Foreign Employees…" (27 December 2023): https://www.fragomen.com/insights/iraq-new-law-changed-retirement-age-added-registration-fees-for-foreign-employees-and-increased-pension-contributions.html
  6. ILO policy brief on social security in the Kurdistan Region (August 2025): https://www.ilo.org/sites/default/files/2025-08/KrFiODIPolicyBriefDOI_English.pdf

This article is general information, not legal advice.