Terminating Employment Contracts in Iraq: Grounds, Notice, Compensation and Labour Courts

The starting point: termination only on statutory grounds

Iraqi Labour Law No. 37 of 2015 does not allow termination "at will". The employer bears the burden of proving the ground for termination when the worker challenges it (Article 46/Third). If no statutory ground is established, the remedy is reinstatement or enhanced compensation (Article 47). Employers used to flexible termination regimes should plan every exit around a specific ground in the Law.

This article covers federal Iraq, including Baghdad, Basra and the other governorates outside the Kurdistan Region.

How a contract ends: Article 43

Automatic endings (Article 43/First). The contract ends on:

• the death of the worker;
• a final sentence of imprisonment for more than one year;
• the death of the employer, where the employer's person was the basis of the contract;
• liquidation of the enterprise;
• written mutual agreement;
• expiry of a fixed-term contract;
• completion of the specific work agreed;
• the worker's resignation;
• force majeure.

A resigning worker must give at least 30 days' notice. A worker who leaves without notice owes the employer compensation equal to the notice period or the unexpired part of it (Article 43/First/h).

Employer termination (Article 43/Second). The employer may terminate where:

• the worker has an illness preventing work and is not cured within six months, or a disability of 75% or more, in each case supported by an official medical report;
• the worker reaches retirement age;
• working conditions require a reduction in the volume of work, with the Minister's consent;
• the worker engages in conduct in breach of their duties under the employment contract;
• the worker assumes a false identity or submits forged documents;
• a worker on probation proves insufficiently qualified;
• the worker commits a serious error causing heavy loss to the work, the workers or production, established by a final judicial decision.

Closure. An employer may not close, suspend or liquidate its enterprise without the Minister's approval (Article 43/Third). Restructurings and exits from the Iraqi market should therefore include a regulatory step with the Ministry of Labour and Social Affairs.

Fixed-term contracts and probation

A fixed-term contract may be concluded for a specific job or service and may not exceed one year. It may not be used for work of a continuing nature except to meet a temporary need for additional workers. A contract renewed more than once becomes indefinite (Article 38). Employers who roll over annual contracts should take this rule into account.

A probation period of up to three months may be agreed where the worker has no professional certificate proving the relevant skill, and only once with the same employer (Article 37/Second). The employer may end the contract during probation if the worker is unsuitable, on at least seven days' notice (Article 37/Third).

Notice

Where the employer terminates on a ground in Article 43/Second, it must give the worker written notice of at least 30 days or pay compensation in lieu (Article 44). Notice does not cure the absence of a valid ground. It is an additional requirement.

Disciplinary dismissal: a closed list and a procedure

Dismissal is the most serious of the disciplinary penalties in Article 138/Second. The others are a written warning, suspension of up to three days, withholding of the annual increment, and demotion. The penalty must be proportionate, and only one penalty may be imposed for the same violation (Article 138/Third and Fourth). No disciplinary penalty may be imposed more than 15 days after the employer or its representative learns of the violation (Article 138/First).

Dismissal as a penalty is permitted only in the cases in Article 141. These include:

• a serious violation causing the employer serious damage;
• disclosure of work secrets causing serious, proven damage;
• repeated breach of safety instructions;
• repeated drunkenness or drug influence at work after warnings;
• repeated misconduct after a warning;
• assault on the employer, a superior or a colleague;
• unjustified absence of 10 consecutive days or 30 non-consecutive days in a work year;
• a crime against a colleague at work, established by final judgment;
• a final prison sentence of more than one year.

Under Article 142, an employer that warns the worker in writing after five consecutive (or 20 non-consecutive) days of absence may dismiss after five further consecutive (or ten further non-consecutive) days.

The procedure is mandatory:

• the worker must be given an opportunity to defend themselves in the presence of a workers' representative (Article 140);
• a contract may not be terminated for an error unless the error is repeated after a prior written warning, subject to Article 43/Second (Article 143/First);
• for unsatisfactory performance, the employer must have given the necessary instructions and a written warning, and the poor performance must have continued for 30 days after the warning (Article 143/Second);
• the worker may be assisted by a workers' or union representative or any person of their choice (Article 143/Third), and the Law provides for the employer to consult workers' representatives before a final termination decision (Article 143/Fourth);
• the decision must be in writing and notified to the worker (Article 144).

Prohibited grounds and worker-initiated termination

A contract may not be terminated because of:

• trade-union membership or activity;
• seeking or holding the role of workers' representative;
• a complaint or claim against the employer;
• legal leave;
• discrimination;
• temporary absence due to documented illness or accident.

Such a termination is void (Article 48).

A worker may terminate without notice if the employer breaches its obligations under the law, internal regulations or contract, commits a felony or misdemeanour against the worker or a family member, or knowingly leaves a serious safety risk unaddressed. The worker may then claim compensation (Article 49).

Remedies

• No lawful ground reinstatement with full back pay (Article 47/First). If reinstatement is not possible, compensation equal to twice the end-of-service gratuity of Article 45 (Article 47/Second). Article 47/Third makes special provision for enterprises regularly employing fewer than five workers.
• Prohibited ground reinstatement with back pay. If reinstatement is not requested or is impractical, fair compensation of not less than twice the Article 47/Second amount (Article 48/Second).
• In addition: notice pay (Article 44), unused leave compensation (Article 76/Fourth) and the final wage settlement (Article 60).

Employers that violate the termination chapter also face criminal penalties: imprisonment of three months to one year, or a fine of IQD 500,000 to 1,000,000 (Article 52).

Disputes: committee or labour court

Choice of forum. A worker may challenge a termination before the termination-of-service committee (formed under ministerial instructions) or the labour court within 30 days of notification. A worker who does not challenge within this period is treated as having waived the challenge, and choosing one route forfeits the other (Article 46/First). A committee decision may be challenged before the labour court within 30 days (Article 46/Second). Where dismissal was imposed as a disciplinary penalty, the challenge to the labour court must likewise be filed within 30 days, and the employer must prove the violations (Article 145). Other disciplinary penalties may be challenged within 15 days, and the court's decision on them is final (Article 145/First).

Labour courts. One or more labour courts sit in each governorate (Article 165). Following Federal Supreme Court decision No. 67/Federal/2021, the provisions adding worker and employer representatives to the bench were struck down, so the court is composed of a judge. Labour courts hear civil and criminal matters under the Labour Law and the workers' social security law. Worker claimants and their unions are exempt from court fees at all stages, and labour cases are treated as urgent (Article 166). The worker may file in the court for the place of work or for the defendant's domicile or residence (Law No. 18 of 2023, Article 102/Second).

Appeals. A labour panel at the Court of Cassation hears appeals (Article 167). A cassation appeal must be filed within 30 days from the day after notification, and an objection to a default judgment within 10 days (Article 168).

Time limits for money claims. Claims arising from the employment relationship are barred three years after they fall due (Article 51).

Practical steps before terminating

1. Identify the exact statutory ground and gather evidence. The burden is on the employer.
2. For disciplinary cases, act within 15 days, hold a hearing with a workers' representative present, and issue a written, reasoned decision.
3. For performance cases, issue written instructions and a warning, then document 30 days of continued underperformance.
4. For downsizing or closure, obtain the Minister's consent or approval first.
5. Prepare the full final settlement and keep the calculations on file.
6. Expect a challenge within 30 days and keep the file ready.

Frequently Asked Questions

Can an employer in Iraq terminate without cause by paying notice?

No. Termination must rest on a ground in Article 43 or, for disciplinary dismissal, Article 141. Notice under Article 44 is an extra requirement, not a substitute for a ground.

What notice is required?

At least 30 days' written notice or pay in lieu for employer terminations under Article 43/Second (Article 44). During probation the notice is seven days (Article 37/Third). A resigning worker must give 30 days (Article 43/First/h).

Where does an employee challenge a dismissal?

Before the termination-of-service committee or the labour court, within 30 days of notification. Choosing one forfeits the other (Article 46).

Is redundancy allowed?

Termination because working conditions require a reduction in the volume of work is permitted only with the Minister's consent (Article 43/Second/d).

Related reading

• Iraqi Labour Law on our website
• End-of-Service Entitlements in Iraq: A Practical Guide to Labour Law No. 37 of 2015
• Hiring Foreign Workers in Iraq: Work Permits under Instructions No. 1 of 2026

Sources

1. Labour Law No. 37 of 2015 (Arabic text), University of Al-Qadisiyah: https://cm.qu.edu.iq/?page_id=17299
2. Labour Law No. 37 of 2015 (Arabic PDF, used for Article 43): https://iba.atu.edu.iq/wp-content/uploads/2025/04/%D9%82%D8%A7%D9%86%D9%88%D9%86-%D8%A7%D9%84%D8%B9%D9%85%D9%84-%D8%B1%D9%82%D9%85-37-%D9%84%D8%B3%D9%86%D8%A9-2015.pdf
3. English translation of Labour Law No. 37 of 2015: https://learningpartnership.org/sites/default/files/resources/pdfs/Iraq-Labor%20Law-2015-English.pdf
4. Supreme Judicial Council note on Federal Supreme Court decision No. 67/Federal/2021 (Article 165): https://www.sjc.iq/view.69977/
5. Workers' Retirement and Social Security Law No. 18 of 2023, official English translation (Article 102): 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
6. ILO NATLEX record, Labour Law 2015 (Iraq): https://natlex.ilo.org/dyn/natlex2/r/natlex/fe/details?p3_isn=96652

This article is general information, not legal advice.