Foreign oil companies and Iraqi labour law

In briefA foreign company that puts people to work on Iraqi soil is bound in that relationship by Labour Law No. 37 of 2015 whenever worker status exists, whether the worker is Iraqi or foreign (arts. 1 and 3). A foreign worker may not start before the Ministry of Labour and Social Affairs issues a work permit (arts. 30 and 31), and the company owes duties to staff it brought in (art. 32). Where part of the work is subcontracted under the same working conditions, equal rights are owed and both firms answer jointly (art. 12). Social security is read from Workers’ Pension and Social Security Law No. 18 of 2023.

The HR manager of an oil or oilfield-services company arriving in Iraq usually carries internal policies written for another country and template contracts from head office. The question put to the Law Office of Ali Barakat in Baghdad, al-Yarmouk, is: what has to change before the first employee starts on site? We answer with six questions that we take in the same order in every file of this kind, with the articles behind each answer. Matters specific to Basrah sites are on a separate page.

Question one: does Iraqi law govern the relationship?

The company’s nationality and place of registration do not decide the applicable law. What counts is where the work is done and what the relationship looks like. The Labour Law reaches everyone working in Iraq and anyone treated as a worker (art. 3, first paragraph), and its definition of a worker is a natural person whose effort is given under the employer’s management and supervision for pay (art. 1). The foreign engineer in the field, the Iraqi technician in the camp and the company driver are all inside the scope once those elements are present. The only people left out are those the text names: state employees appointed under the Civil Service Law or a special statute, and those serving in the military, the police or the internal security forces (art. 3, second paragraph).

In practice: a clause saying “the law of the head-office country governs” in the contract of someone working in Iraq does not strip that person of the protection Iraqi law gives.

Question two: does every foreign national on site hold a valid work permit?

No one may employ a foreign worker, under any job title, before the Ministry of Labour and Social Affairs has issued that worker a work permit, and the charge for the permit is set by the Minister’s instructions (art. 30). The worker is likewise barred from taking up work before obtaining it (art. 31). The Minister may issue specific instructions on bringing in and employing foreign staff (art. 33), and those are what we check in each file. Breaching this chapter exposes the body or person to a fine that the text ties to multiples of the minimum wage (art. 36).

It also helps for the company to know that the Law sets no general numerical ratio of Iraqi to foreign staff in its articles. Any ratios or conditions come from the instructions and contracts in force, which is why they are reviewed on the page on rules on employing non-Iraqis.

Question three: what does the company owe those it brought in?

If the company brought a worker from abroad at its own cost, it pays for his journey home to the country he was recruited from, unless he left before the contract ended without a lawful reason. If he dies, the company arranges for the body to be prepared and returned to his country or usual residence where the family requests it (art. 32).

On the other side, a foreign worker lawfully resident in Iraq for work does not become irregular simply because his job has ended, and losing the job does not by itself lead to the withdrawal of his residence or work permission, unless he has broken Iraqi law (art. 34). This matters when a company downsizes, because it separates ending the contract from the question of residence.

Question four: who answers for subcontractors’ workers?

Oil projects have many layers: operator, main contractor, subcontractors and service firms. The Law deals with all of them through one rule. Where the principal employer contracts out a portion of the job to a second employer, and that portion runs on the same terms, the subcontractor must give its staff the same rights as the principal’s staff, and the two are jointly liable for that (art. 12).

An example: maintenance technicians employed by a subcontractor work in the same facility and on the same shift rota as the operator’s own technicians. If their pay or leave is lower, a claim may be aimed at both companies together. We therefore advise that the subcontract carry an express compliance undertaking and a right to audit payroll records. Details are on the page on subcontractors’ workers’ wages and social security.

If the project changes hands, merges, is sold, leased, or its operation is handed over in whole or in part, the new employer takes on the previous employer’s obligations to the workers, while the outgoing employer stays liable alongside it for anything that accrued before the handover (art. 50). That has to be factored into any purchase of a stake in a running project.

Question five: do site safety rules match Iraqi law?

The occupational safety and health provisions in Chapter Thirteen of the Law apply to workplaces it covers, oil sites included. A company’s international standards may go further, but they do not replace the Iraqi obligations. Details are on the page on the employer’s occupational safety and health duties.

Question six: how are workers registered for social security?

Workers’ Pension and Social Security Law No. 18 of 2023 covers, according to its article 3, people working in the private, mixed and cooperative sectors and those subject to the Labour Law, alongside other groups it names. Among the branches listed in article 12 is the branch for work injuries, sickness and occupational disease. Contributions are allocated in article 14, which includes a higher rate, twenty-five per cent, for private and mixed-sector employers whose profits come from the sale of Iraqi-produced oil and hydrocarbons sent abroad, or of rights and interests tied to them, spread across the branches as the text sets out. For a foreign worker, the employer also bears the state’s share on top of its own. These rates are read from the text for each case, and the general framework is on the page on the employer’s social security duties.

Oil, construction and logistics operations in Basrah are covered on the page on labour rules for oil, construction and logistics companies in Basrah.

Legal basis and sources

Frequently asked questions

Our staff contracts name the law of the head-office country. Is that enough?

Not to exclude Iraqi law from work done in Iraq. The rights the Labour Law gives a worker remain in place once worker status exists and the work is inside Iraq.

A visiting engineer will work on site for only three weeks. Does he still need a permit?

The bar in articles 30 and 31 makes no distinction by length of work or job title. The detailed conditions for short assignments are read from the Ministry’s instructions in force before he arrives.

Is the operator answerable for a subcontractor’s workers’ wages?

If the subcontractor carries out part of the operator’s work under the same working conditions, article 12 makes the two jointly responsible for equal treatment.

Always check the text in force and its amendments in the official source.

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A foreign oil company hiring in Iraq: six labour questions before day one