Rivermate | Iran flag


Discover everything you need to know about Iran

Hire in Iran at a glance

Here ares some key facts regarding hiring in Iran

Iranian Rial
GDP growth
GDP world share
Payroll frequency
Working hours
48 hours/week

Overview in Iran

Read more

Iran, officially known as the Islamic Republic of Iran and historically referred to as Persia, is a country characterized by its geographical diversity, rich historical legacy, and complex socio-economic landscape.

  • Geographical Diversity: Iran is strategically located at the crossroads of Western, Central, and South Asia, covering over 1.6 million square kilometers. It features a varied terrain from mountainous regions, such as the Alborz mountain range, to deserts like the Dasht-e Kavir, and a fertile Caspian Sea coast. This diversity results in a climate that ranges from arid to subtropical.

  • Historical Legacy: Iran has a profound historical significance with roots dating back to the Achaemenid Empire established in 550 BCE. Over centuries, it has been a center for cultural and architectural development, particularly influenced by the arrival of Islam in the 7th century CE. Despite various periods of foreign rule and internal conflicts, Iran has maintained a distinct cultural identity.

  • Socioeconomic Landscape: The nation is a major energy producer with the world's second-largest natural gas reserves and third-largest oil reserves. Beyond hydrocarbons, Iran's economy includes agriculture, manufacturing, and a growing service sector. The discovery of oil in the early 20th century spurred economic growth, but the 1979 Islamic Revolution and international sanctions have posed challenges.

  • Social Dynamics: Predominantly Shia Muslim with a significant Sunni minority, Iranian society values strong family ties and communal religious observances.

  • Challenges and Opportunities: Iran faces issues like youth unemployment and inflation, but its strategic location, abundant resources, and educated population offer substantial development opportunities. The workforce is young and diverse, with a high literacy rate, though there is a skills gap that needs addressing. The service sector is expanding, while traditional sectors like agriculture and manufacturing continue to play significant roles.

  • Workplace Culture: Iranian workplaces are influenced by cultural traditions, emphasizing indirect communication, respect for hierarchy, and strong colleague relationships. Work-life balance is family-oriented, though some sectors may require overtime.

Overall, Iran's blend of historical depth, resource wealth, and cultural richness defines its unique position on the global stage, presenting both significant challenges and opportunities for future growth.

Taxes in Iran

Read more

In Iran, employers are required to contribute to the social security system, managed by the Social Security Organization (SSO), which provides benefits like pensions, unemployment insurance, and healthcare. Employers contribute 23% of an employee's gross salary, while employees contribute 7%, totaling a 30% contribution to the SSO. Additionally, employers must withhold income tax based on a progressive system, with rates depending on the employee's taxable income after exemptions and deductions.

Employers also need to handle VAT obligations if applicable. The standard VAT rate is 9%, with certain services exempt. Businesses exceeding a turnover threshold must register for VAT, comply with record-keeping, and file periodic returns. Non-compliance can lead to penalties.

Furthermore, Iran offers various corporate income tax (CIT) exemptions and benefits, particularly in Free Trade Zones (FTZs) and Special Economic Zones (SEZs), to stimulate sectors like mining, tourism, and technology. These incentives include exemptions on CIT for up to 13 years, depending on the business location and sector, with additional benefits for exports and R&D activities.

Leave in Iran

Read more

Iranian labor law ensures that all employees receive a minimum amount of vacation leave, with specific provisions for those in hazardous jobs and various types of special leave. Here are the key points:

  • Annual Leave: Employees are entitled to one full month of paid vacation annually, prorated if the employment period is less than a year.
  • Leave for Hazardous Jobs: Employees in dangerous or difficult jobs receive five weeks of paid vacation each year.
  • Scheduling: Vacation schedules are mutually agreed upon by the employee and employer to minimize work disruptions.
  • National and Religious Holidays: Iran observes several national holidays like Nowruz and the Anniversary of the Islamic Revolution, and religious holidays based on the Lunar Islamic calendar, such as Eid al-Fitr and Ashura.
  • Special Leave Provisions: Includes sick leave, maternity and paternity leave, bereavement leave, and a special leave for the Hajj pilgrimage.

Employees can also save up to nine days of their annual leave and are compensated for accrued leave in cases like termination or disability.

Benefits in Iran

Read more

Iran's labor laws provide a robust framework of benefits for employees, ensuring protection, social security, and fair compensation. Key benefits include:

  • Core Benefits: Employees enjoy a probationary period, a minimum of one month of paid annual leave, and paid leave on public holidays with overtime compensation for work on these days.

  • Social Security and Insurance: Mandatory contributions to the State Social Security Fund cover pensions, disability benefits, and unemployment insurance.

  • Leave and Compensation: Benefits include paid sick leave, 90 days of paid maternity leave, overtime pay, and severance pay calculated as one month's salary for each year of service.

  • Financial Benefits: Optional benefits may include profit sharing, transportation allowances, meal subsidies, and interest-free loans.

  • Health and Wellness Benefits: Employers may offer supplemental health insurance, gym memberships, or fitness programs.

  • Work-Life Balance Benefits: Flexible working arrangements, childcare assistance, and educational support are provided to enhance work-life balance.

  • Other Benefits: Recreational activities and social events are organized to boost morale and team building.

  • Social Security Health Insurance: This covers all employees for basic medical services, funded by mandatory contributions from both employers and employees.

  • Private Health Insurance: Optional additional coverage can include a broader range of services, access to private facilities, and shorter wait times.

  • Retirement System: The public pension plan managed by the Social Security Organization offers pensions based on earnings and contribution years, with recent reforms aimed at sustainability. Additionally, voluntary private pension plans are available for further retirement savings.

Workers Rights in Iran

Read more

Iranian employment termination is strictly regulated under Law No. 1 of 1996, allowing termination only under specific conditions such as death, retirement, disability, contract expiry, or resignation with notice. Unlawful dismissal requires adherence to procedural guidelines, including written warnings for misconduct and approval from relevant labor bodies for economic dismissals. Notice periods vary, and severance pay is mandated as one month's salary per year of service for those eligible.

Discrimination laws in Iran are limited, with some protections based on race, color, ethnicity, and language under the Constitution, but significant gaps remain, particularly for religious minorities and women. Redress mechanisms are available but often ineffective, including complaints to the Ministry of Labour and international human rights bodies.

Employers are obligated to ensure a non-discriminatory work environment, though enforcement is challenging due to vague laws. The Labour Code also outlines standards for working hours, rest periods, and ergonomic safety to promote a balanced and safe work environment. Enforcement of these regulations is primarily the responsibility of the Ministry of Labour and Social Affairs, focusing on workplace safety and health practices.

Agreements in Iran

Read more

Iranian Labor Law accommodates various employment contracts including permanent, temporary, apprenticeship, and part-time agreements. Permanent contracts are indefinite and continue until legally terminated. Temporary contracts have limitations to prevent misuse in circumventing permanent employment rights. Apprenticeship contracts focus on vocational training, while part-time contracts must ensure proportional benefits and protections.

Key elements of a legally sound employment agreement include clear identification of parties involved, job details, compensation, and work location. It should specify the type of contract, start date, role responsibilities, salary, benefits, and working hours. The agreement must also outline leave entitlements, social security contributions, and additional insurance provisions.

Termination conditions, dispute resolution methods, and details about probationary periods should be clearly stated. Probation allows assessment of suitability with specific rules on termination rights and obligations during this period. Confidentiality and non-compete clauses are also common, with enforceability depending on their adherence to Iranian labor law and general contract law principles, ensuring they do not unreasonably restrict an employee's future employment opportunities.

Remote Work in Iran

Read more

In Iran, there are no specific laws or regulations addressing remote work, leaving employers to rely on general labor laws and well-defined employment contracts to manage telecommuting arrangements. These contracts should clearly outline work hours, compensation, and employer responsibilities such as equipment provision and internet reimbursements. Given the limitations in Iran's internet infrastructure and government restrictions, employers need to consider these factors when setting up remote work systems. Employers are advised to develop formal remote work policies that include communication protocols, performance metrics, and security measures. Additionally, they should provide training on remote work tools and cybersecurity best practices. The absence of specific laws on data protection in remote work contexts necessitates clear contracts and employer transparency regarding data usage and security measures. Employers should also focus on fostering a positive work culture and supporting employee well-being to counter potential challenges like isolation in remote work environments.

Working Hours in Iran

Read more

Iran's labor law enforces a 44-hour workweek, typically spread over eight hours from Saturday to Wednesday and a half-day on Thursday. Overtime, defined as work beyond these hours, requires employee consent and is compensated at a 40% increase over the regular hourly wage. The maximum daily overtime allowed is four hours, with exceptions possible under mutual agreement.

Key entitlements under Iranian labor law include:

  • Weekly Rest Day: A mandatory full-pay rest day each week.
  • Designated Day of Rest: Friday is specifically set as the weekly rest day.
  • Rest Breaks: A minimum of 45 minutes for meals during continuous work schedules, not counted as work time.

Exceptions to these rules can occur through collective bargaining agreements. Night work, defined as work between 10 pm and 6 am, warrants a minimum 35% wage supplement. Work on Fridays, the designated rest day, is generally prohibited unless in continuous process industries or emergencies, with required compensation being a substitute rest day or a 40% wage increase. Legal consultation is recommended for navigating exceptions or complex situations in overtime and break regulations.

Salary in Iran

Read more

Understanding competitive salaries in Iran involves analyzing various factors and sources:

  • Salary Ranges and Benchmarks: Utilizing industry reports, job boards, and recruitment agencies helps gauge average and competitive salaries across different sectors.

  • Factors Affecting Market Competitiveness: Salaries vary by industry, experience, skills, location, and company size. For instance, industries like Oil & Gas, IT, and Finance generally offer higher salaries, especially in urban areas like Tehran.

  • Negotiation and Benefits: In addition to base salary, competitive compensation includes benefits such as health insurance and paid leave. The culture of negotiation allows employees to discuss salary offers, backed by knowledge of market benchmarks.

  • Minimum Wage Setting Process: The Supreme Labor Council, which includes representatives from the government, employers, and workers' unions, meets annually to adjust the minimum wage based on factors like inflation and economic growth.

  • Mandatory Benefits and Allowances: Iranian labor law mandates benefits such as paid leave, overtime pay, and severance pay, along with allowances for specific job requirements or positions.

  • Optional Bonuses and Perks: Companies may offer additional perks like profit sharing, production incentives, educational assistance, and wellness programs to attract and retain talent.

  • Payroll Cycle Flexibility: While the monthly pay cycle is mandated by law, some flexibility is allowed through employment contracts or established practices.

  • Overtime Pay and Year-End Bonus: Overtime work is compensated with a 40% premium, and a mandatory year-end bonus equivalent to two months' wages is required for employees who have completed a year of service.

These elements collectively define the framework for understanding and negotiating competitive salaries in Iran.

Termination in Iran

Read more

In Iran, the Labour Law mandates a one-month notice period for employees who wish to resign, requiring them to continue working during this time after submitting a written notice. There are no legal obligations for employers to provide a notice period when terminating employees, although certain payments may be required under specific circumstances.

Exceptions to the one-month notice period can exist in individual employment contracts, but they cannot reduce the notice period below the legal minimum. Adhering to these notice periods is crucial for a smooth transition and fulfilling contractual obligations.

Severance pay is entitled to employees under conditions such as employer-initiated termination without valid reason, completion of a fixed-term contract, or retirement. The calculation of severance pay depends on the employee's length of service and last salary, with specific provisions for disability.

The termination process involves justification, potential approval from the Islamic Labor Council or Labor Discretionary Board, dispute resolution through the Labor Court, and a final settlement of all dues. Employment contracts can include clauses that exceed the minimum legal requirements. Employers are advised to consult with qualified labor lawyers to ensure compliance with the Labour Law during terminations.

Freelancing in Iran

Read more

In Iran, the distinction between employees and independent contractors is blurred, leading to potential legal disputes and complexities. Employees are covered under the Iranian Labor Code, which mandates employer responsibility for workplace safety and provides employees with fixed salaries and benefits like health insurance and social security. Independent contractors, however, manage their own work methods, compensation, and benefits without such protections.

Contractual relationships also differ; employees have formal employment contracts, while contractors work under agreements specific to the project or service. Misclassification of these roles can lead to significant issues, particularly concerning tax obligations and worker protections.

Contract structures in Iran include fixed-fee, time-based, and performance-based contracts, each suitable for different project needs. Negotiation practices vary from direct negotiations for smaller projects to tendering for larger ones, with a strong emphasis on building long-term relationships and trust.

Independent contracting is prevalent in industries such as IT, creative sectors, and construction. However, international sanctions can complicate foreign collaborations. Intellectual property rights, crucial for freelancers, are governed by laws that assign copyright to the creator unless specified otherwise in a contract. Trademarks and patents are also protected, but freelancers must ensure proper registration and agreements to secure these rights.

Non-Disclosure Agreements (NDAs), though not explicitly recognized by Iranian law, are used to protect confidential information based on good faith and contractual obligations. Freelancers must navigate tax obligations by registering with the Iranian National Tax Administration and managing their tax filings and payments diligently to avoid penalties. They also have the option to contribute voluntarily to social security for benefits like retirement and healthcare, or they can opt for private health insurance plans.

Health & Safety in Iran

Read more

Iran's health and safety framework is managed by two main bodies: the Ministry of Health and Medical Education, responsible for occupational health services and health regulations, and the Ministry of Labour and Social Affairs, which oversees occupational safety legal aspects. The framework is primarily governed by the Labour Law, which mandates employers to provide a safe and healthy work environment but only applies to workplaces with at least 25 workers, potentially leaving employees at smaller enterprises less protected.

Iran has ratified the International Labour Organization (ILO) Convention 155 and its Protocol in 2018, aiming to align its domestic legislation with international standards. The country's commitment to improving its occupational safety and health (OSH) system includes establishing councils in larger workplaces to oversee safety protocols and worker health, although consistent enforcement across all industries remains a challenge.

Workplace inspections are conducted by the Ministry of Labour and Social Affairs and the Ministry of Health and Medical Education, focusing on compliance with safety and health regulations. These inspections prioritize high-risk workplaces and can also be complaint-driven. Non-compliance can lead to fines or closure of workplaces.

In case of workplace accidents, employers must report to the Social Security Organization (SSO) within 48 hours, and investigations may follow to determine fault and potential employer negligence. Workers or their families can claim compensation through the SSO, with the option for legal action if dissatisfied with the compensation offered.

Despite these protocols, challenges such as enforcement and underreporting of accidents, particularly in smaller enterprises, persist.

Dispute Resolution in Iran

Read more

Iran's labor dispute resolution system involves multiple tiers, primarily through the Labor Dispute Settlement Boards (LDSB) and the Supreme Labor Council. The LDSB, a tripartite body, handles individual labor disputes related to employment contracts, labor law violations, and social security benefits, starting with mediation and potentially issuing binding decisions if conciliation fails. The Supreme Labor Council acts as an appellate body to review LDSB decisions. Arbitration is available but less common, used only upon mutual agreement or specified in collective agreements.

Labor courts and LDSBs manage various cases including wage disputes, working hours, termination issues, discrimination, and safety violations. The Ministry of Labor, which conducts regular inspections, and the Social Security Organization ensure compliance with labor and social security regulations. Inspection frequency varies by industry risk, company size, and potential violations reported.

Non-compliance can lead to fines, closures, criminal charges, and reputational damage. Compliance audits are crucial for protecting workers' rights, ensuring fair competition, and identifying workplace hazards. Whistleblower protections exist but are weakly enforced, and practical challenges like fear of retaliation and lack of awareness hinder reporting of violations.

Iran has ratified several International Labor Organization (ILO) conventions, but gaps remain between legal frameworks and their implementation, affecting rights related to unionization, collective bargaining, forced labor, child labor, equal pay, and non-discrimination. To better align with international standards, Iran needs to enhance enforcement, expand inspections, support independent unions, and engage civil society in labor rights promotion.

Cultural Considerations in Iran

Read more

In Iran, a collectivistic society with a rich cultural heritage, effective communication in the workplace involves understanding and adapting to indirect communication styles, maintaining formality, and being cognizant of non-verbal cues. Iranians prefer indirect communication to avoid confrontation, using respectful deference to hierarchy and polite suggestions rather than direct criticism. Formality is crucial, with a strong emphasis on using titles and professional behavior to build trust. Non-verbal communication, such as eye contact, body language, and facial expressions, plays a significant role in conveying messages and building rapport. Understanding these communication nuances, along with cultural considerations like the importance of building relationships and the concept of saving face in negotiations, is essential for successful business interactions in Iran. Additionally, hierarchical structures in Iranian businesses influence decision-making and team dynamics, often leading to centralized decision-making and a focus on individual performance within a respect-for-authority framework. Awareness of Iranian holidays and observances is also important for planning and maintaining respectful business relationships.

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.