Twenty-eight years after the enactment of the Labour Law (71/1987), Parliament voted on the new Labour Law (37/2015), which was published in the Official Gazette on November 9 2015. The new law abrogated the outdated 1987 law and came into force 90 days after its publication.

Considering the fundamental differences between the governance system and business environment surrounding the promulgation of both laws, they naturally differ on several points. Understanding these differences is essential for the organisation of companies' relationships with their employees and the adjustment of underlying employment agreements.

The following is a comparative table summarising the major differences between the two laws. Notably, the Kurdistan Region of Iraq still applies the old labour law because its Parliament has not yet ratified the new law.

Subject

Old Labour Law (71/1987)

New Labour Law (37/2015)

Probation period

The employment agreement could be terminated at any time without prior notice or cause during a maximum three-month probation period.

The new law entitles the employer to terminate the employment agreement during the probation period by way of a seven-day termination notice.

Mandatory information

Article 30 imposed the mandatory inclusion of only the salary and type of work in the employment agreement.

Articles 37(a), (d) and (e) added that the employment agreement should include, among other things, its duration, allowances and the employee's working hours.

Term

The general rule was that employment agreements cannot have a fixed term. Article 32(2) permitted fixed-term agreements only when contracting for a specific assignment or season.

Article 38 allows fixed-term employment agreements if the work or service is expected to be completed within a maximum period of one year.

Rights of fixed-term employees

The old law contained no provisions with regard to this subject matter.

Article 38(3) grants fixed-term employees the same rights as permanent employees.

Termination

The employer was entitled to terminate employment only based on restricted conditions.

Article 43 provides for new elaborated conditions for employment termination.

In this respect, the employer must issue a 30-day termination notice.

In addition, Article 143 enables termination based on poor performance as detailed further below in this table.

End of service indemnity

The old law did not grant the employee the right to any end of service indemnity.

Except under certain termination conditions, Article 45 gives the terminated employee the right to an end of service indemnity of two weeks for every year of employment based on the last salary level.

Termination timing restrictions

The old law provided no timing restrictions on terminations.

Article 48 stipulates that the termination of employment is prohibited and will be considered void in several instances, including:

  • if the employee sues the employer; and
  • if the employee is on medical or annual leave.

Currency

The old law allowed only the payment of salaries in local currency.

Under Article 53, the parties may agree in the employment agreement to the payment of salaries in a foreign currency through wire transfers, cheques or cash.

Salary

The employer must hold a salaries registry to be signed by the employee on payment of his or her salary in order to be discharged.

Article 59 provides that:

  • the employee must be informed about all salary components before employment; and
  • the employee must receive on payment a statement detailing the elements that formed the paid salary amount.

Settlement of outstanding salaries

The previous law required completion of the settlement within seven days of the termination date.

Article 60 requires the settlement of any outstanding salary payments one day following the termination of employment. However, if the agreement is terminated by the employee, the settlement can be completed within seven days.

Salary raise

The old law did not mention the employee's right to an annual raise.

Article 63(4) sets out the employee's right to an annual raise following the first year of employment, based on market rates and indicators.

Working hours

Article 55 of the old law stipulated that normal working hours were eight hours per day, but mentioned no weekly total.

Overtime was limited to four hours per day and 300 hours per year.

Article 67(1) states that normal working hours are limited to eight hours per day and 48 hours per week, except for certain types of job or position (eg, employees in managerial positions).

Overtime is limited to four hours per day, eight hours per week, 40 hours per 90 days and 120 hours per year.

Annual leave

The employee was eligible for 20 days of annual leave as of the start of employment, prorated to the period of employment during the first year.

Article 68 added two days of annual leave for every five years of employment.

Article 75(1) sets the number of annual leave days at 21. The employee is eligible for annual leave only following completion of the first year of employment, and the leave is prorated for the remaining period of the year following the first year of employment.

Article 75(3) adds the following to the annual leave entitlement:

  • two days for the first five years;
  • two days for the second five years; and
  • three days for each subsequent five years.

Exclusion of allowances

The old law mentioned no exclusion of allowances from the salary paid when the employee was on leave.

Article 76(2) excludes transport, danger and food allowances from the salary paid when the employee is on leave.

Paid leave

The old law did not elaborate on the employee's right to paid leave, other than the usual annual or medical leave.

Article 82 gives the employee the right to paid leave in the following instances:

  • five days for the employee's marriage;
  • one day for the marriage of the employee's son or daughter;
  • five days for the death of the employee's spouse, parent, child, sibling or parent-in-law;
  • 130 days for a widowed or divorced female employee;
  • one period of Hajj leave at the employee's request during the employment period; and
  • leave to fulfil official or public duties, exercise voting rights or report to a court as a witness or expert.

Maternity leave

The old law limited the paid maternity leave to a maximum period of 72 days per year.

Article 87 extends paid maternity leave to a minimum period of 14 weeks per year and guarantees working mothers the right to return to the same or an equivalent position at the end of their maternity leave.

Penalties

The old law stipulated the following penalties for an employee's breach of duties:

  • drawing the employee's attention to the breach;
  • deducting a maximum of three days of the salary;
  • postponing the employee's annual raise for six months at most;
  • depriving the employee of an annual raise for the year in which the breach occurred; and
  • terminating employment.

Article 138(2) stipulates the following penalties for an employee's breach of duties:

  • issuance of a written notice;
  • suspension from work for three days at most;
  • postponement of the employee's annual raise for a maximum of 180 days;
  • demotion and a consequent salary reduction; and
  • termination of employment.

Absence

The previous law permitted the termination of employment due to the employee's unjustified absence from work for 10 consecutive days or 20 intermittent days throughout the year.

Article 141(7) provides that employment may be terminated due to the employee's unjustified absence from work for 10 consecutive days or 30 intermittent days throughout the year.

Termination for error or poor performance

The old law did not contain provisions concerning this matter.

Article 143 prohibits the termination of an employment agreement due to an employee's error or poor work performance.

However, an error's recurrence or the employee's continued poor performance enables the employer to terminate the employment agreement by written notice if the employee's work does not improve within 30 days of receiving the notice.

For further information on this topic please contact Alain Hannouche or Amanda Mezher at Hannouche Associates by telephone (+964 771 444 7447) or email (ahannouche@hannouchelaw.com or amezher@hannouchelaw.com). The Hannouche Associates website can be accessed at www.hannouchelaw.com.

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