Iran

499 EUR per employee per month

Discover everything you need to know about Iran

Talk to an expert Create an account

Hire in Iran at a glance

Here ares some key facts regarding hiring in Iran

Capital: Tehran
Currency: Iranian Rial
Language: Persian
Population: 83,992,949
GDP growth: 0%
GDP world share: 0%
Payroll frequency: Monthly
Working hours: 48 hours/week

Overview in Iran

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.

Get a payroll calculation for Iran

Understand what the employment costs are that you have to consider when hiring Iran

Employer of Record in Iran

Rivermate is a global Employer of Record company that helps you hire employees in Iran without the need to set up a legal entity. We act as the Employer of Record for your employees in Iran, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Iran through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationship with the employee, you allocate them the work and manage their performance. Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits, and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Iran, Rivermate is responsible for:

Creating and managing the employment contracts
Running the monthly payroll
Providing local and global benefits
Ensuring 100% local compliance
Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

Day-to-day management of the employee
Work assignments
Performance management
Training and development

Taxes in Iran

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

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

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

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

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

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

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

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

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

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

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

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

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.

Frequently Asked Questions for Employer of Record services in Iran

Is it possible to hire independent contractors in Iran?

Yes, it is possible to hire independent contractors in Iran. However, there are several important considerations to keep in mind due to the specific legal and regulatory environment in the country.

Legal Framework: Iran has a distinct legal framework governing employment and contractor relationships. Independent contractors in Iran are typically governed by civil law rather than labor law, which means they do not enjoy the same protections and benefits as regular employees. This includes aspects such as social security, health insurance, and severance pay.
Contractual Clarity: It is crucial to have a well-drafted contract that clearly defines the nature of the relationship, the scope of work, payment terms, and other relevant conditions. This helps in avoiding any potential misclassification issues where the contractor might be deemed an employee by the authorities, which could lead to legal complications and financial penalties.
Tax Implications: Independent contractors in Iran are responsible for their own tax filings and payments. However, the hiring company may still have some withholding tax obligations. It is essential to understand the local tax regulations to ensure compliance and avoid any legal issues.
Cultural and Business Practices: Understanding the local business culture and practices is important when engaging with independent contractors in Iran. Building trust and maintaining clear communication can help in fostering a successful working relationship.
Regulatory Compliance: Iran has specific regulations regarding foreign companies operating within its borders. Ensuring compliance with these regulations is critical to avoid any legal repercussions. This includes registering the business, obtaining necessary permits, and adhering to local laws.

Given these complexities, many companies opt to use an Employer of Record (EOR) service like Rivermate when hiring in Iran. An EOR can handle all the legal, tax, and administrative responsibilities, ensuring full compliance with local laws and regulations. This allows companies to focus on their core business activities while mitigating the risks associated with hiring independent contractors directly.

What options are available for hiring a worker in Iran?

Hiring a worker in Iran involves navigating a complex landscape of local labor laws, regulations, and cultural nuances. Here are the primary options available for hiring a worker in Iran:

Direct Employment:
- Establishing a Legal Entity: Foreign companies can set up a branch or subsidiary in Iran. This involves registering the business with the Iranian authorities, obtaining necessary licenses, and complying with local labor laws. This option provides full control over the hiring process but requires significant investment and understanding of local regulations.
- Local Recruitment: Once a legal entity is established, companies can directly hire local employees. This involves drafting employment contracts in compliance with Iranian labor laws, which include specific provisions on working hours, wages, benefits, and termination procedures.
Independent Contractors:
- Companies can engage independent contractors for specific projects or tasks. This option offers flexibility and can be cost-effective. However, it is crucial to ensure that the contractor relationship is clearly defined to avoid misclassification issues, which can lead to legal complications and penalties.
Outsourcing:
- Businesses can outsource certain functions or projects to local firms in Iran. This can be an effective way to leverage local expertise and reduce the administrative burden of direct employment. However, it requires careful selection of reliable outsourcing partners and clear contractual agreements.
Employer of Record (EOR) Services:
- Using an Employer of Record (EOR) like Rivermate can be an efficient and compliant way to hire workers in Iran without establishing a legal entity. An EOR handles all aspects of employment, including payroll, tax compliance, benefits administration, and adherence to local labor laws. This allows companies to focus on their core business activities while ensuring compliance with Iranian regulations.

Benefits of Using an Employer of Record (EOR) in Iran:

Compliance: An EOR ensures that all employment practices comply with Iranian labor laws, reducing the risk of legal issues and penalties.
Speed: EOR services can expedite the hiring process, enabling companies to quickly onboard local talent without the lengthy process of setting up a legal entity.
Cost-Effective: Avoiding the need to establish a local entity can save significant costs related to registration, legal fees, and ongoing administrative expenses.
Local Expertise: EORs have in-depth knowledge of the local market, labor laws, and cultural nuances, which can help in effectively managing the workforce.
Focus on Core Business: By outsourcing employment administration to an EOR, companies can concentrate on their strategic objectives and business growth.

In summary, while there are several options for hiring workers in Iran, using an Employer of Record like Rivermate offers a streamlined, compliant, and cost-effective solution, particularly for companies looking to enter the Iranian market without the complexities of establishing a local entity.

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Iran?

When using an Employer of Record (EOR) like Rivermate in Iran, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes ensuring compliance with local tax regulations and social security laws. The EOR takes on the responsibility of calculating the appropriate amounts for income tax, social insurance, and any other mandatory contributions, and then remits these payments to the relevant Iranian government authorities on behalf of the employer. This service simplifies the administrative burden for companies, ensuring that all legal obligations are met accurately and on time, thereby reducing the risk of non-compliance and associated penalties.

What is HR compliance in Iran, and why is it important?

HR compliance in Iran refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes a wide range of legal requirements related to hiring, wages, working hours, employee benefits, termination procedures, and workplace safety. Ensuring HR compliance in Iran is crucial for several reasons:

Legal Obligations: Iranian labor law, primarily governed by the Labor Code of the Islamic Republic of Iran, sets out specific requirements for employers. These include regulations on employment contracts, minimum wage, working hours, overtime pay, leave entitlements, and termination procedures. Non-compliance can result in legal penalties, fines, and potential litigation.
Employee Rights and Protections: Compliance ensures that employees' rights are protected. This includes fair wages, safe working conditions, and appropriate benefits. Adhering to these regulations helps in maintaining a motivated and productive workforce.
Reputation Management: Companies that comply with local labor laws are viewed more favorably by employees, customers, and the public. This can enhance the company's reputation and brand image, making it more attractive to potential employees and business partners.
Risk Mitigation: Non-compliance can lead to various risks, including legal disputes, financial penalties, and damage to the company's reputation. By ensuring compliance, companies can mitigate these risks and avoid costly legal battles and disruptions to their operations.
Operational Efficiency: Understanding and adhering to local labor laws can streamline HR processes and improve operational efficiency. This includes proper management of payroll, benefits, and employee relations, which can lead to a more harmonious and productive workplace.
Cultural Sensitivity and Adaptation: Compliance with local labor laws also demonstrates respect for the local culture and legal environment. This can be particularly important in a country like Iran, where cultural and religious considerations play a significant role in business practices.

Using an Employer of Record (EOR) like Rivermate in Iran can greatly simplify the process of ensuring HR compliance. An EOR takes on the responsibility of managing all aspects of employment, including compliance with local labor laws. This allows companies to focus on their core business activities while ensuring that all legal requirements are met. Rivermate, for example, would handle payroll, benefits administration, tax compliance, and other HR functions, ensuring that the company remains compliant with Iranian labor laws and regulations. This can be particularly beneficial for foreign companies looking to expand into Iran without establishing a legal entity, as it reduces the complexity and risk associated with navigating the local regulatory environment.

How does Rivermate, as an Employer of Record in Iran, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Iran, ensures HR compliance through a comprehensive understanding and application of local labor laws and regulations. Here are several ways Rivermate achieves this:

Local Expertise: Rivermate employs local HR professionals who are well-versed in Iranian labor laws, including the nuances of employment contracts, termination procedures, and employee rights. This local expertise ensures that all HR practices are compliant with national regulations.
Employment Contracts: Rivermate ensures that employment contracts are drafted in accordance with Iranian labor laws. This includes specifying terms of employment, job descriptions, compensation, benefits, and termination conditions. These contracts are tailored to meet both legal requirements and the specific needs of the client.
Payroll Management: Rivermate handles payroll processing in compliance with Iranian tax laws and social security regulations. This includes accurate calculation of wages, deductions, and contributions to social security, health insurance, and other statutory benefits.
Tax Compliance: Rivermate ensures that all tax obligations are met, including income tax withholding and reporting. They stay updated on any changes in tax legislation to ensure ongoing compliance.
Benefits Administration: Rivermate manages statutory benefits such as health insurance, pensions, and other mandatory contributions. They also ensure that any additional benefits provided by the employer are administered in compliance with local laws.
Labor Relations: Rivermate assists in managing employee relations, including handling disputes, grievances, and disciplinary actions in accordance with Iranian labor laws. They ensure that any actions taken are legally compliant and documented appropriately.
Regulatory Updates: Rivermate continuously monitors changes in Iranian labor laws and regulations. They proactively update their practices and inform their clients of any changes that may impact their operations or require adjustments in HR policies.
Work Permits and Visas: For foreign employees, Rivermate manages the process of obtaining work permits and visas, ensuring compliance with immigration laws and regulations.
Health and Safety Compliance: Rivermate ensures that workplace health and safety standards are met, in line with Iranian regulations. This includes implementing necessary policies and conducting regular audits to maintain a safe working environment.
Data Protection: Rivermate ensures compliance with data protection laws in Iran, safeguarding employee information and maintaining confidentiality in all HR processes.

By leveraging Rivermate’s services, companies can mitigate the risks associated with non-compliance and focus on their core business activities, confident that their HR operations in Iran are being managed legally and efficiently.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Iran?

When a company uses an Employer of Record (EOR) service like Rivermate in Iran, the EOR assumes many of the legal responsibilities associated with employment. Here are the key legal responsibilities and benefits for the company:

Compliance with Local Labor Laws: The EOR ensures that all employment practices comply with Iranian labor laws, which can be complex and subject to frequent changes. This includes adherence to regulations regarding working hours, overtime, minimum wage, and employee benefits.
Employment Contracts: The EOR is responsible for drafting and managing employment contracts in accordance with Iranian law. This includes ensuring that contracts are legally binding and contain all necessary provisions, such as job descriptions, salary details, and termination conditions.
Payroll Management: The EOR handles all aspects of payroll, including salary calculations, tax withholdings, and social security contributions. This ensures that employees are paid accurately and on time, and that all statutory deductions are correctly processed.
Tax Compliance: The EOR manages the complexities of Iranian tax law, ensuring that all necessary taxes are withheld and remitted to the appropriate authorities. This includes income tax, social security contributions, and any other applicable taxes.
Employee Benefits Administration: The EOR administers employee benefits as required by Iranian law, such as health insurance, pensions, and other statutory benefits. This ensures that employees receive all legally mandated benefits.
Work Permits and Visas: For foreign employees, the EOR handles the process of obtaining work permits and visas, ensuring compliance with Iranian immigration laws. This can be particularly beneficial for companies looking to hire expatriates.
Termination and Severance: The EOR manages the termination process in compliance with Iranian labor laws, which can include specific notice periods and severance pay requirements. This helps mitigate the risk of legal disputes and ensures fair treatment of employees.
Legal Representation: In the event of any legal disputes or issues with employees, the EOR can provide legal representation and support, helping to protect the company’s interests.
Local Expertise: The EOR brings local expertise and knowledge of the Iranian market, which can be invaluable for navigating the complexities of local employment laws and practices.

By using an EOR like Rivermate in Iran, a company can significantly reduce its administrative burden and legal risks associated with employment. This allows the company to focus on its core business activities while ensuring full compliance with local laws and regulations.

Do employees receive all their rights and benefits when employed through an Employer of Record in Iran?

Yes, employees in Iran can receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Iran where employment laws can be complex and stringent. Here are some key points to consider:

Compliance with Local Labor Laws: An EOR in Iran ensures that all employment contracts, payroll, and benefits administration comply with Iranian labor laws. This includes adherence to the Iranian Labor Code, which governs aspects such as working hours, overtime, leave entitlements, and termination procedures.
Payroll and Taxation: The EOR manages payroll processing, ensuring that employees are paid accurately and on time. They also handle the calculation and remittance of taxes and social security contributions, which can be particularly complex in Iran due to various local regulations.
Employee Benefits: Employees are entitled to statutory benefits such as health insurance, social security, and pension contributions. An EOR ensures that these benefits are provided in accordance with Iranian law. Additionally, they can offer supplementary benefits that may be customary or expected in the local market.
Leave Entitlements: Iranian labor law mandates specific leave entitlements, including annual leave, sick leave, and maternity/paternity leave. An EOR ensures that these entitlements are correctly administered and that employees can take their leave as required by law.
Employment Contracts: The EOR drafts and manages employment contracts that are compliant with Iranian regulations. This includes specifying terms of employment, job roles, compensation, and other critical details that protect both the employer and the employee.
Termination and Severance: In the event of termination, the EOR ensures that the process follows Iranian legal requirements, including the provision of any severance pay or other entitlements due to the employee.

By using an EOR like Rivermate in Iran, companies can ensure that their employees receive all their legal rights and benefits, while also mitigating the risks associated with non-compliance. This allows businesses to focus on their core operations while the EOR handles the complexities of local employment laws.

What are the costs associated with employing someone in Iran?

Employing someone in Iran involves several costs that employers need to consider. These costs can be broadly categorized into direct and indirect expenses. Here is a detailed breakdown:

Salaries and Wages:
- Base Salary: The base salary must comply with the national minimum wage laws, which are set annually by the Supreme Labor Council. As of the latest update, the minimum wage is subject to change based on inflation and economic conditions.
- Overtime Pay: Employees are entitled to overtime pay for hours worked beyond the standard 44-hour workweek. Overtime is typically paid at a higher rate, often 1.4 times the regular hourly wage.
Social Security Contributions:
- Employer Contributions: Employers are required to contribute to the Social Security Organization (SSO). The standard rate is 23% of the employee's gross salary.
- Employee Contributions: Employees also contribute to the SSO, typically at a rate of 7% of their gross salary. While this is deducted from the employee's salary, it is an administrative cost for the employer.
Unemployment Insurance:
- Employers must contribute to the unemployment insurance fund, which is generally around 3% of the employee's gross salary.
Health Insurance:
- Employers are required to provide health insurance coverage for their employees. This is often included in the social security contributions but may involve additional costs depending on the coverage level.
Bonuses and Allowances:
- New Year Bonus: Employees are entitled to a New Year bonus, which is typically equivalent to one month's salary.
- Housing and Transportation Allowances: Employers may need to provide additional allowances for housing and transportation, depending on the terms of the employment contract and industry standards.
Paid Leave:
- Annual Leave: Employees are entitled to 26 days of paid annual leave.
- Public Holidays: Iran has several public holidays, and employees are entitled to paid leave on these days.
- Sick Leave: Employees are entitled to sick leave, which is usually covered by the social security system after a certain period.
Severance Pay:
- In the event of termination, employees are entitled to severance pay. The amount is typically calculated based on the length of service and the employee's final salary.
Administrative and Compliance Costs:
- Payroll Management: Managing payroll in compliance with Iranian labor laws can incur administrative costs, especially if the employer is not familiar with local regulations.
- Legal and Accounting Fees: Employers may need to engage local legal and accounting services to ensure compliance with employment laws and tax regulations.
Training and Development:
- Employers may invest in training and development programs to enhance the skills of their workforce. This can be an additional cost but is often necessary for maintaining a competitive edge.

Using an Employer of Record (EOR) like Rivermate can help manage these costs effectively. An EOR handles all aspects of employment, including payroll, compliance, and benefits administration, ensuring that the employer adheres to local laws and regulations. This can significantly reduce the administrative burden and potential legal risks associated with employing staff in Iran.

What is the timeline for setting up a company in Iran?

Setting up a company in Iran involves several steps and can be a time-consuming process due to the bureaucratic and regulatory requirements. Here is a detailed timeline for setting up a company in Iran:

Preliminary Steps (1-2 weeks):
- Market Research and Feasibility Study: Conducting thorough market research and feasibility studies to understand the business environment, competition, and potential market.
- Choosing a Business Structure: Deciding on the type of company to establish (e.g., Limited Liability Company, Joint Stock Company, Branch Office, or Representative Office).
Name Reservation (1-2 weeks):
- Company Name Registration: Submitting a request to the Companies Registration Office to reserve a unique company name. This process involves checking the availability of the desired name and ensuring it complies with local regulations.
Drafting Articles of Association (1-2 weeks):
- Preparation of Documents: Drafting the Articles of Association and other necessary documents, such as the Memorandum of Association, which outline the company's structure, purpose, and operational guidelines.
Capital Deposit (1-2 weeks):
- Opening a Bank Account: Opening a temporary bank account in the company's name and depositing the initial capital required for the business. The bank will issue a certificate confirming the deposit.
Registration with the Companies Registration Office (2-4 weeks):
- Submission of Documents: Submitting all required documents, including the Articles of Association, bank certificate, and identification documents of shareholders and directors, to the Companies Registration Office.
- Review and Approval: The Companies Registration Office reviews the submitted documents and, if everything is in order, issues a registration certificate.
Publication in Official Gazette (1-2 weeks):
- Public Announcement: Publishing the company's registration details in the Official Gazette, which is a mandatory step to inform the public about the new company.
Tax Registration (2-4 weeks):
- Obtaining a Tax Identification Number: Registering the company with the Iranian Tax Administration to obtain a Tax Identification Number (TIN). This involves submitting the registration certificate and other relevant documents.
Social Security Registration (2-4 weeks):
- Employee Registration: Registering the company and its employees with the Social Security Organization to ensure compliance with social security and labor laws.
Operational Licenses and Permits (Variable):
- Industry-Specific Licenses: Depending on the nature of the business, obtaining necessary operational licenses and permits from relevant authorities. The timeline for this step can vary significantly based on the industry and specific requirements.

Overall, the entire process of setting up a company in Iran can take anywhere from 3 to 6 months, depending on the complexity of the business, the efficiency of document preparation, and the responsiveness of regulatory authorities.

Given the complexities and potential delays in the process, many businesses opt to use an Employer of Record (EOR) service like Rivermate. An EOR can expedite market entry by handling all administrative and legal requirements, allowing companies to focus on their core business activities without the need to establish a legal entity in Iran.