Iranian Labor Law recognizes various types of employment agreements, both written and oral, catering to temporary and indefinite durations of employment.

Permanent Employment Contracts

Permanent employment contracts, also known as indefinite-term contracts, are the most common type of employment agreement in Iran. These contracts don't have a pre-defined end date and continue until terminated by either party following the legal guidelines set out in the Labor Law.

Temporary Employment Contracts

Temporary employment contracts are also recognized by Iranian labor law. However, there are limitations on their use. Employers cannot use consecutive fixed-term contracts exceeding a specific period to effectively bypass permanent employment obligations.

Apprenticeship Contracts

Apprenticeship contracts are a specific type of employment agreement designed to provide vocational training alongside practical work experience. These contracts typically have a fixed term and may include specific clauses regarding training components.

Part-Time Employment Contracts

Part-time employment contracts are recognized under Iranian labor law. There are no specific legal requirements regarding the minimum or maximum number of hours a part-time employee can work, but they must receive benefits and protections proportionate to their working hours compared to full-time employees.

Iranian employment agreements are governed by the Labour Code of 1990, supplemented by additional regulations and by-laws. For a comprehensive and legally sound agreement, several essential clauses should be included.

Core Elements

The agreement should clearly identify the employer and the employee, including their full names and relevant identification details. It should specify the commencement date of employment and whether the contract is definite (fixed-term) or indefinite (open-ended). The designated location where the employee is expected to perform their duties should also be outlined.

Job Details and Compensation

The agreement should include a clear description of the employee's role, responsibilities, and any specific qualifications required for the position. It should detail the employee's base salary, payment schedule, and any additional benefits like bonuses, allowances, or overtime pay. It's important to clarify which components are considered part of the remuneration for calculating benefits under Iranian labor law. The agreement should also specify the standard working hours per day and week, along with the policy for overtime work, including compensation or time-off in lieu.

Leave and Benefits

Iranian labor law mandates paid annual leave and public holidays for employees. The agreement should specify the entitlement to these leaves. The agreement can outline the policy for sick leave, including any required documentation or limitations. Details regarding mandatory social security contributions and any additional insurance plans offered by the employer should be included.

Termination and Dispute Resolution

The agreement should outline the grounds for termination by either party, following the provisions laid out in the Labour Code. This includes details around notice periods, severance pay, and any specific conditions for termination without notice. The agreement can specify a process for resolving any disagreements arising during employment, such as mediation or arbitration.

Probationary periods are a common feature in Iranian employment contracts, allowing both employers and employees to assess suitability before committing to a long-term arrangement.

Duration of Probation

The Iranian Labour Law dictates the maximum duration of a probationary period based on employee skill level.

• Unskilled and Semi-Skilled Workers: One month
• Skilled and Professional Workers: Three months

This limit ensures a fair assessment period without excessive temporary employment.

Termination During Probation

A key feature of the probationary period is the ease of termination for either party. Both employer and employee have the right to terminate the agreement without prior notice and without any obligation to pay severance pay during this time.

However, one exception exists. If the employer terminates the contract, they are obligated to pay the employee's salary for the entire probationary period, even if the employee worked for a shorter duration. This protects the employee from financial hardship in case of unexpected termination.

Probation Not Mandatory

It's important to note that including a probationary period is not mandatory in Iranian employment contracts. The employer and employee can agree to forego this period if they see fit.

Benefits of Probationary Periods

Probationary periods offer advantages for both employers and employees:

• Employers: Assess an employee's skills, work ethic, and suitability for the role before committing to a permanent position.
• Employees: Evaluate the work environment, company culture, and if the role aligns with their expectations.

Iranian employment contracts often include confidentiality and non-compete clauses to safeguard an employer's legitimate business interests. The enforceability of these clauses is significantly influenced by Iranian labor law.

Confidentiality Clauses

Confidentiality clauses prevent employees from revealing an employer's confidential information to third parties. Although the Iranian Labor Code does not specifically address confidentiality clauses, it is likely that general contract law principles apply, permitting employers to include such clauses as long as the protected information is a legitimate trade secret.

Key Points for Confidentiality Clauses:

• Confidential Information Definition: The contract should explicitly define what is considered confidential information. This could encompass trade secrets, customer lists, marketing strategies, and unpublished inventions.
• Allowed Disclosures: The clause should specify situations where disclosure is allowed, such as when mandated by law or with the employer's written consent.

Non-Compete Clauses

Non-compete clauses limit employees from accepting similar employment with a competitor after leaving the company. Iranian labor law is more restrictive towards non-compete clauses compared to confidentiality clauses.

• Legal Foundation: Article 10 of the Iranian Civil Code permits contract stipulations that limit a party's freedom to contract, but only within the confines of " الشرع (Sharia law) and public order".
• Enforceability: Iranian courts may be more inclined to uphold non-compete clauses for positions with access to highly sensitive information or trade secrets. However, the clause cannot impose an unreasonable geographical or time restriction on the employee's ability to secure new employment.

Additional Points to Consider:

• Interest Balance: The clause should balance between protecting the employer's legitimate interests and not excessively restricting the employee's ability to earn a living.
• Proportionality: The restrictions imposed by the clause should be proportionate to the employee's role and the level of access they have to confidential information.