Employer of Record in Jordan

Expanding your business into Jordan opens doors to a dynamic talent pool, but navigating the local employment landscape requires careful consideration of legal and administrative requirements. For companies looking to establish a presence or hire individuals in Jordan, understanding the available hiring structures is crucial to ensure compliance and operational efficiency. The employment laws in Jordan are designed to protect local workers and require adherence to specific regulations regarding contracts, wages, benefits, and termination.

When considering hiring employees in Jordan, businesses typically have a few primary approaches available:

• Establishing a Local Entity: This involves setting up a registered company in Jordan, which entails a significant investment of time, capital, and resources for registration, legal compliance, and ongoing operational management.
• Utilizing an Employer of Record (EOR): A third-party service provider, like Rivermate, acts as the legal employer for your staff in Jordan, handling all compliance, payroll, and HR functions on your behalf while you manage the day-to-day work of your employees.
• Hiring Independent Contractors: Engaging individuals as independent contractors can offer flexibility, but it carries the risk of misclassification if the working relationship resembles that of an employee, potentially leading to legal and financial penalties.

How an EOR Works in Jordan

An Employer of Record simplifies the process of hiring in Jordan by taking on the legal responsibilities associated with employment. This allows your company to operate in the country without establishing a local legal entity. The EOR handles various critical functions:

• Payroll Processing and Tax Withholding: Manages monthly payroll, calculates and remits income tax, and handles social security contributions for both employer and employee in compliance with Jordanian regulations.
• Compliance with Local Labor Laws: Ensures employment contracts, working hours, leave entitlements, and termination processes adhere to Jordan's labor code.
• Benefits Administration: Administers mandatory benefits, including social security, and can help manage supplementary benefits as per local market practices.
• Visa and Work Permit Sponsorship: For foreign nationals, the EOR can facilitate the necessary work permits and visas, ensuring legal authorization to work in Jordan.
• HR Support and Legal Guidance: Provides ongoing HR support and expert guidance on local employment laws, reducing the burden of in-house expertise.

Benefits of Using an EOR in Jordan

Opting for an EOR service in Jordan offers several strategic advantages for companies looking to expand without the complexities of entity establishment:

• Accelerated Market Entry: Hire employees in Jordan within days or weeks, rather than the months typically required for company registration.
• Reduced Risk and Enhanced Compliance: The EOR assumes the legal responsibility for employment compliance, significantly mitigating your company's exposure to local labor law violations.
• Cost-Effectiveness: Avoids the substantial costs and administrative overhead associated with establishing and maintaining a local legal entity.
• Operational Flexibility: Easily scale your workforce up or down based on business needs, without the complexities of entity restructuring.
• Access to Top Talent: Recruit and onboard skilled professionals anywhere in Jordan, regardless of your physical presence or entity status.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Jordan includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Jordan.

Employers in Jordan must comply with social security and income tax obligations. They are required to contribute approximately 14.25% of employees' gross salaries to the Social Security Corporation (SSC), covering old age, disability, death, work injuries, and unemployment benefits. Employees contribute around 7.25%. Additionally, employers must withhold income tax from salaries based on progressive brackets, with rates ranging from 5% to 20% for income above JOD 20,000. Employers also handle monthly payroll reporting to the SSC and the Income and Sales Tax Department (ISTD), with strict deadlines for remittance and reporting to avoid penalties.

Employees benefit from deductions such as personal allowances, family allowances, contributions to pension funds, and social security payments, which reduce taxable income. Foreign workers are taxed based on residency status, with special considerations under double taxation treaties, and employers of expatriates must adhere to similar withholding and contribution obligations, sometimes with additional reporting requirements. Key data points are summarized below:

Jordan's salary landscape varies significantly across sectors, roles, experience, and company size. Typical monthly salaries range from 600 JOD for teachers to 3,500 JOD for medical doctors, with industry-specific figures such as IT software engineers earning between 1,200-2,500 JOD and finance accountants earning 800-1,500 JOD.

The legal minimum wage is 260 JOD per month, enforced to ensure basic income standards. Compensation packages often include bonuses (annual, Ramadan/Eid), allowances (transportation, housing, COLA), and other benefits. Salaries are typically paid monthly via bank transfer, with deductions for social security, income tax, and other contributions.

Salary growth is expected to be moderate, with higher demand and wages for skilled workers in IT, finance, and engineering, especially those with expertise in emerging technologies like AI and data science. Government policies and economic factors will continue to influence future salary trends in Jordan.

Jordanian labor law mandates various leave types to support employee well-being. Employees are entitled to annual leave based on tenure: less than one year (pro-rated), 14 days for 1-5 years, and 21 days for over five years. Employers and employees can agree to more generous leave, which must generally be taken within the same year.

Public holidays include New Year's Day, Labour Day, Independence Day, Islamic holidays (Eid al-Fitr, Eid al-Adha, Islamic New Year, Prophet Muhammad's Birthday), and Christmas, with Islamic dates varying annually. Sick leave grants 14 paid days annually, with an additional 14 unpaid days upon medical certification. Parental leave includes 70 days of paid maternity leave and 3 days of paid paternity leave; adoption leave is not explicitly regulated but may be offered voluntarily.

Employees in Jordan are protected by mandatory benefits outlined in the Labour Law, including social security contributions, paid annual leave (14 days for the first five years, 21 days thereafter), paid public holidays, sick leave, maternity leave, and severance pay (one month's salary per year of service after at least one year). Employers and employees contribute to the Social Security Corporation, which covers pensions, disability, and survivors' benefits.

Key data points for employers:

Navigating employment law can be complex; using an Employer of Record (EOR) can assist companies in ensuring compliance and managing benefits effectively. Offering competitive benefits is vital for attracting and retaining talent in Jordan's market.

Employment agreements in Jordan are essential for defining the rights and obligations of both employers and employees, with legal compliance required under Jordanian Labour Law. There are two main contract types: fixed-term, which specifies a start and end date and may be renewed within legal limits, and indefinite-term, which continues until termination by either party. Fixed-term contracts are often used for seasonal or project-based work, while indefinite contracts offer greater job security and are subject to specific legal termination procedures.

Key clauses in employment agreements include job title, start date, working hours, compensation, benefits, leave entitlements, termination conditions, confidentiality, non-compete restrictions, and legal dispute resolution. The law allows a probationary period of up to three months, during which employment can be terminated with minimal notice. Confidentiality and non-compete clauses are common, especially for sensitive roles, and are enforceable if reasonable. Contract modifications require mutual written agreement, and termination procedures depend on the contract type, with severance pay applicable for lawful dismissals from indefinite contracts.

Remote work in Jordan is expanding, supported by technological progress and recognized benefits for employers and employees. Although there is no specific remote work legislation, existing labor laws ensure remote workers have rights comparable to on-site staff, covering employment contracts, working hours, health and safety, social security, and termination procedures. Employers should clearly define remote work terms in contracts, adhere to working hour regulations, and ensure health and safety measures, including ergonomic guidance.

Key considerations for employers include data security, equipment policies, and technology infrastructure. Data protection laws require implementing security policies, access controls, secure networks (VPNs), and breach response plans. Equipment provision and expense reimbursement policies should be clear, covering device supply, internet costs, and ergonomic setups, with attention to tax implications. Reliable connectivity and robust IT support are vital, utilizing cloud solutions, communication tools, and security software to maintain productivity and security.

In Jordan, employment termination must comply with the Labour Law to avoid legal issues. Employers are required to follow specific notice periods based on employee category and tenure, with minimum durations as follows:

Severance pay, calculated based on the employee’s last wage, is owed after at least one year of service. The formula is half a month's wage per year for the first five years, and one month for each additional year. For example, an 8-year employee would receive 6.5 months' salary.

Termination grounds are categorized as with or without cause. With cause includes misconduct, criminal conviction, or breach of confidentiality, allowing dismissal without notice or severance. Without cause, such as redundancy or restructuring, requires proper notice and severance pay. Procedural compliance involves written notices, clear reasons, documentation, and final settlements. Employees are protected against wrongful dismissal based on discrimination, procedural violations, or retaliation, with legal recourse available through the Labour Court.

The work landscape in Jordan is shifting towards more flexible arrangements, with independent contracting and freelancing becoming prominent across various sectors. This trend aligns with global movements towards agility in work structures, benefiting both businesses and individuals. For companies in Jordan, understanding the legal, contractual, and tax implications of engaging independent contractors is essential for compliance and effective talent management. The distinction between employees and contractors in Jordan is determined by factors such as control, integration, and economic dependence, rather than titles alone.

Engaging contractors requires a comprehensive written agreement detailing scope, payment, confidentiality, and IP rights. Contractors manage their own tax obligations, including income and sales tax, and are not covered by company social security contributions. They are responsible for their own insurance. Key sectors utilizing freelancers include IT, creative services, consulting, education, media, and construction, driven by the need for specialized skills and project-based work.

Jordan's economy and strategic location attract foreign workers, but navigating work permits and visas can be complex. Employers must understand the different visa types, application procedures, and compliance requirements to ensure legal employment.

Key visa types include:

The application process involves submitting documentation such as a work contract, passport, and health insurance, with processing times typically ranging from a few weeks to a month. Employers must also adhere to compliance standards, including renewal and reporting obligations. The system aims to regulate foreign employment effectively, balancing economic needs with legal standards.