Employee benefits and entitlements in Iran are governed by a complex framework of labor laws and regulations. Understanding these requirements is critical for companies employing individuals in Iran, whether directly or through an Employer of Record (EOR). Benefits are a significant factor in attracting and retaining talent in the Iranian job market, and a competitive package that goes beyond the statutory minimum is often necessary.
Navigating the intricacies of Iranian employment law requires expertise. Companies must understand mandatory benefits, typical employer-provided benefits, health insurance practices, retirement plans, and industry-specific packages to remain compliant and attract top talent.
Mandatory Employee Benefits in Iran
Iranian labor law mandates a number of benefits that employers are legally required to provide to their employees. These include:
- Social Security Contributions: Employers and employees both contribute to the Social Security Organization, which provides benefits such as retirement pensions, disability benefits, unemployment benefits, and healthcare. The employer's contribution is typically a higher percentage than the employee's.
- Paid Annual Leave: Employees are entitled to a minimum of 21 days of paid annual leave, which increases with years of service.
- Public Holidays: Iran has a number of public holidays each year, during which employees are entitled to paid time off.
- Sick Leave: Employees are entitled to paid sick leave, usually with a medical certificate. The duration and payment terms may vary based on employment contracts and social security regulations.
- Maternity Leave: Female employees are entitled to maternity leave with partial pay.
- Eidi Bonus: Employers are required to pay an annual Eidi bonus (New Year bonus) to employees, typically equivalent to one or two months' salary.
- Severance Pay: Upon termination of employment, employees are typically entitled to severance pay based on their length of service.
Common Optional Benefits
In addition to the mandatory benefits, many employers in Iran offer optional benefits to attract and retain talent. These can include:
- Supplementary Health Insurance: Given the limitations of public healthcare, supplementary health insurance is a highly valued benefit.
- Life Insurance: Providing life insurance coverage for employees is increasingly common.
- Transportation Allowance: Due to traffic congestion and public transportation challenges, transportation allowances are appreciated.
- Meal Allowance: Providing meal allowances or subsidized meals is another common benefit.
- Housing Allowance: In certain regions or for specific roles, employers may provide housing allowances.
- Performance Bonuses: Offering performance-based bonuses can incentivize employees and reward achievement.
- Training and Development: Investing in employee training and development is viewed favorably.
- Company Car: For senior management or sales roles, a company car may be provided.
Health Insurance
Health insurance in Iran operates on a mixed system of public and private healthcare. While the public system provides basic coverage, many employers offer supplementary health insurance to provide more comprehensive benefits and access to private healthcare facilities.
- Public Healthcare: The public healthcare system is managed by the Ministry of Health and Medical Education. It is funded through social security contributions and government funding.
- Supplementary Health Insurance: This is a common and highly valued benefit. It typically covers a wider range of medical services, prescription drugs, and access to private hospitals and specialists. Employers often contribute a significant portion of the premium, with employees potentially contributing the remainder.
Retirement and Pension Plans
The primary retirement and pension plan in Iran is provided through the Social Security Organization. Both employers and employees contribute to this fund, which provides retirement pensions, disability benefits, and survivor benefits. The retirement age is typically 60 for men and 55 for women, with a minimum number of years of contributions required.
- Social Security Pension: This is the mandatory pension plan. The benefits are calculated based on the employee's earnings history and years of contributions.
- Supplementary Pension Plans: While less common, some larger companies may offer supplementary pension plans to provide additional retirement income for their employees.
Typical Benefit Packages
Benefit packages in Iran vary depending on the industry, company size, and the employee's role. Generally, larger multinational companies tend to offer more comprehensive benefits packages than smaller local companies.
| Benefit | Large Companies | Small to Medium Companies |
|---|---|---|
| Health Insurance | Comprehensive private coverage | Basic supplementary coverage |
| Life Insurance | Higher coverage amounts | Basic coverage |
| Transportation | Generous allowance or company car | Modest allowance |
| Meal Allowance | Subsidized meals or higher allowance | Basic allowance |
| Pension | Social Security + supplementary options | Social Security only |
| Performance Bonus | Structured bonus plans | Discretionary bonuses |
| Training & Development | Extensive programs and opportunities | Limited training opportunities |
| Other Benefits | Housing allowance, gym membership, etc. | Fewer additional benefits |
Benefit Costs and Compliance
The cost of providing employee benefits in Iran can vary widely depending on the specific benefits offered and the coverage levels. Employers need to budget for both mandatory social security contributions and the costs of any optional benefits they choose to provide. Compliance with Iranian labor law is crucial, and employers should seek expert advice to ensure they are meeting all legal requirements.
| Benefit | Employer Cost (Approximate % of Salary) |
|---|---|
| Social Security | 23% |
| Supplementary Health | 3-5% |
| Transportation Allowance | 1-3% |
| Meal Allowance | 0.5-2% |
| Eidi Bonus | 8.33-16.66% (1-2 months' salary) |
| Severance Pay | 8.33% per year of service |
