Labor Contracts

Chapter II: Labor Contracts

First topic: Defining a labor contract and the essential conditions for closing one

Article 7: A labor contract is composed of a written or oral contract according to which the worker, in exchange for receiving compensation for his efforts, will provide labor on a temporary or non-temporary duration for the employer.

Note 1: The maximum temporary duration for jobs which have a non-continuous nature will be determined by the Ministry of Labor and Social Affairs and confirmed by the Cabinet.

Note 2: In jobs which by nature have a continuous duration, should the duration not be mentioned in the in the contract, the contract will be considered permanent.

Article 8: The above conditions in the labor contract or later changes in it will not be in effect if the benefits for the worker are less than the benefits stipulated in this law.

Article 9: For the labor contract to be sound, the following conditions must be met at the time the contract is closed:

a)       The contract’s subject is valid.

b)      The contract’s subject is specific.

c)       The consumption of property or performance of work by either side is not forbidden by the legal code or the sharia.

Note: The chapter refers to the soundness of all labor contracts unless their voiding has been confirmed by the appropriate authorities.

Article 10: A labor contract, in addition to precise specifications by both sides, must include the following:

a)       The type of labor or skill or duty which the worker must be occupied in.

b)      The base wages or salary and the associated benefit.

c)       The hours of labor, vacation, and leave.

d)      The site of the labor.

e)       The duration of the contract, should the work be for a fixed time.

f)        Other issues engendered by the customs or norms of the occupation or location.

Note: In cases in which there is a written labor contract, it shall be produced in quadruplicate. One copy shall be sent to the local Bureau of Labor, one to the worker, one to the employer , and one should be turned over to the Islamic Labor Council and, in workplaces lacking a council, to the worker’s representative.

Article 11: Both parties may, should they agree, fix a period as a probation period. In the absence of such a period, each party has the right to cease working without prior warning and without being required to pay damages. The worker is only entitled to receive compensation for the time he works.

Note: The probation period must be specified in the labor contract. The maximum time for this period for unskilled and semi-skilled workers is a week and for skilled, specialized workers, three months.

Article 12: Any sort of legal change in the property status of the workplace, such as its sale or transfer in any fashion, a change in the type of production, absorption into another institution, the workplace’s nationalization, the owner’s death, etc. will not have any effect on the contractual relationship of the workers whose contract has been made certain, and the new employer will inherit the agreements and rights of the previous employer.

Article 13: In cases where work is done on a contract basis, the one who hires the contractor is obliged to close the contract with the contractor in such a way that throughout the contract the contractor is obliged to behave towards his workers in accordance with all the provisions of this law.

Note 1: The workers’ due is the primary obligation and the employers are obliged to pay what is due the workers from the subcontractors’ budget in accordance with the opinion of the legal authorities, on the condition that they performed their duties well.

Note 2: Should the contractor act towards the subcontractor in violation of the aforementioned instructions in closing the contract or settles accounts 45 days before having temporarily turned over his business, he is obliged to pay what the subcontractor owes the workers.


Second Topic: Suspending a Labor Contract

Article 14: Should, due to issues mentioned in subsequent articles, one of the parties temporarily cease performing its duties, the labor contract enters into a state of suspension. After these issues are resolved, the labor contract returns to its former terms of service (in terms of retirement and salary increases).

Note: The period of military service (obligatory, active service, and reserves) as well as a worker’s period of voluntary participation at the front will be considered as part of his record of service and labor.

Article 15: Should, as a result of force or due to unforeseeable events, the occurrence of which is outside the control of either party, the entire workspace be closed and the worker or the employer temporarily unable to fulfill his obligation, or part of the workspace be closed and the worker or the employer temporarily unable to fulfill his obligation, the labor contracts with either all of the workers or those of that part of the workplace which is closed enter into a state of suspension. The Ministry of Labor and Social Affairs determines the aforementioned matter.

Article 16: The contract of workers who, in accordance with this law, are utilizing an unpaid educational or any other leave, will enter into a state of suspension throughout this entire leave and for a period of two years. 

Note: An educational leave can be extended for two additional years.

Article 17: The contract of a worker who is fired and whose firing does not end in a conviction enters into a state of suspension as long as he is fired and the worker shall return to work after the suspension is lifted.

Article 18: Should a worker’s arrest be due to a employer’s complaint and the arrest not end in a conviction by the conflict resolution authorities, its duration shall be considered as part of the worker’s record of service and the employer is obliged, in addition to paying the worker compensation for damages suffered as determined by the court’s decision, to also pay his salary and benefits.

Note: The employer is obliged, as long as the worker’s duties have not been determined by the aforementioned authorities, to pay at least fifty percent of his monthly salary in accordance with accounts to his family in order to eliminate their needs.

Article 19: The labor contract enters into a state of suspension during his period of military service, but the worker must return to his former work at most up to two months after the end of his service. Should his job have been eliminated, he should be employed in a similar job.

Article 20: In each of the aforementioned issues mentioned in Articles 15, 16, 17, and 19, should the employer, after the state of suspension being lifted, refrain from accepting the worker, this act will be considered an illegal firing and the worker has the right to refer to the Arbitration Panel within a period of 30 days (should the worker have an appropriate explanation). Whenever the employer cannot confirm that not admitting the worker is documented with appropriate reasons, he is obliged, in accordance with the aforementioned panel, to return the worker to his job and pay him wages or salary from the day of his return to work, and if he is able to confirm this, he is to pay him the last 45 days of his wages as he had in previous years.

Note: Should the worker not declare to the employer within 30 days after the lifting of the state of suspension his readiness to work or not refer to the Arbitration Panel after his return and disdain the employer, he is considered as having resigned. In this case, the worker receives his annual benefit, i.e., receives his last month’s salary for each year [he worked].


Third Topic: Definition of the Labor Contract and the Fundamental Conditions for Its Closure

Article 21: The labor contract is to be terminated by one of the following causes:

a)       The worker’s death.

b)      The worker’s retirement.

c)       The worker’s complete inability to work.

d)      The determination that the labor contracts is temporary in duration and that and it contains no clear rehiring or guaranteed renewal.

e)       The worker’s resignation.

Note: A worker who resigns is obliged to continue to be at his job for a month and first inform his foreman of his resignation in writing and, should he declare to his foreman that he dispenses with it in the space of at most fifteen days in writing, his resignation will be considered voided and the worker is obliged to turn over a copy of his resignation owing to his change of mind to the workplace’s Islamic Council and Craft Society and the workers’ representative.

Article 22: At the end of their employment, all the worker’s dues stemming from the labor contract and connected with the worker’s sphere of occupation in the above articles will be paid to the worker and, should he have expired, to his legal heir.

Note: Until the legal heir’s duties are determined and the stipulated administrative and pension tasks are performed by the Social Security Organization, this latter organization is obliged to take measures for the payment to the family he was supporting through the payment of a provisional salary according to his last wages received according to the records for a period of three months.

Article 23: In terms of his receipt of wages or pensions resulting from his death, illness, retirement, unemployment, arrest, a partial or complete loss of ability to work,  stipends or related issues shall follow the Social Security Law.

Article 24: Should the labor contract expire, for a specific job or be of a temporary duration, the employer is obliged to pay the worker who, in accordance with the contract, has worked for a year or more, for each previous year, whether it was continuous or episodic, one month’s salary as a benefit for the end of his job based on his last month’s salary.

Article 25: Should a labor contract be closed for a temporary period or for accomplishing a specific task, neither party has the right to dissolve it unilaterally.

Note: It is for the Arbitration and Conflict Resolution Panels to review differences resulting from the type of these contracts.

Article 26: Any fundamental change in labor conditions which is contrary to the common practice in a workplace or work site may be implemented after the local Bureau of Labor and Social Affairs declares its agreement with it in writing. Should a dispute emerge, the Conflict Resolution Panel’s view is binding and must be implemented.

Article 27: Should a worker err in performing his duties or violate the workplace’s rules of discipline after having received a written warning, the manager has the right, should the Islamic Labor Council issue a positive opinion, to pay him not only his benefits and back wages but a month’s salary for each year of work based on the last month of the worker’s wages as the annual benefit and dissolve the contract. In units which lack Islamic Labor Councils, a positive view of the Craft Society is required. In any of the aforementioned cases, if the issue is not resolved through an agreement, it will be referred to the Arbitration Panel and, should the differences remain unresolved, it will be investigated and acted upon by the Conflict Resolution Panel. The labor contract is considered suspended for the duration of its appeal by the arbitration authorities.

Note 1: In workplaces which are not included in the Islamic Council Law or in which neither an Islamic Labor Council nor a Craft Society has been organized or which lacks a worker’s representative, a positive statement opinion by the Arbitration Panel (mentioned in Article 158 of this law) is necessary in dissolving the labor contract.

Note 2: Articles on delinquency [موارد قصور] and instructions and bylaws on workplace discipline will be in accord with stipulations drafted by the Supreme Labor Council and confirmed by the Ministry of Labor and Social Affairs.

Article 28: During the stages of elections, the workers’ legal representatives and members of the Islamic Labor Councils, as well as volunteers fulfilling the conditions for being a worker’s representative or a representative of the Islamic Labor Council shall, before announcing the final decision of the Arbitration Panel (mentioned in Article 22 of the Islamic Labor Council law) and the opinion of the Conflict Resolution Panel, continue with his activity in that same unit and be busy at work like the other workers and shall continue doing his duty and the work which devolves upon him.

Note 1: After the Arbitration Panel or the Conflict Resolution Panel receives the complaint, it shall subject the differences between the workers’ legal representative or representatives and the manager to immediate review and as a priority and declare its final decision. In any case, the Conflict Resolution Panel is obliged to subject the complaint to investigation within a space of at most one month after its receipt.

Note 2: In workplaces where an Islamic Labor Council has not been organized or in regions where an Arbitration Panel (as mentioned in Article 22 of the Law of Islamic Labor Councils) has not been organized or in cases where the workplace under consideration is not included under the law of Islamic Labor Councils, workers’ representatives or Craft Society representatives will continue their activities and perform the duties which devolve upon them as usual before the declaration by the Arbitration Panel (mentioned in Article 22 of the Law on Islamic Labor Councils) of its opinion the Conflict Resolution Panel and declares its final decision.


Fourth Topic: Compensation for All Damages and Severance Benefits

Article 29: Should, according to the determination of the Conflict Resolution Panel, the employer be obliged to suspend a worker from a contract, the worker has the right to receive damages resulting from the suspension and the manager is obliged to return the worker suspended from his job to his former job.

Article 30: Should the workplace, due to an unpreventable event (earthquake, flood, etc.) or an unforeseen event (war, etc.) be shut down and its workers become unemployed, when the workplace revives, the employer is obliged to restore the unemployed workers to the same rebuilt unit and the same jobs in which they had been working.

Note: The government is obliged, according to Article 29 of the Constitution, to prepare the necessary resources to reemploy the workers utilizing public income and income from the people’s participation as well as through forming an unemployment fund to guarantee the livelihood of the unemployed workers of the workplaces covered by Article 4 of this law and with due consideration of the second clause of Article 43 of the Constitution.

Article 31: Should the end of the labor contract be a result of the worker’s general loss of ability to work or retirement, the employer must pay him thirty days wages for each year’s record of service based on his most recent wages. This will be in addition to the worker’s pension for losing his abilities or retirement, which will be paid by the Social Security Organization.

Article 32: Should the end of the labor contract be a result of a decline in physical or mental powers resulting from the worker’s work (as determined by the Medical Commission of the Health and Medical Organization of the region by the Islamic Labor Council or the worker’s legal representative), the employer is obliged to pay him two months salary for each year of previous service.

Article 33: Determining cases of a total or partial loss of ability to work or illness resulting from work or resulting from other than work or the worker’s death performing his duties assigned to him and the degree of the employer’s culpability in under the law which led to the ending of the labor contract will be based on stipulations which will be drafted by the Minister of Labor and Social Affairs as confirmed by the cabinet.