---
title: "Iraq Termination & Severance 2026"
description: "Iraq end-of-service gratuity: 2 weeks pay per year from year one of service. Notice bands up to 90 days, probation at 7 days."
canonical: https://www.teamed.global/country-hiring-guides/iraq/termination-and-severance
---

Iraq · Termination child

Served by Teamed vetted partner-entity network in Iraq

# How do you *terminate an employee in Iraq* in 2026?

Iraq's [Labour Law No. 37 of 2015](https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=96652) makes end-of-service gratuity mandatory from year one: 2 weeks of pay for every completed year of service, owed whether you dismiss the employee or they resign. You can't opt out of it, cap it by contract, or offset it against notice pay.

Last reviewed 12 June 2026 · Iraq guide

![A warm dusk view of a tree-lined boulevard in Baghdad with traditional architecture and a clear amber sky.](/images/country-guides/iraq-termination-severance.webp)

Illustration · Baghdad, Iraq

Answer.cite this

In Iraq, every employee who completes at least 1 year of service earns an end-of-service gratuity. The rate is 2 weeks of pay for every completed year. It is owed on dismissal, resignation, or the end of a fixed-term contract. No contract can cap or remove it.

Notice is set by the law and scales with how long the employee has worked. Under five years gets 30 days. Five to under ten years gets 60 days. Ten or more years gets 90 days. During probation, either side can leave with just 7 days ([Labour Law No. 37 of 2015](https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=96652)).

Dismissal without a valid reason is treated as unjust dismissal. The employee can bring a claim before the Iraqi Labour Court. Procedural protections apply from the first day of employment. The exact qualifying period for an unfair-dismissal claim is not confirmed by a primary source. See the section below for more detail.

![A stack of signed employment papers on a wooden desk with a traditional Iraqi tea glass beside them.](/images/country-guides/iraq-termination-polaroid-1.webp)

End of service

## What are valid grounds for termination in Iraq?

You can end employment with notice for a genuine operational or commercial reason. You can dismiss without notice for gross misconduct. Cause-based grounds include repeated failure to perform after a written warning, material breach of contract, unauthorised absence, and serious disciplinary violations ([Labour Law No. 37 of 2015](https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=96652)).

Dismissal without a valid reason is treated as unjust dismissal. The employee can claim compensation on top of the gratuity. Iraqi courts require the penalty to fit the seriousness of the conduct.

Valid grounds recognised by Iraqi courts fall into two categories:

1. **Operational grounds**: genuine redundancy driven by restructuring, automation, or cessation of activity. The employer must show the role has genuinely disappeared, not merely that they wish to replace the employee at lower cost.
2. **Disciplinary grounds**: gross misconduct, documented performance failure after a written warning, persistent unauthorised absence, disclosure of trade secrets, physical violence in the workplace, or material dishonesty.

Dismissal during the statutory probation period of 3 months requires only 7 days' notice and carries no gratuity obligation provided the probationary terms were disclosed in writing at the start of employment. After probation, the full notice and gratuity regime applies.

### Protected categories

Iraqi law prohibits dismissal on grounds of pregnancy, maternity leave, trade-union activity, religion, and ethnicity. Dismissal of a pregnant employee or an employee on approved medical leave is void unless the employer can show an entirely unrelated lawful ground with full documentation. Courts will reinstate or award additional compensation where a protected characteristic is found to be the real reason for dismissal.

1. Establish a valid reason Anchor the termination to a recognised ground under Labour Law No. 37 of 2015: operational redundancy or documented disciplinary cause. A dismissal without a traceable valid reason is treated as unjust dismissal and attracts additional compensation beyond the statutory gratuity.
2. Issue a written warning where applicable For performance or conduct grounds, issue a written warning and give the employee a documented opportunity to meet the required standard. Courts look for evidence the employee was told what was wrong and given a realistic chance to correct it.
3. Serve written notice Give the statutory notice in writing, scaled to tenure: the shortest band applies to under five years of service and the longest to ten or more. Keep a dated and signed copy.
4. Calculate and pay the gratuity Every employee with at least one completed year of service earns the end-of-service gratuity. Calculate it on final basic pay and include it in the final settlement; it cannot be deferred or withheld.
5. Notify the Ministry if required For larger restructurings, notify the Ministry of Labour in writing before individual notices issue and document the commercial rationale. Failure to notify can invalidate the termination and expose the employer to reinstatement orders.

## How much notice must you give an employee in Iraq?

Notice is set by the law and depends on how long the employee has worked. Under five years: 30 days. Five to under ten years: 60 days. Ten or more years: 90 days.

A resigning employee must give at least 30 days. During probation, which runs up to 3 months, either side can leave with just 7 days.

| Length of continuous service | Statutory employer notice |
| --- | --- |
| During probation (up to 3 months) | 7 days |
| Less than 5 years | 30 days |
| 5 to less than 10 years | 60 days |
| 10 or more years | 90 days |

Notice must be given in writing. Where the employer wants the employee to stop working immediately, pay in lieu of notice is permitted: the employee receives a lump sum equal to their salary for the full notice period, which does not reduce or replace the separate end-of-service gratuity obligation.

Contractual notice can be longer than the statutory minimum. It can never be shorter. If a contract specifies a shorter period, the statutory floor applies automatically.

## How is Iraq's end-of-service gratuity calculated?

Every employee with at least 1 year of completed service earns a gratuity. The rate is 2 weeks of final pay for every completed year. It is owed no matter how employment ends.

It applies on dismissal, resignation, and expiry of a fixed-term contract. It is paid separately from notice pay. There is no offset between the two.

ILO NATLEX · Iraq Labour Law No. 37 of 2015

End-of-service gratuity is mandatory after 1 year of continuous service: 2 weeks of final pay per completed year. It applies on all termination types, whether the employer dismisses or the employee resigns.

Source: [ILO NATLEX, Iraq Labour Law No. 37 of 2015](https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=96652)

### What counts as final pay

The gratuity is calculated on the employee's last drawn basic salary. Variable pay, bonuses, and allowances are excluded unless the employment contract specifies otherwise. Years of service are counted in complete years; a partial year at the end does not attract a proportional payment under the statutory minimum, though contracts frequently improve on this.

### Unjust dismissal top-up

Where the court finds the dismissal was unjust, the employee may claim additional compensation beyond the statutory gratuity. Iraqi courts have broad discretion to award additional months of salary in such cases. The statutory gratuity remains payable regardless of whether the dismissal was lawful; it is not withheld as a disciplinary sanction.

### Worked example

An employee dismissed after seven completed years on a basic monthly salary:

- Gratuity rate: 2 weeks per completed year
- Years countable: 7 completed years
- Total: 7 multiplied by 2 weeks of final basic pay
- Plus: notice pay (60 days for 5 to under 10 years), paid separately

## Collective and mass redundancy rules in Iraq

Iraq has no fixed headcount trigger or set consultation window for mass redundancies. There is no EU-style collective redundancy regime. Instead, the same fair-grounds and procedural rules that apply to every dismissal apply here too. The Ministry of Labour oversees larger exercises.

The law gives the Ministry authority to approve or block a mass termination where the employer cannot show a genuine commercial basis. In practice, notify the Ministry in writing before individual notices go out whenever a significant number of employees at one site are affected.

There is no published statutory threshold in the Iraq Labour Law specifying the exact headcount or percentage of workforce that triggers a formal collective-redundancy obligation with a fixed consultation period. Employers planning large-scale restructurings should take the following steps:

- **Ministry of Labour notification**: notify in writing before individual notices are issued, setting out the commercial reason, the number of roles affected, and the proposed timeline.
- **Employee representative consultation**: where a trade union or worker committee is present, consult on alternatives to dismissal, including redeployment, reduced hours, and voluntary separation.
- **Documentation**: retain records of the selection process and the commercial rationale. Iraqi Labour Courts scrutinise whether the criteria were applied objectively and consistently.

Each dismissed employee in a mass redundancy exercise is still entitled to the full statutory gratuity of 2 weeks per completed year of service and their applicable notice period. These obligations stack, not substitute, for any Ministry-approved separation package.

The Kurdistan Region of Iraq operates under the same federal Labour Law No. 37 of 2015 for private-sector employment, though enforcement practices and minimum-wage levels differ. A termination in Erbil or Sulaymaniyah carries the same statutory gratuity and notice obligations as one in Baghdad.

## Mutual termination and agreed separation in Iraq

Iraqi law allows the employer and employee to agree a mutual separation. A written agreement sets the leaving date, any enhanced gratuity, notice or pay it out in full, and a mutual release of claims.

Mutual separation is the cleaner exit when both sides agree on the date and the money. Iraqi courts will uphold a written agreement provided the employee had a genuine chance to consider the terms and was not pressured.

A mutual separation avoids the procedural documentation trail required for a cause-based dismissal. It also reduces the risk of an unjust-dismissal challenge, because the employee has agreed to the terms. The minimum statutory gratuity cannot be waived or reduced below the 2 weeks-per-year floor, even in a negotiated agreement; any waiver of the statutory minimum is void.

### What a separation agreement typically covers

- **Effective date** and whether notice is worked or paid in lieu
- **End-of-service gratuity** at or above the statutory rate of 2 weeks per completed year
- **Release of claims**, mutual and in writing
- **Reference clause**, agreed wording for future employment references
- **Confidentiality** obligations on both sides
- **Return of company property** and handover obligations

Final pay settlement following any termination is expected promptly. Iraqi law requires payment without undue delay; while no fixed statutory deadline in days is confirmed by a primary source, practitioner guidance consistently places the expectation at the subsequent payroll run or within approximately two weeks of the termination date.

## How Teamed runs Iraq terminations

Teamed is your legal [employer of record](/lp/employer-of-record) in Iraq. The flat fee is [**from $599 per employee per month**](/pricing) with **zero FX mark-up** in any currency. Gratuity calculation, notice, and Ministry notifications all run through Teamed's Iraq operations.

The full termination process runs on **one platform**. The decision to end employment, and on what grounds, stays with you.

**Real HR and legal experts** support your Iraq hires from offer through final settlement. **An actual person** handles the documentation, not a ticket queue. There is **no setup fee** and **no exit fee**. Every employer cost, including the gratuity calculation, **passes through at cost, itemised** on every invoice.

The split of responsibilities under EOR for Iraq terminations:

| What Teamed handles | What the client decides |
| --- | --- |
| Notice period calculation against the three statutory bands | Whether to dismiss, on what grounds, and on what timeline |
| End-of-service gratuity calculation and payment | Whether to offer enhanced gratuity above the statutory rate |
| Valid-grounds documentation and written dismissal notice | Performance standards and what constitutes cause |
| Ministry of Labour notification where the exercise requires it | The scope of any restructuring |
| Mutual separation agreement drafting with local legal partners | The commercial terms of an agreed package |
| Final payroll: gratuity, notice pay, accrued leave, all deductions | Whether to settle beyond statutory minimums |
| Labour Court coordination if a claim is filed | Settlement versus defence strategy |

EOR, contractor management, and entity setup all live on **one platform**. An Iraq hire can **graduate** from EOR to your own in-country entity without switching systems, and the platform monitors the economics so you know when the model flips. Run the [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator) to see the inflection point. EOR is the right answer for Iraq, **until it isn't**. Start from the Iraq hiring overview for the full picture.

## Frequently asked questions

Is end-of-service gratuity mandatory in Iraq on resignation as well as dismissal?

Yes. Under [Labour Law No. 37 of 2015](https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=96652), every employee who completes at least 1 year of continuous service earns the end-of-service gratuity of 2 weeks of final basic pay per completed year. This obligation applies whether the employer ends the contract or the employee resigns.

How much notice must an employer give an employee in Iraq in 2026?

Employer notice is banded by tenure: 30 days for under five years of service, 60 days for five to under ten years, and 90 days for ten or more years. During the statutory probation period of up to 3 months, either party needs only 7 days.

Can an employer dismiss an employee without cause in Iraq?

Not without financial consequence. A dismissal without a valid reason under Labour Law No. 37 of 2015 is treated as unjust dismissal. The employee retains the statutory end-of-service gratuity and may also claim additional compensation at the discretion of the Labour Court. Valid grounds include genuine redundancy, documented misconduct, and repeated performance failure after a written warning.

What is Iraq's probation period and what are the notice rules during it?

The statutory maximum probation period is 3 months. During probation, either the employer or the employee can end the contract with 7 days' notice. No end-of-service gratuity is owed on termination during probation, provided the probationary terms were set out in writing at the start of employment.

Are there collective redundancy consultation rules in Iraq?

Labour Law No. 37 of 2015 does not set a fixed headcount trigger or consultation window equivalent to EU-style collective redundancy rules. Mass redundancies are subject to Ministry of Labour oversight: employers must notify the Ministry before issuing individual notices and consult with any recognised worker representatives. Each affected employee still receives the full statutory gratuity of 2 weeks per completed year and the applicable notice pay.

Teamed Legal Operations

The gratuity on resignation catches companies off guard more than the gratuity on dismissal. Most employers budget for one and forget the other. In Iraq, both events trigger the same obligation from year one, and you'll see it on a payroll run you didn't plan for.

A note from Tom Price-Daniel

Iraq's end-of-service gratuity runs at 2 weeks per year from the first anniversary. It pays out on resignation just as it does on dismissal.  
Most employers model the dismissal scenario. Fewer model the resignation.  
The obligation doesn't change based on who ends it.

Tom Price-Daniel · Co-founder, Teamed

## Related Iraq guides

- Hiring in Iraq, overviewparent
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [EOR vs Entity Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Iraq Ministry of Labour and Social Affairs or a qualified local employment-law practitioner before relying on any specific framework. The Kurdistan Region of Iraq may apply different enforcement practices and wage levels despite operating under the same federal Labour Law No. 37 of 2015. No primary-source confirmation was available for the statutory final-pay deadline or the precise qualifying period for unfair-dismissal protection.