Labor Law

Labor Law

In this article, we aim to provide a comprehensive review of the detailed provisions, chapters, and notes of Iran’s Labor Law.

Employment Contract Conditions

Chapter One: Definitions and General Principles

Article 1

All employers, workers, workshops, and production, industrial, service, and agricultural establishments are required to comply with this Law.

Article 2

For this Law, a “worker” is a person who, under any title and in return for receiving remuneration, including wages, salary, profit share, and other benefits, performs work at the request of the employer.

Article 3

An “employer” is a natural or legal person for whose benefit and on whose account a worker performs work, in return for remuneration. Managers, supervisors, and generally all persons responsible for administering a workplace shall be deemed representatives of the employer, and the employer shall be responsible for all obligations undertaken by such representatives toward the worker. Where an employer’s representative undertakes an obligation beyond the scope of their authority and the employer does not accept it, the representative shall be liable to the employer.

Article 4

A “workshop” is a place where a worker performs work at the request of the employer or the employer’s representative. This includes industrial, agricultural, mining, construction, transportation, passenger service, commercial, and production establishments, public places, and similar locations. All facilities that, by virtue of the work, belong to the workshop, including prayer rooms, cafeterias, cooperatives, nurseries, kindergartens, clinics, baths, vocational training centers, reading rooms, literacy classes, other educational centers, and premises related to councils, Islamic associations, workers’ Basij units, sports facilities, vehicles, and similar items, shall be deemed part of the workshop.

Article 5

All workers, employers, their representatives, apprentices, and workshops are subject to the provisions of this Law.

Article 6

Pursuant to the Constitution of the Islamic Republic of Iran, forced labor and exploitation are prohibited. All Iranian people, regardless of ethnicity or tribe, enjoy equal rights, and color, race, language, and similar characteristics shall not constitute privilege grounds. All individuals, both women and men, are equally protected by the Law, and every person has the right to choose an occupation they desire, provided it is not contrary to Islam, public interests, or the rights of others.

Chapter Two: Employment Contract

Section One: Definition of the Employment Contract and Essential Conditions for Its Formation

Article 7

An employment contract is a written or oral agreement under which a worker, in return for remuneration, performs work for an employer for a fixed term or an indefinite term.

Note 1

The maximum duration of fixed-term contracts for work that is non-continuous by its nature shall be prepared by the Ministry of Labor and Social Affairs and approved by the Council of Ministers.

Note 2

For work that is continuous by its nature, if no term is specified in the contract, the contract shall be deemed indefinite.

Article 8

The conditions stated in the employment contract, or later amendments, shall be valid only to the extent that they do not provide the worker with benefits less than those prescribed by this Law.

Article 9

For the validity of an employment contract at the time of execution, the following conditions are mandatory:

1. Lawful subject matter of the contract.
2. A definite and specified subject matter.
3. No legal or religious prohibition prevents either party from disposing of property or performing the intended work.

Note

All employment contracts are presumed valid unless their invalidity is established before competent authorities.

Article 10

In addition to the full particulars of the parties, the employment contract must include the following:

1. The type of work, profession, or duty the worker is engaged to perform.
2. Base wage or salary and its components.
3. Working hours, holidays, and leave entitlements.
4. Place of work.
5. Date of contract execution.
6. Contract term, where the work is for a fixed period.
7. Any other matters required by custom and practice of the occupation or workplace.

Note

Where the contract is written, it shall be prepared in four copies: one for the local Labor Office, one for the worker, one for the employer, and one for the Islamic Labor Council, or in workplaces without such a council, for the worker’s representative.

Article 11

The parties may, by mutual agreement, designate a trial period. During the trial period, either party may terminate the employment relationship without prior notice and without liability for damages. If the employer initiates termination, the employer must pay the worker’s wages for the entire trial period. If the worker initiates termination, the worker shall be entitled only to wages for the period actually worked.

Note
The trial period must be specified in the employment contract. Its maximum duration is one month for unskilled and semi-skilled workers and three months for skilled workers with advanced specialization.

Article 12
Any legal change in ownership of the workshop, including sale or transfer in any form, change in production type, merger, nationalization, death of the owner, and similar events, shall not affect the contractual relationship of workers whose contracts have become established. The new employer shall succeed to the former employer’s obligations and rights.

Article 13

Where work is performed through contracting, the principal contractor is required to conclude the contract in a manner that obligates the subcontractor to apply all provisions of this LaLawo its personnel.

Note 1

Workers’ claims are privileged debts. Employers are obligated, pursuant to decisions of competent authorities, to pay contractors’ debts to workers from the contractor’s receivables, including performance guarantees.

Note 2

If the principal contractor, contrary to the above, concludes the contract improperly or settles accounts before forty-five days from provisional delivery, the principal contractor shall be responsible for payment of the subcontractor’s debts to workers.

Section Two: Suspension of the Employment Contract

Article 14

If, due to circumstances addressed in the following Articles, performance of obligations by either party is temporarily interrupted, the employment contract shall be suspended. Upon removal of such circumstances, the contract shall resume, with service continuity counted for retirement and wage increases.

Note

Compulsory military service, reserve service, and voluntary participation of workersonn the war front shall be counted as service records.

Article 15

In the event of force majeure or unforeseeable incidents beyond the parties’ control that cause all or part of a workshop to be closed and render performance temporarily impossible, the employment contracts of workers in the affected workshop or part thereof shall be suspended. The Ministry of Labor and Social Affairs shall make determination of such cases.

Article 16

The employment contracts of workers who, under this LLaw take educational leave or other unpaid leave shall be suspended during the leave for up to two years.

Note

Educational leave may be extended for an additional two years.

Article 17

The contract of a worker who is detained, where detention does not result in a conviction, shall be suspended during detention, and the worker shall return to work upon release.

Article 18

If the worker’s detention results from the employer’s complaint and does not lead to a conviction, the detention period shall be counted as part of the worker’s service record. In addition to compensating the worker for damages as ordered by the court, the employer must also pay the worker’s wages and benefits.

Note

Until the competent authorities determine the worker’s status, the employer must pay at least fifty percent of the worker’s monthly wages as an advance to the worker’s family to meet their needs.

Article 19

During compulsory military service, the employment contract shall be suspended. The worker must return to their prior work no later than 2 months after completing service. If the prior position has been eliminated, the worker shall be assigned to a similar position.

Article 20

In cases referenced in Articles 15, 16, 17, and 19, if the employer refuses to readmit the worker after the suspension ends, such refusal shall be deemed unlawful dismissal. The worker may, within thirty days, apply to the Dispute Resolution Board, unless the worker has a justified excuse. If the employer fails to prove justified grounds for refusal, the employer shall be required to reinstate the worker and pay wages from the date of the worker’s return. If justified grounds are proven, the employer shall pay forty-five days of the last wage for each year of service.

Note

If the worker, without a justified excuse, fails to notify readiness to work within thirty days after suspension ends, or after the employer’s refusal fails to apply to the Board, the worker shall be deemed resigned. In such a case, the worker shall be entitled to end-of-service benefits equal to one month of the last salary for each year of service.

Section Three: Termination of the Employment Contract

Article 21

An employment contract terminates in any of the following cases:

1. Death of the worker.
2. Retirement of the worker.
3. Total disability of the worker.
4. Expiration of the term in fixed-term contracts and non-renewal, whether express or implied.
5. Completion of work in contracts for a specific task.
6. Resignation of the worker.

Note

A resigning worker must continue working for one month and must first notify the employer in writing. If the worker submits a written withdrawal of resignation within fifteen days, the resignation shall be deemed void. The worker must deliver a copy of the resignation and its withdrawal to the Islamic Labor Council, the trade association, or the workers’ representative.

Article 22

At the end of employment, all claims arising from the employment contract and relating to the worker’s period of employment shall be paid to the worker, and in the event of death, to the legal heirs.

Note

Until heirs are determined and administrative steps are completed and the Social Security Organization establishes the pension, the Organization must pay the deceased worker’s salary, up to the amount of the last received salary, on an interim basis for three months to the dependents.

Article 23

With respect to wages and pensions arising from death, illness, retirement, unemployment, suspension, total or partial disability, and related protective rules and conditions, the worker shall be subject to the Social Security Law.

Article 24

Upon termination of the employment contract, whether for a specific task or a fixed term, the employer is required to pay a worker who has been employed for one year or more, for each year of service, whether continuous or intermittent, an amount equal to one month of the last salary as end-of-service benefits.

Article 25

Where an employment contract is concluded for a fixed term or for performing a specific task, neither party may unilaterally terminate it.

Note

Disputes arising from such contracts fall within the jurisdiction of the Dispute Resolution and Settlement Boards.

Article 26

Any major change in working conditions contrary to the customary practice of the workshop or workplace shall be enforceable only after written approval by the local Labor Office. In the event of a dispute, the decision of the Settlement Board shall be final and binding.

Article 27

If a worker neglects assigned duties or violates disciplinary regulations after written warnings, the employer may, subject to a favorable opinion of the Islamic Labor Council, terminate the contract and pay the worker, in addition to accrued claims and arrears, an amount equal to one month of the last salary for each year of service as severance. In workplaces without an Islamic Labor Council, afavorablee opinion of the trade association is required. If the matter is not resolved by agreement, it shall be referred to the Dispute Resolution Board and, if unresolved, to the Settlement Board. During such proceedings, the contract shall be suspended.

Note 1

In workshops not covered by the Islamic Labor Council Law, or where no Islamic Labor Council or trade association is established, or where there is no workers’ representative, a favorable opinion of the Dispute Resolution Board under Article 158 of this Law is required for termination.

Note 2

Instances of neglect and disciplinary instructions shall be governed by regulations proposed by the Supreme Labor Council and approved by the Minister of Labor and Social Affairs.

Article 28

Legal representatives of workers, members of Islamic Labor Councils, and qualified candidates for such representation shall continue their activities in the same uni. They shalll remain employed and perform assigned duties until the final opinion of the Dispute Resolution Board and the final decision of the Settlement Board are issued.

Note 1

The Boards shall, upon receipt of a complaint concerning disputes between workers’ representatives and the employer, promptly and out of turn review the matter and announce their final opinion. In any event, the Settlement Board must consider the matter within one month of receiving the complaint.

Note 2

In workplaces where no Islamic Labor Council is established, or where the Dispute Resolution Board is not formed, or where the workplace is not subject to the Islamic Labor Council Law, workers’ representatives or trade association representatives shall continue their activities and employment until the final opinion and decision are issued.

Section Four: Compensation for Damages and Payment of End-of-Service Benefits

Article 29

Where the Settlement Board determines that the employer is responsible for suspension of the contract attributable to the worker, the worker shall be entitled to compensation for damages arising from suspension, and the employer must reinstate the suspended worker to their former position.

Article 30

If a workshop is closed due to force majeure, such as earthquake or flood, or unforeseeable incidents, such as war, and workers become unemployed, the employer must, upon resumption of operations, re-employ the unemployed workers in the reconstructed unit and in positions created therein.

Note

The Government is obligated, pursuant to the Constitution, to secure the livelihood of unemployed workers and to provide opportunities for their re employment, including through establishment of an unemployment insurance fund.

Article 31

If termination of the employment contract results from total disability or retirement, the employer must pay the worker, based on the last wage, an amount equivalent to thirty days’ wages for each year of service. This payment is in addition to disability or retirement pension paid by the Social Security Organization.

Article 32

If termination results from a reduction in physical or mental capacity caused by work, as determined by the relevant medical commission, the employer must pay the worker, for each year of service, an amount equivalent to two months of the last salary.

Article 33

Determination of total or partial disability, occupational and non-occupational illnesses, death of the worker, and the employer’s degree of fault leading to termination shall be based on criteria proposed by the Minister of Labor and Social Affairs and approved by the Council of Ministers.

Frequently Asked Questions about Labor Law