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The lockdown and imposed curfews in both Federal Iraq and the Kurdistan Region of Iraq in an effort to contain the ongoing COVID-19 pandemic triggered several repercussions affecting the relationship between companies and their employees as a result of the unforeseen social and financial conditions.
In Federal Iraq, the lockdown began on March 17, 2020 and the Ministry of Health declared February 20, 2020 as the effective date for the beginning of the legal effects of a force majeure. Similarly, the Kurdistan Region of Iraq started its lockdown on March 14, 2020, without officially addressing the issue of force majeure in any of its communications or directives.
Prior to addressing the affected employment rights and obligations, it is worth noting that the employment relationship in Federal Iraq is regulated by the new Labor Law (37/2015), whereas, the old Labor Law (71/1987) is still enforceable until today in the Kurdistan Region of Iraq, which provides for several divergences from a legislative standpoint.
Hereinafter, we will provide answers to the most frequent Labor Law related inquiries we received since the beginning of the outbreak.
1) Should an employer keep paying full salaries to all employees?
In Federal Iraq, article 72(1) of the new Labor Law states that in the event of work being completely or partially suspended due to exceptional circumstances or force majeure, the employer is only required to pay the employee’s salary for the first (30) days of suspension. Following the employee’s return to work, the employer is entitled to request the performance of additional unpaid work in lieu of lost working hours, on the condition of the additional unpaid work not exceeding (2) hours per day and (30) days per year.
In parallel, article 65(1) of the old Labor Law, applicable the Kurdistan Region, stipulates for similar conditions as described under article 72(1) of the new law, except for the remunerated period of suspension which extends to (60) days under the old law instead of (30) days.
Therefore, as the COVID-19 pandemic persists, employers in Federal Iraq are obliged to pay salaries for the first (30) days following the date when employees could not perform their work duties anymore, which in most instances would fall on March 17, the start date of the lockdown, and in all cases, the force majeure period cannot be considered as starting before February 20. On the other hand, employers in the Kurdistan Region, must pay salaries for up to (60) days as of March 14, the date when the lockdown in Kurdistan started, for all employees who could not perform any work thereafter.
2) Should the employees keep receiving allowances?
Employers have the right, during the lockdown period, to suspend payment of a number of allowances directly linked to the usual performance of work from the workplace such as transportation and food allowances.
3) What health and safety conditions must be secured by the employer?
The Labor Laws applicable in both jurisdictions require employers to take all necessary measures to ensure the employees’ safety during the performance of their job including the provision of the necessary protective gear. Furthermore, the employer should ensure a sanitized workplace and set internal rules for safe behavior at work.
Moreover, while no provision of the Labor Laws or any specific directives regulate working remotely or any other flexible work arrangements, employers are nevertheless required by law to provide employees with the necessary means to perform their job, which implies that under the current circumstances employees must be provided with all needed tools and access solutions, to enable them to efficiently and safely perform their work duties remotely whenever possible.
4) Can the employer impose an annual or unpaid leave?
Both Labor Laws state that the timing of an annual leave must be set in the internal policy of the employer, however, in the absence thereof, the timing of the annual leave must be agreed upon mutually between the employer and employee.
Consequently, if the employer does not use the right to unilaterally determine the timing of annual leaves through an internal policy approved by the Ministry of Labor, the employer will not have the right to impose an annual leave on employees during this period without the consent of the employee.
Furthermore, it must be noted that the Iraqi laws do not contain any provisions under which employers are entitled to place employees on unpaid leave. Any such measures are therefore considered equivalent to a termination of the employment relationship.
5) What are the rights and obligations of an employee who contracts COVID-19?
In the event where an employee catches COVID-19, and obtains a valid medical report confirming his/her health condition, he/she would be entitled to a paid sick leave of (30) days for every year of employment, which may have accumulated up to (180) days of paid sick leave depending on the number of previous years of service. The employee is not allowed to conduct any work during the sick leave period.
Moreover, article 43 of the Retirement and Social Security Law (39/1971) provides that any period of sick leave exceeding the (30) days remunerated by the employer under the Labor Law, will be compensated by the social security, on the condition of the medical report of such cases being either issued or certified by a medical professional accredited by the social security directorate.
6) Did the government issue any additional measures pertinent to the employment relationship?
The Central Bank of Iraq, issued on March 29, 2020 directives no. 5/6/822, which imposed a 0.7% fee on all cash withdrawals in US Dollars for transfers received from abroad, in addition to the payment of only 75% of any received amount in US Dollars, with the remaining 25% paid in Iraqi Dinars. In case an employer receives funding from abroad and pays salaries through direct deposit to each employee’s bank account, then the 0.7% charge and the currency division will be passed to the employee by the bank.
On another note, the Kurdistan Ministry of Interior decided to waive all daily penalties on expired and delayed residency permits and exit visas.
For Further information on this topic please feel free to contact Alain Hannouche on ahannouche@hannouchelaw.com or Amanda Mezher on amezher@hannouchelaw.com.