SAILGLOBAL EMPLOYMENT GUIDE
2026 Iran Employment Guide: Minimum Wage, Social Insurance, Leave and Termination
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1405 minimum wage increased
From March 21, 2026, the minimum daily wage is IRR 5,541,850, requiring updated contracts, quotations, payroll parameters and wage-difference checks.
Wage levels and statutory allowances changed
From 1405, other wage levels rise by 45% plus IRR 519,549 daily, while the confirmed monthly cost-of-living and marriage allowances require separate payslip configuration.
Social-insurance bases moved with the wage floor
For 1405, employers must update the minimum insurable wage and recheck the commonly applied seven-times daily ceiling before the first payroll and every filing.
Hiring in Iran in 2026 requires more than an employment contract. Employers must coordinate Iran employment law, the 1405 minimum wage, Iran payroll, social insurance, salary tax, working time, statutory leave, termination procedure and compliant payment channels. High inflation and the Iranian calendar-year change make recycled payroll parameters especially risky.
This guide is for Chinese companies planning recruitment, payroll, Employer of Record services, remote work or employee exits in Iran. Its 1405 wage parameters apply from March 21, 2026. Housing allowance, salary-tax bands, religious holidays, banking availability and sanctions controls must still be rechecked against current official materials before each quotation and payroll run. Visa and work-permit procedures require a separate immigration assessment.
1. Iran Employment Compliance at a Glance in 2026
Compliance item | 2026 baseline | Employer control |
Main framework | Labour Law, Social Security Law, annual Supreme Labour Council wage decision and tax legislation | Confirm coverage, workplace and special-industry rules |
Minimum wage | IRR 5,541,850 per day from March 21, 2026 | Test each paid day and add applicable statutory allowances |
Working time | Generally eight hours per day and 44 hours per week | Align contract, roster, attendance and payroll |
Overtime | Employee consent and normal hourly pay plus 40% | Pre-approve and retain auditable records |
Annual leave | Generally one month including four Fridays; prorated for shorter service | Define counting method and control the nine-day carryover limit |
Social insurance | Employee commonly 7%; employer commonly 20% plus 3% unemployment insurance | Confirm insurable items, annual floor and ceiling, identity and industry exceptions |
Probation | Commonly up to three months for professional or technical work and one month for low- or semi-skilled work | Put it in the contract and model employer-termination cost |
Termination | Depends on contract type, statutory ground, warnings, employee-representative input and dispute procedure | Obtain Iranian legal review before notice |
Foreign employees | A compliant contract does not itself confer the right to work | Verify work authorization, residence, tax, insurance and payment route |
Cross-border payment | Banking, foreign-exchange, sanctions and AML controls can affect payroll | Obtain written finance, banking and sanctions clearance |
Employer cost should not be simplified to “salary plus 23%.” Calculate wage components and the insurable base first, then add Eidi, overtime, shift premiums, leave, termination exposure, insurance, payment and service costs.
2. Three Employment and Payroll Changes Requiring Action in 2026
Change | 2026 position | Employer action |
1405 minimum wage | From March 21, 2026, the minimum daily wage is IRR 5,541,850 | Update contracts, quotations and payroll; identify and correct any shortfall |
Other wage levels and allowances | Other wage levels rise by 45% of prior basic wage plus IRR 519,549 daily; the confirmed monthly cost-of-living allowance is IRR 22,000,000 and marriage allowance is IRR 5,000,000 | Configure every component separately and do not offset mandatory items with a discretionary bonus |
Social-insurance base | The minimum insurable daily wage follows the wage increase; the maximum is commonly controlled at seven times the minimum | Update payroll floors and ceilings and test the actual paid days before filing |
Housing allowance may require separate government approval. Employers should not lock a proposed or prior-year amount into a firm quotation before receiving the effective 1405 instrument. The 1405 salary-tax table, full religious-holiday calendar and payment availability also require implementation-date verification.
3. Iran’s Employment Law and Regulatory Framework
Private-sector employment is principally governed by Iran’s Labour Law. The Ministry of Cooperatives, Labour and Social Welfare and local labour authorities administer employment matters and disputes. The Social Security Organization manages social insurance, while the Iranian National Tax Administration administers salary tax. The Supreme Labour Council normally sets annual wage parameters.
Statutory minimum rights cannot be waived by contract. A collective agreement, company policy or individual contract may provide more favourable benefits. When an EOR is used, the client may set business objectives and provide factual performance feedback, but the contractual employer should legally review and issue contractual changes, disciplinary decisions, suspension, leave denials and termination.
Party | Main responsibility |
Contractual employer | Contracting, payroll, tax and insurance registration, wage payment, records, safety, discipline and termination |
Employee | Accurate identity and payroll information, lawful instructions and reporting status changes affecting benefits |
Client manager | Business objectives, lawful tasks and factual feedback without independently promising pay changes or dismissal |
Local adviser | Special-industry, foreign-worker, restructuring, sanctions and dispute advice |
4. Recruitment, Offers and Onboarding
Job descriptions should state genuine duties, location, reporting line, normal hours, shifts, travel, language and necessary qualifications. Recruitment should collect only information required for a lawful employment purpose. Sensitive religious, political, health or family information should not be collected without a specific lawful need.
Offers should separate basic wage, statutory allowances, bonus, commission, overtime and expenses. Effectiveness may be conditioned on execution of a locally enforceable contract, identity review, payroll setup and required compliance approvals. Employers should not use an uncertain bonus to fill a minimum-wage gap or promise that a foreign worker’s permit will be approved.
Stage | Employer check | Completion evidence |
Before signature | Role, location, wage components, term, probation, hours and governing rules | Approved job description, offer and cost model |
Before work starts | Local contract, payroll, tax, social insurance and required authorization | Signed contract and completed registrations |
First payroll | Daily minimum, allowances, employee deduction, employer contribution and tax | Reconciled payslip, filing, payment and ledger |
Ongoing employment | Attendance, overtime, leave, performance, warnings and wage changes | Traceable lifecycle record |
5. Employment Contracts, Contract Types and Probation
An employment contract should identify the parties, work, wage and additional benefits, working time, leave, workplace, signature date, duration and other mandatory conditions. It should also document the payment date and route, bonus or commission conditions, expenses, confidentiality, intellectual property, equipment, data security, misconduct and exit handover. An English or Chinese summary does not replace a locally enforceable text.
Contract type | Typical use | Main risk |
Indefinite-term | Continuing work | The employer cannot reserve an unrestricted right to dismiss without cause |
Fixed-term | Defined start and end dates | The parties generally cannot terminate early at will |
Specific-task | Identifiable project or result | Scope, completion test and settlement must be precise |
Part-time | Hours below full time | Pay and some rights may be proportional, but mandatory floors remain |
Probation must be agreed in the contract. It is commonly limited to three months for professional and technical workers and one month for low- and semi-skilled workers. If the employer terminates during probation, it may owe wages for the entire agreed probationary period; an employee who resigns generally receives wages for time actually worked. Probation is not a cost-free same-day dismissal mechanism.
Material changes to duties, workplace or core terms should be agreed in writing and checked for any labour-authority approval. A “consultant” label does not prevent employment classification when the person is directed, paid regularly and integrated into the organization.
6. Wages, Minimum Wage and Gross-to-Net Payroll
The 1405 wage decision applies from March 21, 2026 to permanent and temporary workers covered by the Labour Law. Payroll should separate basic wage, seniority base, cost-of-living allowance, marriage or housing allowance, bonus, overtime and reimbursed expenses.
Wage item | 1405 parameter | Note |
Minimum daily wage | IRR 5,541,850 | Mandatory floor |
30-day monthly basic wage | IRR 166,255,500 | 5,541,850 × 30 |
31-day monthly basic wage | IRR 171,797,350 | 5,541,850 × 31 |
Other wage-level adjustment | Prior basic wage +45%, plus IRR 519,549 daily | Result cannot fall below the minimum |
Seniority base after one year | IRR 166,667 daily | Commonly applies after one year of service or one year since the last seniority-base award |
Cost-of-living allowance | IRR 22,000,000 monthly | Confirmed 1405 wage component |
Marriage allowance | IRR 5,000,000 monthly | For an eligible married employee |
Housing allowance | Recheck before quotation | Lock only after formal 1405 approval |
Illustrative minimum-wage calculation. An unmarried employee with less than one year’s service working a 30-day payroll month receives IRR 166,255,500 in basic wage plus the confirmed IRR 22,000,000 cost-of-living allowance, producing at least IRR 188,255,500 in confirmed cash items. Add marriage allowance when eligible, the daily seniority base when applicable and housing allowance only after official confirmation.
Gross-to-net payroll should follow this order:
- Aggregate basic wage, applicable statutory allowances, overtime, bonuses and other taxable or insurable items.
- Determine the 1405 insurable base and deduct the employee’s 7% contribution.
- Apply the effective 1405 progressive salary-tax table.
- Deduct other items only where a lawful basis exists and the payslip identifies them.
- Pay net wages through an approved, auditable route and issue a payslip.
Statutory annual Eidi is commonly 60 days’ wages, capped at the amount corresponding to 90 days of the statutory minimum daily wage. It is prorated for service below one year and should not be treated as an optional year-end bonus.
7. Working Time, Overtime and Records
Item | General rule | Payroll control |
Normal working time | Generally up to eight hours daily and 44 hours weekly | Align contract, roster, attendance and payslip |
Dangerous or harmful work | Generally up to six hours daily and 36 hours weekly | Complete risk classification and occupational-health controls |
Ordinary overtime | Employee consent and normal hourly pay plus 40% | Normally limit to four hours daily; document genuine emergencies |
Non-shift night work | Commonly attracts a 35% premium | Itemize instead of burying it in basic pay |
Shift premium | Commonly 10%, 15% or 22.5%, depending on the morning/evening/night combination | Configure against the actual rotation |
Weekly rest | Friday is generally the paid weekly rest day | Create lawful alternative rest and compensation for continuous operations |
A fixed monthly wage does not automatically purchase unlimited overtime. Keep auditable records of ordinary hours, overtime, night work, shifts, weekly rest and holiday work. Any claimed managerial exception must follow actual duties and a defensible legal basis, not merely the job title.
8. Public Holidays, Annual Leave and Other Statutory Leave
Annual leave is generally one month including four Fridays and is prorated for shorter service. Workers in dangerous or harmful jobs generally receive five weeks, normally taken in six-month intervals. Up to nine days may usually be carried forward. Employers should reconcile unused balances at exit.
2026 date or period | Holiday or event | Payroll action |
February 11 | Anniversary of the Islamic Revolution | Apply public-holiday rules if it overlaps the roster |
Around March 20–24 | Oil Nationalization Day and Nowruz period | Use the official 1404/1405 calendar to lock exact dates |
April 1 | Islamic Republic Day | Do not automatically deduct annual leave |
April 2 | Nature Day | Record holiday work or shutdown arrangements |
May 1 | Labour Day | Treat as a statutory holiday for covered workers |
June 4 | Anniversary of Imam Khomeini’s death | Roster continuous operations in advance |
June 5 | 15 Khordad anniversary | Verify holiday-work pay and alternative rest |
Throughout the year | Eid al-Fitr, Eid al-Adha, Tasua, Ashura and other religious holidays | Import all dates from the official Iranian calendar; lunar dates may shift |
This table highlights operational dates and is not a substitute for the complete official calendar. Employers should import every statutory holiday and should not assume that Chinese substitute-holiday rules apply when a holiday overlaps weekly rest.
Other leave | General position | Administration |
Sick leave | No simple universal annual employer-paid entitlement; approved absence may count as service | Social-security cash benefit depends on coverage and evidence |
Maternity leave | Eligible insured employees generally receive nine months | Benefit is commonly paid by the Social Security Organization subject to application and evidence |
Marriage or death of immediate family | Commonly three paid days | Verify covered relationships and retain evidence |
Hajj | Commonly one month of unpaid leave once during service | Obtain advance written request and avoid duplicate annual-leave deduction |
9. Employer Social Security, Mandatory Benefits and Tax
For an ordinary covered employee, the employer commonly deducts 7% social insurance from insurable pay and contributes 20% social insurance plus 3% unemployment insurance on the same base. The employer-side 23% is not total employment cost and may not apply identically to every worker or industry.
Item | Employer | Employee | Control |
Social insurance | Commonly 20% | Commonly 7% | Employer withholds and remits the employee share |
Unemployment insurance | Commonly 3% | 0% | Do not deduct the additional 3% from the employee |
Occupational injury and safety | Depends on job and industry | No single payroll deduction | Price high-risk work separately |
Salary income tax | Withhold, file and remit | Bears personal liability | Use the effective 1405 progressive table |
Supplementary benefits | Depends on law, contract, collective agreement or policy | May share cost under the plan | Do not describe private insurance as a universal statutory rate |
The minimum daily insurable wage for 1405 should track IRR 5,541,850. The maximum daily insurable wage is commonly seven times that amount, or IRR 38,792,950, producing an illustrative 30-day maximum base of IRR 1,163,788,500. Verify final parameters with the Social Security Organization and the actual paid days.
Illustrative employer-cost calculation. Assume a Tehran office employee has monthly gross and insurable pay of IRR 500,000,000 and no special-industry rate.
Item | Calculation | Amount |
Gross wage | Fixed | IRR 500,000,000 |
Employer social insurance | 500,000,000 × 20% | IRR 100,000,000 |
Employer unemployment insurance | 500,000,000 × 3% | IRR 15,000,000 |
Known monthly employer-cost subtotal | Excludes Eidi, leave, benefits, termination and service fees | IRR 615,000,000 |
The employee contribution is IRR 35,000,000. Because salary tax and other lawful deductions have not been calculated, IRR 465,000,000 must not be labelled net pay. Reconcile payroll, social-insurance filing, tax filing, payment and the general ledger every month.
10. Local Employees and Foreign Employees
Review item | Local employee | Foreign employee or assignee |
Contract | Local mandatory standards apply | An overseas contract does not automatically displace Iranian law |
Right to work | Local identity information generally supports registration | Maintain the required work permit and residence status before productive work |
Wage and payment | Use a compliant local payroll and payment process | Review currency, split payroll, banking and sanctions restrictions |
Social insurance | Generally covered locally | Confirm by status, assignment structure, international arrangement and authority position |
Tax | Employer withholds under effective rules | Assess Iranian residence, overseas income, permanent establishment and home-country tax |
Exit | Follow local contract and procedure | Also manage work authorization, residence, departure and cross-border benefit settlement |
Assignment documentation should address housing, schooling, home travel, tax equalization, exchange-rate protection and other expatriate benefits. Offshore payment must not be used to underreport Iranian wages, social insurance or tax. An EOR should not be represented as automatically resolving permits, banking or sanctions restrictions.
11. Remote Work, Data Privacy and Record Retention
A written remote-work agreement should define location, availability, time recording, equipment, expenses, information security, accident reporting, cross-border access and return-to-office requirements. Long-term work in Iran for an overseas company can create Iranian employment, payroll, social-security, tax and permanent-establishment risk even when salary is paid offshore.
Control | Minimum requirement |
Equipment and accounts | Issue, access, patching, encryption and exit-return records |
Time and overtime | Record remote hours and pre-authorize and pay overtime |
Data access | Least-privilege access and restrictions on unapproved foreign systems |
Retention | Separate labour, tax, social-insurance, dispute and business periods; avoid indefinite blanket retention |
Exit | Close access, recover equipment, preserve required evidence and delete unnecessary copies |
Personnel files should contain contracts and amendments, identity and payroll data, payslips, tax and insurance filings, attendance, overtime, leave, performance, warnings, incidents, complaints and exit records. Sensitive information and cross-border transfers require purpose, necessity, access, security, retention and sanctions review.
12. Termination, Severance and Final Settlement
Ordinary dismissal under Iranian labour law cannot generally be completed merely by paying notice. The employer must identify the contract type, probation status, genuine ground, written warnings, worker-representative or Islamic Labour Council involvement and the applicable dispute process.
Termination route | Ground or procedure | Settlement focus |
Employer ends probation | Check contract and protected grounds | Potential payment for the entire agreed probation period |
Employee resigns during probation | Confirm last working day in writing | Pay time actually worked |
Ordinary dismissal after probation | Genuine lawful reason, warnings, representative input and dispute process | Payment in lieu alone does not validate same-day dismissal |
Employee resignation | Written resignation and commonly one further month of work | Employee may commonly withdraw within 15 days |
Fixed term expires | Expiry and non-renewal | After one year, commonly one month of final wage per service year |
Early fixed-term termination | Generally no unilateral at-will termination | Check agreement, serious misconduct or another statutory basis |
Serious misconduct | Strong facts and evidence | Investigation, warnings, representative input and procedure remain important |
Mutual termination | Genuine, written and voluntary agreement | Date, amounts, tax, insurance and reservation of rights |
Collective or economic restructuring | Separate authority, representative and restructuring review | Do not split a collective process into ordinary individual dismissals |
On normal expiry of a fixed-term or specific-task contract, an employee with at least one year’s service commonly receives one month of final wage for each year. An unlawful dismissal may lead to reinstatement and back pay; certain outcomes may involve 45 days of final wage per service year.
Illustrative final settlement. Assume final monthly wage is IRR 500,000,000, service is three years, a fixed-term contract expires without renewal and ten confirmed leave days remain. The illustrative daily wage is IRR 500,000,000 ÷ 30.
Item | Calculation | Amount |
Service or termination benefit | 500,000,000 × 3 | IRR 1,500,000,000 |
Illustrative unused leave | 16,666,666.67 × 10 | IRR 166,666,666.70 |
Identified subtotal | Excludes final wage, Eidi, tax, insurance, commission and expenses | IRR 1,666,666,666.70 |
This example demonstrates a method, not a fixed payment for every termination. Use the legally recognized final wage components, actual balances and the applicable exit route.
13. Hiring Model: Entity, EOR or Payroll Outsourcing
Model | Suitable use | Company responsibility | Main limitation |
Direct entity employment | Stable long-term operation and team | Entity, contract, payroll, tax, insurance, authorization, audit and disputes | Maintenance, banking and sanctions burden |
Employer of Record | Market test, small team or no employing entity | Client manages business activity; EOR performs legal-employer processes | Employer eligibility, payment, role, identity, data and sanctions require case review |
Payroll outsourcing | Existing lawful Iranian employer needs payroll support | Client remains legal employer and ultimately responsible | Outsourcing does not transfer employment, tax, insurance or termination liability |
An EOR review should cover the contractual employer’s eligibility, banking and wage-payment route, social-insurance and tax registration, employment authority, industry and role, worker status, data flow, AML, work authorization and sanctions. No provider should promise that EOR avoids Iranian labour law, work-permit or sanctions requirements.
Cost proposals should separate: wages and confirmed statutory allowances; employer 20% plus 3%, employee 7% and salary-tax withholding on the correct base; and variable Eidi, overtime, shift, holiday, leave, insurance, termination and local-service costs. Foreign exchange and payment fees are not statutory social insurance.
sailglobal can support hiring-model assessment, payroll coordination and preliminary cost modelling. Final feasibility and pricing require the employee’s status, role, location, wage structure, payment route and current official results.
14. Common Iran Employment Risks for Chinese Companies
Risk | Typical error | Control |
Old annual wage parameters | Failing to switch to 1405 on March 21, 2026 | Apply IRR 5,541,850 daily according to employment and payroll dates |
Treating minimum wage as one monthly amount | Ignoring 30- and 31-day differences and mandatory allowances | Test actual paid days and itemize allowances |
Unconfirmed housing allowance | Reusing a 1404 or proposed amount | Obtain the effective 1405 approval before locking payroll |
Treating 23% as total cost | Omitting Eidi, overtime, leave, termination, benefits and payment costs | Build wage, statutory payroll and variable-cost layers |
Wrong social-insurance allocation | Deducting the employer’s 3% from the employee or ignoring the ceiling | Reconcile employee 7%, employer 20% plus 3%, base and cap |
Weak working-time evidence | Assuming salary includes unlimited overtime | Link prior approval, attendance and payslip items |
Incomplete holiday calendar | Recording only fixed Gregorian dates | Import the full official 1404/1405 calendar |
Cost-free probation assumption | Dismissing immediately without modelling remaining probation pay | Use a valid written period and calculate employer exposure |
Early fixed-term termination | Relying only on advance notice | Confirm agreement, serious misconduct or another legal basis |
Missing dismissal procedure | No warnings, employee response or representative input | Preserve evidence and follow the applicable labour-dispute route |
Foreign-worker authorization | Treating a contract or EOR as a work permit | Verify permit, residence, tax, insurance and exit consequences before work |
Cross-border payroll and sanctions | Using offshore, cash or third-party payment to hide local obligations | Obtain banking, AML, sanctions, tax and payroll approval |
Contractor misclassification | Directing an integrated monthly paid worker under a consulting label | Assess control, dependency, integration and commercial risk |
Uncontrolled data transfer | Uploading identity, wage or health records abroad without review | Document purpose, access, security, retention and transfer controls |
Incomplete final settlement | Omitting leave, Eidi, commission or service benefit | Use a reconciled exit checklist and preserve calculations |
VERIFIED REFERENCES
Official Sources & Further Reading
- Iran Social Security Organization — 1405 Minimum-Wage Circular
- Ministry of Cooperatives, Labour and Social Welfare
- Iran Social Security Organization
- Iranian National Tax Administration
- ILO NATLEX — Labour Law of the Islamic Republic of Iran
- ILO NORMLEX — Islamic Republic of Iran
- ILO EPLex — Employment Protection Legislation Database