This article examines how UAE groups that share staff with Iraqi operations should allocate bonus decisions, expense reimbursements and exit liabilities across group employers. An employee working in Iraq may report to a Dubai executive, receive a regional bonus and claim expenses from several companies. This can work commercially while leaving it unclear who the employer is and who must pay what.
In Federal Iraq, the relevant statutes are the Labour Law No. 37 of 2015, which governs employment contracts, wages, working conditions and termination; the Retirement and Social Security for Workers Law No. 18 of 2023; the Income Tax Law No. 113 of 1982 for payroll tax; and the Residency Law No. 76 of 2017 for foreign employees. Operations in Kurdistan Region require separate assessment under the regional framework.
The employer and direction of work
The company named in the employment contract is the starting point, but the actual relationship also matters. Who directs the work, pays remuneration and exercises disciplinary authority are all relevant facts, and a secondment or cost-sharing arrangement should be documented in line with them. Iraqi labour authorities and courts look at the substance of the relationship.
A review of employment arrangements in Iraq should separate the employee’s rights from the internal allocation between affiliates. Group companies may agree who ultimately bears a cost, but that agreement does not change the employee’s claim against the legal employer. Work permits and residence status should also be checked where a foreign employee performs work for an additional entity, since permits are usually tied to a specific employer.
Bonus decisions and payment entitlement
A regional bonus policy should identify the decision-maker, qualifying conditions and the effect of joining, transferring or leaving mid-period. Calling a bonus discretionary does not remove the need to examine the contract, communications and the practice on which entitlement may be claimed; a bonus paid regularly can come to be treated as part of the wage.
The Iraqi employer should know whether a UAE manager can promise a bonus or vary pay. Approvals and payments should be recorded with any outstanding conditions. If another group company pays the bonus, the employment, tax and social security treatment should be assessed rather than assuming that an overseas payment falls outside Iraqi rules.
Expenses and remuneration records
Genuine reimbursement of documented business expenses should be distinguished from allowances or disguised pay. A fixed monthly sum described as expenses may be treated differently from reimbursement of a hotel invoice incurred on business travel, including for social security contributions, which are calculated on wages.
The group should keep a consistent record of who approves and pays each category. Duplicate claims and unexplained deductions cause both employment disputes and accounting problems. A review of Iraqi payroll tax obligations should reconcile local payroll with payments made elsewhere, and employees should receive clear statements allowing reimbursements from one affiliate to be matched with the local employer’s payroll.
Social security registration
The 2023 Social Security Law extended coverage and strengthened enforcement, including obligations to register workers and pay contributions on time, with penalties for non-compliance. Where an employee’s pay is split between an Iraqi employer and a UAE affiliate, the group should determine which amounts count for contribution purposes and ensure registration reflects the actual employer. Foreign employees’ coverage should also be checked under the current rules.
Transfers and termination liabilities
A move between group companies should state whether employment continues, changes employer or ends and is replaced. The effect on accrued rights, such as service length and leave, should be assessed under Iraqi law. A group announcement that service is continuous does not settle which entity owes outstanding wages or other entitlements.
Exit calculations should cover accrued pay, any established bonus entitlement, documented expenses and statutory termination payments under the Labour Law. Social security deregistration needs separate attention. Indemnities between employers should be supported by records and not presented as an employee waiver, and settlement agreements should state what is paid and identify any amount still disputed.
Immigration status of shared staff
Foreign employees working in Iraq need residence and work permits tied to a specific sponsoring employer. If an employee formally employed by a UAE company works for an Iraqi affiliate, or moves between affiliates, the permits may not reflect the actual arrangement. Under the Residency Law and Labour Law, working outside the conditions of a permit can lead to fines and deportation, and the sponsoring entity can also be penalised.
Groups should align employment contracts, secondment letters and permits, and update permits when an employee’s employer or role changes. Exit planning should include cancellation of residence permits and exit formalities. These steps are often overlooked in regional HR processes designed around UAE rules, yet they directly affect the employee’s ability to work and travel and the group’s compliance record in Iraq.
Conclusion & how Etihad Law Firm can help
Staff sharing requires clear local employment responsibility alongside the group’s financial arrangements, so that regional decisions do not create unplanned liabilities in Iraq.
As Iraq employment law advisors for UAE-based companies, Etihad Law Firm drafts employment and secondment documentation, reviews bonus and expense policies, advises on social security and payroll compliance, and negotiates exit settlements, helping reconcile regional decisions with employee rights and Iraqi obligations.