Social Security is a way of helping to provide social care and economic insurance for individuals by relying on government funds. It is the administration of programs that help individuals benefit from it during disability, old age, death, and insurance against unemployment. it is applied after the worker leaves his work with the company in both the private and public sectors.
The provisions of the Social Security Act apply to any registered or unregistered corporate with contracts in Iraq belonging to the private sector or to the public sector. Regardless of their position in social security, employees and workers must be registered for a long or limited period of time and update the file in the department annually to inform them who has been appointed and who has been removed from the company.
The social security allowance shall be applied after the employee leaving from a certain department or company and depending on the legal period of retirement mentioned in the law and the salary recorded in the signed forms. If the employee or worker is not registered with social security, the employer is fined by the Social Security Service. The Ministry of Labor can sue the company and collect the rights prescribed by law.
Social Security Allowance
Social security allowances are calculated on the basis of a specific proportion of the worker’s actual wage. The wage approved for determining the proportion of participation in all cases may not be lower than the minimum wage prescribed in the secured worker’s profession, if any, or may not be lower than the general minimum wage.
Allowances are paid on a monthly basis on the basis of wages paid in January of that year.
Workers who are covered by the provisions of this Act for the first time shall pay their contributions on the basis of the wages of the month in which they were secured or enrolled in service until the end of the year in which this was done, and their contributions shall be paid on the basis of the following month’s wages.
Allowances shall be payable for the first month in which the social security process commences and shall not be payable for the part of the month in which they end
If the worker’s wages are not monthly, his/her allowances shall be calculated on the basis of the total actual wages received within one month.
the Board of Directors has the authority to modify the method of calculation of the companies referred to, and decide to calculate them on the basis of actual wages paid at the end of each month.
The Board of Directors, at the suggestion of the General manager, shall determine the method of calculating wages and participating in certain cases, such as cases of wages of juveniles, trainees, employees of more than one employer, employees on the basis of production, temporary, seasonal and other employees. The Board may determine how contributions are made or collected in any of the cases mentioned.
Deduction process
The secured worker shall be deducted (5%) of his/her wage for his/her participation in the corporate. This percentage shall be fully included in the calculation of the retirement security branch. The worker shall be exempt from payment of any allowances to the other branches of social security.
The proportion of departments’ and employers’ contributions, to their secured workers, is determined as follows:
12% of wages, for employers whose number of employees is not more than 100 workers, or whose capital is not more than 100,000 dinars. This percentage is distributed as follows: 1% for the Health Insurance Branch, 2% for the Employment Injury Insurance Branch, and 9% for the Retirement Security Branch.
15% of wages, to different departments, this percentage is distributed as follows: 1% for the Health Insurance Branch, 2% for the Employment Injury Insurance Branch, and 12% for the Retirement Security Branch.
22% of wages, for employers not covered by the provisions of paragraph (b.1) of this article, whether they are from the private sector or the mixed sector. This percentage is distributed as follows: 2% for the Health Insurance Branch, 3% for the Employment Injury Branch, 15% for the Retirement Security Branch, and 2% for the Services Guarantee Branch.
Employers are required to pay their and their employees’ allowances to the enterprise, within the dates specified in this Act, or in the regulations and instructions issued thereunder.
In case of late performance on schedule, the employer is obliged to pay the institution a fine equal to (5%) of the amount of allowances for each month of delay.
If the performance is delayed by a department covered by the provisions of this Act and the delay has no legitimate justification, the responsible for the delay shall be punished and, if necessary, subject to a disciplinary penalty
How does the Ministry of Labour Work?
- Each corporate, whether it was registered or not in Iraq or had contracts with the Government at the time of its commencement of employment in Iraq, should formally inform the Department of Labour and Social Affairs if it employs one or more employees regardless of their nationality for the purpose of covering them with social security provisions.
- If the employee’s service with the corporate with which he worked is terminated without notifying the social security department, the company shall be liable for payment of allowances in accordance with Article (36) for the employee who was terminated until the date of notification.
- At the beginning of each year, the Company provides an “annual statement” containing information about the corporate, its projects, workers, employees, their salaries, and the allowances due to each employee
- Under a monthly payment form, the Company notifies the Social Security Department monthly of any changes relating to the appointment and dismissal of employees to install the names of employees and workers who are terminated during the month.
- If the company delays the monthly payment, a monthly fine of 2% of the amount of allowances shall be imposed for each month of delay because the statutory period of payment of allowances is during the following month in accordance with article 30 of the Retirement and Social Security Act.
- Allowances are paid from the date of inclusion of the company under the social security act.
- Details of the paid allowances and the company’s deduction of 5% of the employee wages per month plus 12% of the wages paid by the company to the employee. Thus, the total allowances paid are 17%. For corporates that engage in business whose profits result from the sale of oil or other hydrocarbons produced in or exported from Iraq or the sale of rights or interests related to oil, it is withheld 25-30%
- Monthly payments are made according to the payment forms prepared by the Department
- Through its representative, the corporate shall pay employees allowances in accordance with the below details:
From the date of informing the Ministry of Labour, each company shall issue an official authorization entitled to the Department (Department of Retirement and Social Security, allowances Section), which shall include the authorization of a representative of the company to review all purposes relating to the application of the Workers’ Retirement and Social Security Act No. 39 of 1971 as amended.
Clearance
Any company can request clearance from the Social Security Department for certain reasons to pay their service bills by their customers or because it is a condition to participate in tenders, the Social Security Department announced a new instruction that it will not provide any corporate with “clearance” Unless entrepreneurs/employers obtain the social security identity of their employees and workers even if the working time is limited, corporates and entrepreneurs must provide the department with a modern personal image of the employees and submit it to them.
For more details, contact
Ahmed Hankawi