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Jordan – Employer of Record

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Country Introduction – Jordan:

Capital –  Amman
Currency –  Jordanian Dinar (JOD)
GDP –  $43.80 Billion (2022)
People/Nationality- Jordanian
Language –  Arabic
Major Religions – Islam
Population – estimated 10,428,559 as of September 2022

Jordan is a young Arab country in Southwest Asia that occupies an ancient land, one that bears the traces of many civilizations. Separated from ancient Palestine by the Jordan River, it played a prominent role in biblical history. The culture of Jordan is based on Islamic and Arabic backgrounds with notable aspects of the culture include traditional music and clothing of Jordan, and interest in sports.

Known as the country of golden sand, smiling people, and stones with a 1000-year history. Jordan’s economy is gradually developing through the years, while the standard of living is becoming competitive. Foreign nationals are most likely to consider Jordan That is why people are moving to Jordan to work, study or relocate with their families.

Contract of Employment

Employment Contracts in Jordan must have two copies- one in English and the other, in Arabic translation (although translations are not so common anymore).  If no such contract is made, the worker may establish his rights by all legal means of evidence.

There are two types of employment contracts here, the fixed-term and indefinite contracts. Under the fixed-term contract, both parties usually agree on its duration and thus incorporates an expiry date. Under the indefinite contract, the employment is usually renewed without a formal stated end of contract date. With this, an employee shall be considered in service until his employment is terminated in accordance with the provisions of the Code.

Probation Period

Jordan’s probationary period only lasts up to a maximum of 3 months. If the service falls shorter than the minimum contracted period without just reasons, compensation may not be guaranteed. The employer has the right to terminate the employment of a worker under probation without notice or indemnity during the trial period. If an employee continues work after the end of his probationary period, his contract of employment shall be considered of indefinite duration and the probationary shall be considered as part of the employee’s service period.

Termination

In accordance with Section 21 of the Labour Code, an employment contract shall be considered terminated given the following:

–  Duration of the contract has expired or the work itself has been completed.
–  Employee dies or is no longer capable of working due to a disease or disability
–  Death of an employer shall not bring about the termination of the contract of employment unless the contract took into consideration the personality of the employer.

Jordanian Labour Code makes distinction between ordinary termination (with notice) and extraordinary termination (without notice).

Ordinary Termination – The employer or employee must hand in a written notice at least a month prior the desired last day. If notice is given by the employer, he may release the worker from work for the duration of the notice period, or he may not do so except for the last seven days of that period. In any case, the employee shall be entitled to his remuneration for the notice period. If the employee initiated and he leaves work before the end of the notice period, he shall not be entitled to any remuneration for the period of absence and shall compensate the employer by paying him the equivalent of his own remuneration for that period.

If the contract of employment is for a specified period, it can be terminated before its expiry date by either the employer or the worker for any of the reasons set forth in section 29 of this Code (the work is different in nature from that agreed in the contract; conditions necessitating a change of residence; medical reasons), the worker shall have the right to receive all his entitlements and benefits as stipulated by the contract. If the contract for a specified period is terminated by the worker for none of the reasons set forth above, the employer may claim damages from the worker.

Working Hours

The legal working time is 48 hours in a 6-day workweek (excluding rest and meal breaks) while the 7^th day is a paid weekly holiday. Other industries may be exempted and are subject to longer work hours such as hospitality, tourism and medical sectors.

Most private businesses observe Friday as the weekend holiday, while banks and government offices close on Fridays and Saturdays.

Overtime

All hours exceeding the standard 48 working hours must be paid as overtime and are regulated by employment contract/collective agreements. In general, overtime is paid at 120% of the standard salary rate. If an employee works on his weekly rest day or on religious or official holidays, he shall be paid overtime at a minimum rate of 150% of his regular wage.

Annual Leave

Every employee is entitled to an annual leave with full pay for a period of 14 days for every year of employment. This leave is extended to 21 days where the worker has been in the employment of the same employer for five consecutive years. Official and religious holidays and weekly rest days shall not be counted as part of a worker’s annual leave unless they fall in its course.

If a worker’s employment is terminated for any reason before he uses up his annual leave, he shall be entitled to receive his back pay for all remaining leave days. Any agreement by which a worker relinquishes his right to annual leave in full or in part shall be null and void.

Sick leave

An employee is entitled to 14 days a year of sick leave with full pay based on a report by the medical practitioner approved by the establishment.

Maternity Leave

Women employees are entitled to maternity leave with full pay for 10 weeks including rest before and after delivery. Leave after delivery shall be no less than six weeks long and employment before the expiration shall be prohibited. They will also enjoy an hour off every day for breastfeeding their child during the 1st year after the delivery.

Lastly, they are also entitled to unpaid leave for a year after the birth without any termination or any notice of termination while they are on maternity leave, after which she would be reinstated unless she was gainfully employed during that period.

VAT / GST:

Standard VAT rate in Jordan is 16%. All businesses with sales over $42,000 must also register for a VAT number and file corporate VAT returns every two months; Jordanian companies can carry forward their business losses indefinitely.

Income Tax

Individuals, whether resident or non-resident in Jordan, are taxed based on income earned in the kingdom from all taxable activities, including income from employment, business (either as sole proprietors or as partners), rental income and directors’ fees.

The following tax rates apply for resident and non-resident employees:

5% on the first JOD 5,000
10% on the next JOD 5,000
15% on the next JOD 5,000
20% on the next JOD 5,000
25% on each following dinar, up to JOD 1,000,000
30% on each dinar of the taxpayer’s taxable income exceeding JOD 1,000,000

Employer/Employee Contributions

Social security rates are 14.25% as employer contribution and 7.5% as employee contribution.

Public Pension – The 3 separate tiers of the Public PAYG Pension system in Jordan govern the public pension system.

Health Insurance – Each company deducts a monthly amount from the employee’s salary for the latter to gain due access to public healthcare.

Public Holidays

–  New Year’s Day
–  Public Holiday
–  Labour Day
–  Eid Al Fitr Holidays
–  Independence Day
–  Arafat (Haj) Day
–  Eid Al Adha Holidays
–  Hijri New Year
–  Birthday of Prophet Muhammed
–  Christmas Day

Severance Pay

The employee shall be entitled to half a month salary (50% of total salary) for each year of service as severance pay, calculated on the basis of the last salary received by the Employee with a minimum of two months’ salary. Any applicable termination payment and severance pay is calculated in line with the Jordan Law, as applicable at the time of the actual termination of the Employee and the calculations must incorporate any applicable employment law amendments issued by the government during the term of employment.

Work and Residence Permits (Expatriates)

The processing of a work visa is the responsibility the employer who hires an individual for a company’s standardized skillset. This visa can be granted to both skilled and unskilled professionals who get a job in Jordan.

The Jordan work visa requirements that the employer must submit are:

–  Passport details of the employee with a minimum validity of six months
–  Completed work visa application form
–  Professional experience (CV)
–  Appointment letter
–  Salary and remuneration details
–  Academic education details
–  Documents facilitating work visa
–  Details of professional qualifications.

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