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Employment contracts: drafting tips and essential terms

The employment contract is the key document between employer and employee — and the source of most HR disputes.

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At a glance

An employment contract is an agreement under which a worker performs work for an employer in return for wages. Iran's Labour Law sets minimum standards that cannot be reduced even by agreement, so a good employment contract both meets the legal requirements and states duties, benefits and obligations without ambiguity.

Mandatory terms under Article 10 of the Labour Law

In addition to the full details of the parties, an employment contract must include:

  • The type of work, profession or duty the worker will perform
  • Base salary or wage and related benefits
  • Working hours, holidays and leave
  • Place of work
  • Date the contract is concluded
  • Duration of the contract, if it is for a fixed term
  • Any other matters required by the customs of the occupation or locality

Fixed-term, permanent and project-based contracts

If no term is stated, the contract is treated as permanent. A fixed-term contract runs for a set period, and a project-based contract covers a specific piece of work. The type directly affects how the relationship can end, severance and the employer's obligations.

A probation period can be included, within the legal maximum, during which either party can end the relationship on simpler terms.

Clauses employers often forget

  • Confidentiality: protecting business information even after the employment ends; you can also use a non-disclosure agreement.
  • Intellectual property: who owns software, designs or content the employee creates at work.
  • Return of property and documents at the end of employment and the final settlement process.
  • An attached job description that clarifies the scope of work and prevents overtime disputes.

Common mistakes

  • Clauses that reduce the employee's statutory rights (these are void and undermine the whole contract)
  • No signed copy held by each party
  • Wages in the contract that don't match payslips and social-insurance filings
  • Verbal renewals after a fixed-term contract expires

Frequently asked questions

Yes, an employment relationship can exist without a written contract, but proving terms and benefits in a dispute is difficult. A written contract benefits both parties.

Ending an employment contract is governed by the Labour Law and the contract's terms. Talk to a legal adviser before acting to avoid later claims.

If the person works under the employer's direction in return for wages, the relationship is employment, whatever the contract is called. The title does not change the true nature of the relationship.

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