Minimum Wage

In Jordan, the minimum wage is set at 260 JOD per month as of 2024. This minimum wage applies to all workers, regardless of their employment status, and is designed to ensure that employees receive a basic standard of living. Employers must comply with this regulation to avoid penalties and ensure fair compensation for their employees.

Minimum Wage Rate	Monthly Equivalent
260 JOD	260 JOD

Income Tax

Jordan employs a progressive income tax system, where the tax rate increases with the level of income. The personal income tax (PIT) rates range from 5% to 30% based on taxable income. Residents and non-residents are taxed on income earned within Jordan, and the taxation structure is designed to ensure that higher earners contribute a larger share of their income.

Income Tax Rates

Taxable Income (JOD)	Tax Rate (%)
Up to 5,000	5%
5,001 – 10,000	10%
10,001 – 15,000	15%
15,001 – 20,000	20%
20,001 – 1,000,000	25%
Over 1,000,000	30%

Additionally, an extra 1% national contribution tax applies to individuals with an annual income exceeding 200,000 JOD.

Payroll Cost

Employers in Jordan are required to contribute to the social security system, which includes both employer and employee contributions. The total social security contribution rate is 21.75%, divided between the employer and employee as follows:

Payroll Contributions

Contribution Item	Employer Contribution Rate (%)	Employee Contribution Rate (%)
Social Security	14.25%	7.50%

Employers must ensure timely payments to the social security fund and maintain accurate payroll records.

Overtime Pay

In Jordan, there are specific regulations regarding overtime pay. Employees who work beyond the standard working hours are entitled to overtime compensation. The typical workweek is defined as 48 hours, and any hours worked beyond this limit should be compensated at a higher rate.

Overtime Compensation Rates

Overtime pay is generally calculated as follows:

• For hours worked beyond the regular schedule on weekdays: 1.25 times the regular hourly rate.
• For hours worked on weekends or public holidays: 1.5 times the regular hourly rate.

Table Summary of Overtime Regulations

Working Hours	Overtime Pay Rate
Standard: Up to 48 hours/week	Regular rate + 25% for weekdays; Regular rate + 50% for weekends/public holidays

Understanding these aspects of pay and tax regulations in Jordan is crucial for compliance with local laws and ensuring fair treatment of employees. Employers should regularly review these regulations to stay updated on any changes that may affect their payroll practices.

Regular & Maximum Working Hours

In Jordan, the regular working hours are defined by labor laws to ensure fair treatment of employees. The legal maximum working hours are set at 8 hours per day and 48 hours per week. Employers have the flexibility to distribute these hours throughout the week, provided that daily working hours do not exceed 11 hours. Employees have the right to refuse any work that exceeds these statutory limits.

Working Hours Category	Description
Regular Daily Hours	Up to 8 hours
Maximum Weekly Hours	48 hours
Maximum Daily Hours	Up to 11 hours

Friday is designated as the official weekly rest day in Jordan, although specific sectors may have different arrangements with prior approval from the Ministry of Labour.

Leave

Employees in Jordan are entitled to various types of leave, which are important for maintaining work-life balance and ensuring employee well-being. The key types of leave include:

Annual Leave

Employees are entitled to 14 days of paid annual leave for each year of service. After five years of continuous employment, this entitlement increases to 21 days. If an employee’s contract is terminated before they have used their annual leave, they are entitled to payment for any unused leave days.

Sick Leave

Employees have the right to a maximum of 14 days of fully paid sick leave each year. If hospitalization is required, an additional 14 days may be granted. After this period, employees can receive up to 14 days of half-paid sick leave, provided they submit a medical certificate.

Maternity Leave

Female employees are entitled to 10 weeks of paid maternity leave, with a minimum of 6 weeks required to be taken after childbirth. Additionally, new mothers working in organizations with more than 10 employees can request up to one year of unpaid leave for child-rearing purposes.

Parental Leave

Parents are entitled to parental leave, allowing them time off for family responsibilities. This is particularly important for new parents adjusting to life with a newborn.

Leave Type	Duration
Annual Leave	14 days (increases to 21 days after 5 years)
Sick Leave	14 days fully paid; additional 14 days if hospitalized
Maternity Leave	10 weeks paid; minimum 6 weeks after childbirth
Parental Leave	Up to 1 year unpaid (for organizations with >10 employees)

Holidays

Jordan recognizes several public holidays throughout the year, which provide employees with additional time off work. The main public holidays include:

Holiday Name	Date or Occasion
New Year’s Day	January 1
Labor Day	May 1
Independence Day	May 25
Eid al-Fitr	Varies (Islamic calendar)
Eid al-Adha	Varies (Islamic calendar)
Islamic New Year	Varies (Islamic calendar)

These holidays are typically paid days off, and if they fall on a weekend, employees may receive an alternative day off.Understanding the regulations surrounding working hours and leave entitlements is crucial for employers and employees alike in Jordan. By adhering to these guidelines, employers can foster a positive work environment that promotes employee satisfaction and compliance with local labor laws.

Termination Requirements

In Jordan, termination of employment contracts is governed by the Labor Code, which specifies valid grounds for dismissal. Terminations can occur under various circumstances, including:

• Voluntary resignation by the employee.
• Mutual agreement between the employer and employee.
• Unilateral termination by the employer based on:
  • Completion of the probation period.
  • Objective grounds such as misconduct or poor performance.
  • Expiration of a fixed-term contract.

Employers are required to ensure that any termination is for just cause, and employees are protected against dismissal in specific situations, such as during authorized leave or pregnancy.

Termination Type	Description
Voluntary	Employee chooses to resign
Mutual Agreement	Both parties agree to terminate
Unilateral (Employer)	Based on probation, misconduct, or contract expiration

Notice Period

The notice period required for termination varies depending on the type of contract and the reason for termination. For most employees, a written notice of at least 30 days is required if the employer decides to terminate the contract after the probation period. During the probation period, either party can terminate the contract without prior notice.

Notice Period Guidelines

Employment Status	Notice Period Required
After Probation	Minimum of 30 days
During Probation	No notice required

Failure to provide proper notice may result in compensation equivalent to wages for the notice period.

Severance Pay

Employees who are terminated are entitled to severance pay, which is calculated based on their length of service. For employees with indefinite contracts, severance pay is typically equivalent to one month’s salary for each year of service. The minimum severance pay is two months’ salary.

Severance Pay Calculation

Contract Type	Severance Pay Calculation
Indefinite Contract	One month’s salary per year of service
Fixed-Term Contract	Remaining wages for the contract term if terminated early

Employers must adhere to these regulations to ensure compliance with local labor laws and avoid legal disputes.

Probation Periods

The probation period in Jordan typically lasts up to three months, during which either party can terminate the employment relationship without notice or compensation. If an employee continues working beyond this period, their contract will be considered indefinite.

Probation Period Guidelines

Duration	Notice Requirements
Up to 3 months	No notice required

Understanding these aspects of termination is essential for both employers and employees in Jordan. By adhering to these guidelines, employers can navigate the complexities of labor laws while ensuring fair treatment of their workforce.

Contractor Misclassification

In Jordan, the distinction between independent contractors and employees is crucial for legal and tax purposes. Misclassification occurs when an employer incorrectly labels an employee as a contractor, leading to potential legal ramifications. Understanding the differences is essential to avoid penalties and ensure compliance with local laws.

Key Differences Between Contractors and Employees

Independent contractors operate as self-employed individuals, providing services under specific contracts without the same obligations that employers have towards employees. Here are some of the primary differences:

Aspect	Independent Contractor	Employee
Employment Status	Self-employed	Legally part of the company
Control	Operates independently	Works under employer’s supervision
Benefits	No statutory benefits	Entitled to benefits (e.g., health insurance, paid leave)
Tax Responsibilities	Responsible for own tax filings	Employer handles tax withholdings
Termination Rights	Contract-based, flexible	Subject to employment laws

Misclassification can lead to significant liabilities for employers, including back payments for benefits and taxes. If a contractor is deemed to be functioning as an employee, the employer may be required to pay for unpaid wages, social security contributions, and other employee benefits.

Legal Considerations for Hiring Contractors

When hiring independent contractors in Jordan, it is important to draft clear contracts that outline the terms of engagement. Key elements to include are:

• Scope of Work: Clearly define the services to be provided.
• Payment Terms: Specify rates and payment schedules.
• Intellectual Property Rights: Address ownership of any work produced.
• Confidentiality Clauses: Protect sensitive business information.
• Termination Conditions: Outline how either party can terminate the contract.

Properly structured contracts help mitigate risks associated with misclassification and ensure that both parties understand their rights and obligations.

Risks Associated with Misclassification

Misclassifying employees as independent contractors can result in several risks, including:

• Legal Penalties: Employers may face fines or legal action if found in violation of labor laws.
• Financial Liabilities: Potential back payments for unpaid wages, taxes, and benefits owed to misclassified workers.
• Reputation Damage: Legal disputes can harm a company’s reputation and employee relations.

To avoid these risks, employers should regularly review their classifications and ensure compliance with local regulations.