One of the main concerns that investors take into consideration when they think of investing in a country is the labour market, laws, and regulations that govern the relationship between the Employer and the Employee.

Jordanian Labor law number (8) was issued in 1996 to regulate the relationship between the Employer and the Employee, which means that any contract or any term in any contract between both parties that contradicts the labor law is considered invalid.

Along with labor law, social security law number 19 for the year 2001 is an applicable law in the relationship between both parties.

The social security law was issued to guarantee employee pension, disability, death and to cover the medical expenses and or/any harm occurred to the employee during his duty and/or any career illnesses.

To cover the abovementioned benefits listed in the Social Security Law, 5.5 % of the employee's salary plus contribution from the employer equivalent to 11% of the employers' monthly salaries shall be deducted and paid to the social security department at the beginning of every month, according to the employee list provided to the social security department by the employer. These payments shall be made within fifteen days after the end of each month; any delay will make the employer liable for fines and interests.

Article (52) of the labor law gave the Cabinet the right to formulate a committee from the employers, employees and Ministry of Labor to study the minimum wages according to the market prices and the economic situation. This committee determined the minimum wages to be one hundred ten Jordanian Dinar per month instead of eighty Jordanian Dinar starting from 1st June 2006 for all employees excluding the workers in garment manufacturing, as they will enjoy this increase starting from 1st January 2007. Newspapers mentioned that new regulations may be issued regarding the minimum wages by the beginning of 2009 but nothing official regarding the matter has been confirmed.

Shape of employment contracts

Employment contracts can be limited or unlimited contracts. In the case of limited contracts, if the employer terminates the contract before the end of its duration for unlawful reason, then the employee is entitled for compensation equivalent to his salaries for the rest of the period, while in the unlimited contracts the compensation will be between three – six months plus one month notice, in other words the minimum compensation will be four months salary.

Termination of the Contract

Labor law verifies the cases that gives the employer the right to terminate the employment contract without paying any compensation due to termination. Other than these cases verified in the labor law, the termination will be considered unlawful.

The termination of the employment contract for any reason – with or without cause - does not have an effect on the other rights enjoyed by the employee such as annual leave, unpaid salaries, overtime, or any other benefits.

The foreigner workers

According to labor law, it is not allowed to employ any foreigner workers without prior consent from the Ministry of Labor. The work permit should not exceed one year and can be renewed for extra years.

Any employer who uses any foreign employee without obtaining a work permit will be liable for a fine between 100 – 150 Jordanian Dinar for each month until the employer meets the legal requirements.

Probation period

Labor law gives both parties the right to agree on a probation period, which should not exceed three months (ninety days) This period is not assumed in the employment contract, both parties should agree on it in writing .

Any of the parties have the right to terminate the employment contract within the probation period without any liability towards the other party except the employees' salaries.

The employer cannot extend the probation period for extra time, or terminate the contract during this period and re-employ the employee for another probation period.

Internal regulations

Every employer who has 10 or more employees is required to issue internal regulations to confirm the working hours, rest hours, weekly leave, working hours during Ramadan, sick leave, safety precautions, penalty list, and any other details dependent on the nature of the work.

These internal regulations should be authenticated by Ministry of Labor, otherwise it is considered invalid.

If the employer does not have authenticated internal regulations, he will be liable for a fine.

Working hours

According to labor law it is not allowed to force the employee to work more than eight hours daily or more than forty eight hours weekly. If the employee accepts to work more than the working hours specified in the law, then he will be entitled for overtime.

In some cases, even if the employee worked more than the specified working hours he is not entitled for overtime. These cases depend on the nature of the work, for example employees who works in sale and the nature of their work requires traveling from place to another, their working hours cannot be controlled by the employer, For that reason the labor law excludes these type of employees from the working hours specified in the law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.