Jordan Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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JORDAN
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Jordan Payroll and Employer of Record: Employment Contracts
Anyone entering Jordan must get a visa from one of the country’s diplomatic missions, unless they are from a nation that is exempt from visa requirements or can do so upon arrival. People can obtain a single-entry visa that is valid for up to two months, a double-entry visa that is valid for three months, or a multiple-entry visa that is good for six months. These tourist visas do not permit employment. For a foreigner to work for your firm lawfully in Jordan, they must have a work visa and authorization. While a work permit in Jordan enables individuals to work once they arrive, a work visa permits them to enter the country with the intention of working.
PAID TIME OFF
Annual Vacation
An employee is entitled to 14 days of yearly leave with full pay for each year of employment, unless a greater length of leave has been agreed upon between the employer and employee.
Sick
Employees have 14 days of paid sick leave per year. Sick leave generally necessitates a medical certificate from a physician.
Maternity
A female employee is entitled to paid maternity leave before and after delivery for a total of 10 weeks, with the post-delivery period not being less than 6 weeks.
Paternity
An employee is entitled to three working days of paid paternity leave following the confinement of his wife, if a medical report attested by a medical doctor or midwife is provided.
Family
N/A
National Holidays
16 public holidays.
Other Paid Time Off
Every employee is entitled to 14 days of paid leave each year for any one of the following reasons: to attend a Ministry-approved workers’ education course upon employer or establishment manager nomination, to go on pilgrimage providing they have been in employers service for five consecutive years or to enroll in an official university, institute, or college.
STATUTORY EMPLOYEE BENEFITS
Unemployment
The first month of unemployment is paid at 75% of the insured’s last monthly covered earnings; the second month at 65%; the third month at 55%; and the fourth to sixth months at 45%. With less than 180 months of contributions, the benefit is paid for up to three months; with at least 180 months of contributions, the benefit is paid for up to six months.
Workers Compensation
1% of monthly gross covered earnings. The monthly minimum wage used to calculate contributions is the national monthly minimum wage. The national monthly minimum wage for citizens is 220 dinars and 150 dinars for noncitizens. The maximum monthly earnings for contribution purposes are 3,000 dinars. Changes in the consumer price index and the legally defined average covered wage for the previous year are used to adjust the maximum monthly earnings used to calculate contributions.
Social Security
Insured person: 6.5% of gross monthly covered earnings; voluntary insured: 17.5%.
Employer: 11% of monthly gross covered payroll.
Employers of employees in hazardous occupations must pay an additional 1%.
Retirement
The monthly pension is calculated by multiplying 2.5% of the insured’s average monthly earnings up to 1,500 dinars by the insured’s months of contributions divided by 12. Average monthly earnings are calculated using the insured’s earnings over the previous 36 months.
Health
Jordan’s public healthcare is supported by the government and mandatory contributions from the country’s workforce. Every employee in Jordan has a monthly deduction taken from their pay. These employees are then eligible for social security, which entitles them to free or reduced-cost healthcare.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private companies may offer workers compensation benefits for employees in addition to benefits described in the Jordanian Labor Law.
Retirement
Some companies may offer retirement/pension fund benefits to their employees in addition to benefits required by Jordanian Labor Law.
Health
Some companies may offer health insurance benefits to their employees over and above the benefits required by Jordanian Labor Law.
Insurance
Insurance benefits may be offered by private companies in addition to benefits described in the Jordanian Labor Law.
PERSONAL INCOME TAX
Tax Year
The tax year in Jordan is the calendar year running from 1 January to 31 December.
Tax Tables
| Taxable income (JOD*) | PIT rate (%) |
| The first 5,000 | 5 |
| The second 5,000 | 10 |
| The third 5,000 | 15 |
| The forth 5,000 | 20 |
| Over 20,000 and up to 1,000,000 | 25 |
| The remaining balance | 30 |
Taxation Method
Personal income tax is determined using the progressive tax technique. This implies that as taxable income rises, the tax rate does too.
Double Taxation
Jordan has signed double taxation agreements (DTAs) with a number of nations.
Residence Requirements
The tax duties of a person are based on their residency status, including the forms of income that are taxable in Jordan and the applicable tax rates. In general, Jordanians pay taxes on their worldwide income, while non-citizens pay taxes exclusively on their income earned within Jordan.
Payroll Calendars
There are no predetermined dates on which employees must be paid.
Rebates & Tax Credits
Rebates and tax credits are used as incentives to promote particular patterns of behavior or activities, including investment in particular sectors of the economy or the purchase of particular goods and services.
Health Insurance
In Jordan, employers are obligated to offer their workers health insurance. Depending on the industry, different benefits and contribution amounts may be necessary.
Unemployment
The first month of unemployment is paid at 75% of the insured’s last monthly covered earnings; the second month at 65%; the third month at 55%; and the fourth to sixth months at 45%. With less than 180 months of contributions, the benefit is paid for up to three months; with at least 180 months of contributions, the benefit is paid for up to six months.
Social Security
Insured person: 6.5% of gross monthly covered earnings; voluntary insured: 17.5%.
Employer: 11% of monthly gross covered payroll.
Employers of employees in hazardous occupations must pay an additional 1%.
PAYROLL ELEMENTS
Income
An employee’s basic salary, overtime, allowances, bonuses, commission, benefits and stock options are just a few of the elements that make up an employee’s income.
Bonuses
Subject to the terms of employment specified in the collective bargaining agreement or labor contract and are not mandated by Jordanian labor legislation.
Allowances
- Housing
- Transportation
- Meal
- Education
- Relocation
Benefits in Kind
The labor legislation does not directly specify employee benefits in kind, but it does provide written agreements between the employer and employee regarding supplementary benefits.
Investment Income
Investment income is considered taxable.
Retirement Funding
All employers are required by law to offer their employees retirement plans. A specific portion of each employee’s salary must be contributed by the employer to the pension fund and employees may also contribute a portion of their salary to the fund.
Health Insurance
Jordan’s public healthcare is supported by the government and mandatory contributions from the country’s workforce. Every employee in Jordan has a monthly deduction taken from their pay. These employees are then eligible for social security, which entitles them to free or reduced-cost healthcare.
Risk Insurance
The Jordanian Labor Law does not directly mention employee risk insurance. The law does, however, allow for agreements to be made between an employer and an employee regarding benefits and working conditions. The terms of risk insurance coverage, including eligibility and benefits, are established by the Social Security Law. Additionally, the Social Security Law provides certain risk insurance protection.
Taxable Income
Personal income tax is determined using the progressive tax technique. This implies that as taxable income rises, the tax rate does too. Investment income is also considered as taxable.
Allowable Deductions
Employers in Jordan are allowed to deduct income tax and Social Security contributions from their employees pay. However, deductions cannot amount more than 50% of an employee’s total earnings. Employees’ salaries may be withheld to cover appropriate advance payments, provident fund contributions, and loan repayments.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Payroll taxes include income tax ( personal and/or investment ), Social Security contributions as well as Provident fund contributions.
Unemployment
The first month of unemployment is paid at 75% of the insured’s last monthly covered earnings; the second month at 65%; the third month at 55%; and the fourth to sixth months at 45%. With less than 180 months of contributions, the benefit is paid for up to three months; with at least 180 months of contributions, the benefit is paid for up to six months.
Social Security
Insured person: 6.5% of gross monthly covered earnings; voluntary insured: 17.5%.
Employer: 11% of monthly gross covered payroll.
Employers of employees in hazardous occupations must pay an additional 1%.
Workers Compensation
The Jordanian Labor Law provides for workers’ compensation in case of work-related injuries or illnesses. Compensation amount is determined based on the type and severity of the injury or illness, as well as the employee’s salary. Changes in the consumer price index and the legally defined average covered wage are used to adjust maximum monthly earnings used to calculate contributions.
ADMINISTRATION
Income
Personal income tax is determined using the progressive tax technique. This implies that as taxable income rises, the tax rate does too. Investment income is also considered as taxable.
Payroll Taxes
Payroll taxes include income tax ( personal and/or investment ), Social Security contributions as well as Provident Fund contributions.
Unemployment
The first month of unemployment is paid at 75% of the insured’s last monthly covered earnings; the second month at 65%; the third month at 55%; and the fourth to sixth months at 45%. With less than 180 months of contributions, the benefit is paid for up to three months; with at least 180 months of contributions, the benefit is paid for up to six months.
Social Security
Insured person: 6.5% of gross monthly covered earnings; voluntary insured: 17.5%.
Employer: 11% of monthly gross covered payroll.
Employers of employees in hazardous occupations must pay an additional 1%.
Workers Compensation
1% of monthly gross covered earnings. The monthly minimum wage used to calculate contributions is the national monthly minimum wage. The national monthly minimum wage for citizens is 220 dinars and 150 dinars for noncitizens. The maximum monthly earnings for contribution purposes are 3,000 dinars. Private companies may offer workers compensation benefits for employees in addition to benefits described in the Jordanian Labor Law.
Statutory Benefits
Includes paid annual leave, sick leave, maternity leave, paternity leave and 16 public holidays.
Employee Benefits
Private companies may also include other benefits such as, but not limited to, housing-,transportation- and meal allowances as well as life or disability insurance.
LEGISLATION
- Labor Law
- Social Security Law
- Trade Union Law
- Labor Dispute Resolution Law
- Occupational Health and Safety Law
STATUTORY BODIES
- Ministry of Labor
- Social Security Corporation
- Labor Courts
- Tax Department
