Expanding your business into Jordan requires a thorough understanding of the local payroll system to ensure compliance and efficiency. Jordan’s payroll laws cover salary structures, tax requirements, social security contributions, and more. Here’s a comprehensive guide to managing payroll in Jordan:
Step 1: Understanding Salary Structure in Jordan 💼
A well-defined salary structure is essential for attracting talent while adhering to Jordanian labor laws. It typically includes base salary, allowances, and other benefits.
| Component | Details | Mandatory/Optional |
|---|---|---|
| Base Salary | Fixed monthly salary as per the employment contract. | Mandatory |
| Overtime Pay | Compensation for hours worked beyond regular hours (typically 1.25x base rate). | Mandatory |
| Allowances | Housing, transportation, and other perks, often tax-free. | Optional |
| Gratuity | End-of-service benefit based on years of service. | Mandatory |
Outcome: Structuring salary components accurately ensures compliance with Jordanian labor laws and aids in talent acquisition and retention.
Step 2: Taxation in Jordan 🧾
Jordan has a progressive tax system that applies to both individuals and corporations. Employees are subject to income tax, and companies must ensure compliance with local tax regulations.
| Tax Component | Details | Mandatory/Optional |
|---|---|---|
| Income Tax | Personal income tax rates range from 7% to 30%, depending on salary. | Mandatory |
| Corporate Tax | Levied on companies at a flat rate of 14% (for most businesses). | Mandatory (for companies) |
Outcome: Employees pay income tax based on their salary, while businesses must comply with corporate tax laws and withhold appropriate taxes.
Step 3: Social Security Contributions in Jordan 🏦
Social security contributions are mandatory for both Jordanian and foreign employees working in Jordan. Employers contribute to the state social security system for local employees.
| Contribution Type | Employer Rate | Employee Rate |
|---|---|---|
| Pension Fund | 14.5% of gross salary | 5.5% of gross salary |
| Health Insurance | 5% of gross salary (in some cases) | 1% of gross salary (if applicable) |
Outcome: Ensuring accurate contributions for employees helps businesses comply with Jordanian regulations and guarantees social security benefits.
Step 4: Payroll Cycle and Timing in Jordan 📅
Jordan follows a monthly payroll cycle, with salaries typically processed in line with employment contracts.
| Payroll Cycle | Details |
|---|---|
| Monthly | Salaries are generally paid at the end of each month or as per contract terms. |
Outcome: Timely salary payments ensure compliance with labor laws and contribute to employee satisfaction.
Step 5: Leave and Holiday Entitlements in Jordan 🌴
Employers must account for employee leave and public holidays while managing payroll.
| Leave Type | Entitlement |
|---|---|
| Annual Leave | Minimum 14 days of paid leave after one year of service. |
| Public Holidays | Paid leave for national holidays, including Eid Al-Fitr, Eid Al-Adha, and Independence Day. |
| Sick Leave | Up to 14 days of paid sick leave per year, with medical certificates. |
| Maternity Leave | 10 weeks of paid maternity leave, with social security coverage. |
Outcome: Proper leave management ensures compliance with Jordanian labor laws and supports employee well-being.
Step 6: Managing Payroll for Foreign Employees in Jordan 🌏
Foreign employees must comply with Jordanian labor laws but are subject to different conditions than local employees.
| Requirement | Details |
|---|---|
| Residency Permit | Employers must sponsor work visas and residency permits for expatriates. |
| Social Security | Foreign employees must contribute to social security after 6 months of residence. |
| Medical Insurance | Mandatory health insurance for all employees, including foreign workers. |
Outcome: Ensuring that all legal and administrative requirements for foreign employees are met facilitates smooth operations and compliance.
Step 7: Payroll Compliance and Reporting in Jordan 📊
Employers must adhere to Jordan’s payroll compliance standards, including timely salary disbursements and accurate record-keeping.
| Requirement | Frequency | Details |
|---|---|---|
| Salary Payments | Monthly | Salaries must be paid on time as per the employment contract. |
| Record Keeping | Ongoing | Employers must maintain detailed payroll records for audits. |
Outcome: Compliance with Jordanian payroll laws and accurate record-keeping prevent penalties and ensure smooth operations.
Key Documents for Payroll in Jordan 📋
To stay compliant, employers must maintain the following payroll documents:
| Document | Purpose |
|---|---|
| Employment Contracts | Specifies salary, benefits, and other employment terms. |
| Work Visa and Residency Permits | Validates the employee’s legal status in Jordan. |
| Payroll Reports | Details salary payments, deductions, and allowances. |
GlobainePEO – Your Trusted Partner
GlobainePEO specializes in managing payroll in Jordan, ensuring compliance with local labor laws and regulations. From structuring competitive salary packages to overseeing social insurance contributions, GlobainePEO simplifies payroll management, allowing you to focus on growing your business in the Jordan market.