Jordan, a country brimming with potential, is attracting more global business interest every day. Its resilient economy, with a 2.7% real GDP growth in 2023, reached a nominal GDP of USD 51 billion. With a services sector contributing over 60% to the GDP and a growing industrial base, Jordan offers tons of opportunities for investors.

One factor contributing to Jordan’s attractiveness is its business-friendly environment. The standard corporate income tax rate of 20% (though it can reach 35% for the banking sector), coupled with ongoing reforms, has earned Jordan recognition as a top business climate improver. In the World Bank’s Doing Business 2020 report, Jordan jumped 29 ranks from the previous year to 75th globally.

Recent initiatives, such as the implementation of electronic filing and payment for labor taxes and mandatory contributions, make it even easier to do business in Jordan. This has reduced the administrative burden on businesses, cutting both processing time and the number of annual payments required.

Jordan’s workforce has an average participation rate of 34.8% as of 2024 and is projected to reach 3.14 million by 2025. While the unemployment rate stands at 21.4%, the government is actively working to address this challenge and create a skilled and readily available talent pool. Effective January 1, 2025, the minimum wage in Jordan increased to JOD 290 per month (USD 408), which is a third of the US average.

Jordan’s robust export sector alone generated USD 15.9 billion in 2022. Key exports include:

Key Export
Percentage of Total Exports
Miscellaneous knitted or crocheted garments
14.8%
Potassic fertilizers
7.3%
Natural calcium or aluminum phosphates
6.7%
Phosphoric or polyphosphoric acids
6.6%
Jewelry
6.5%

It’s safe to say that Jordan is an attractive destination for new and expanding businesses. However, navigating the local regulations and administrative complexities can still be tricky. This is where Professional Employer Organizations (PEOs) can provide invaluable support. A PEO acts as a co-employer, handling HR functions like payroll, benefits, and compliance. This way, you can focus on core business operations.

In this guide, we’ll tell you all about hiring in Jordan with the help of a PEO.

Business Expansion in Jordan With a PEO

Jordan is a compelling landscape for business growth, driven by its supportive regulatory environment, attractive tax structures, and talented, multilingual workforce. It serves as a gateway for business and trade between Europe and the Middle East, providing access to over 1.5 billion consumers through its free trade agreements.

However, venturing into a new market like Jordan involves navigating all kinds of complexities. Understanding local labor laws, tax regulations, and administrative procedures, including entity setup and compliance requirements, can be very demanding.

A Professional Employer Organization (PEO) in Jordan can streamline these processes by managing payroll, ensuring adherence to tax laws, administering employee benefits, and providing comprehensive human resource support. This allows businesses to concentrate on essential activities like strategic planning, revenue generation, and product innovation.

For businesses seeking to establish a foothold in Jordan, a PEO allows for a smooth market entry while reducing risks associated with tax penalties, regulatory breaches, and legal issues.

Whether the goal is scaling operations or acquiring skilled professionals, collaborating with a PEO offers the adaptability, specialized knowledge, and efficiency necessary to succeed in Jordan’s competitive business environment.

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Challenges of Expanding to Jordan & How a PEO Helps

Jordan offers many attractive incentives for businesses, including a competitive corporate tax rate, access to the Middle Eastern market, and a skilled workforce. However, expanding into this market requires careful consideration of its intricate labor laws, regulatory framework, and trade agreements.

A lack of understanding of Jordan’s business landscape can lead to costly delays, unforeseen expenses, and potential compliance issues. PEOs offer a streamlined and efficient HR solution, allowing businesses to expand rapidly while complying with Jordan’s regulations.

Here’s how PEOs address common challenges faced by businesses entering the Jordanian market.

Navigating Employment Laws and Compliance

Jordan’s labor market has many robust regulations, including strong employee protections, collective bargaining agreements, and mandatory benefits. Businesses operating in Jordan must adhere to minimum wage requirements (set at JOD 290 per month), provide statutory leave entitlements, and implement pension auto-enrollment.

Failure to comply with these employment laws can expose businesses to legal challenges, financial penalties, and damage to their reputation. PEOs help businesses maintain compliance by managing employment contracts, processing payroll in accordance with Jordanian tax regulations, and administering statutory benefits. This support can protect businesses from potential penalties and costly legal disputes.

Managing Payroll and Taxes

Navigating Jordan’s payroll and tax system can be very challenging for international companies unfamiliar with its intricacies. Understanding and correctly applying concepts like 5–30% PIT, National Contribution Tax, and Social Security deductions is crucial. Employers are required to contribute up to 14.2% in Social Security for their employees, and non-compliance with tax deadlines can lead to penalties and interest accruals. Jordan also has a standard VAT rate of 16%.

PEOs simplify payroll management by ensuring accurate wage payments, correct tax deductions, and adherence to Revenue Ireland regulations. This service reduces administrative burdens for businesses and helps prevent costly errors.

Rising Operational Costs and Competitive Labor Market

The cost of operating a business in Jordan, especially in urban centers like Amman, is on the rise. Securing skilled talent comes at a premium, with competitive salaries, particularly in sectors like technology, often surpassing JOD 825 per month. Elevated living expenses in cities like Amman and Zarqa further intensify the competition for qualified employees.

PEOs can help businesses manage these costs by providing access to more competitive employee benefits packages at potentially lower rates. Additionally, PEOs handle HR functions efficiently, freeing up businesses to allocate resources to their core operational activities.

Attracting and Retaining Talent

While Jordan enjoys a strong global ranking for talent attraction, acquiring and retaining skilled professionals can be difficult due to intense competition, especially from established multinational corporations. Sectors like IT, pharmaceuticals, and finance often face talent shortages, which drive salaries upward and make employee retention a challenge.

PEOs can help businesses create attractive and competitive compensation packages, manage employee benefits, ensure adherence to evolving labor regulations, and improve employee satisfaction and retention.

Reduced Administrative Burden

Establishing a legal presence in Jordan includes multiple administrative procedures, including:

These processes can be time-consuming and resource-intensive, potentially delaying hiring and increasing expansion costs.

Partnering with a PEO allows businesses to hire employees in Ireland without the need to establish a local legal entity. This approach enables rapid and efficient operations, reduces administrative burdens, and facilitates a smoother market entry.

How To Choose the Best PEO in Jordan

Choosing a reliable PEO in Jordan can simplify things for you and push you in the right direction for business expansion. Take a look at some factors that will help you choose a good PEO for comprehensive HR support and more.

1

Compliance and Local Expertise

Jordanian employment law mandates strict adherence to regulations, including:

  • Employment contracts are required to be in Arabic, but they may also be bilingual. Contracts must be documented in writing and endorsed by both the employer and employee.
  • The standard working hours in Jordan are 8 hours per day and 48 hours per week, from Sunday to Thursday. Mandatory overtime is restricted to 30 days per year, according to Article 57 of the Labour Law.
  • Probationary periods in Jordan are optional but should not exceed three months.
  • The Regulation provides employees with different forms of flexible working arrangements, patterns, or work schedules, subject to the employer’s approval. Employers must periodically report to the Tripartite Committee regarding the application of flexible arrangements.
  • Dismissal of pregnant employees is prohibited at any stage of their pregnancy. If an employer terminates up to 15% of employees, a basic notification to the Ministry of Labour is sufficient.

For employing a non-Jordanian worker without a permit, or in a job or for an employer not specified in their permit, the employer can be fined between JOD 100 and JOD 150 for each month (or part of a month) of illegal employment. Recent amendments stipulate a fine of JOD 500 to JOD 1,000 for each illegally employed non-Jordanian worker. This fine doubles for repeat offenses and cannot be reduced below the minimum. The Minister can also deport the violating worker.

A PEO with extensive local expertise ensures businesses maintain full compliance with Jordan’s stringent labor laws, payroll regulations, and immigration policies, thereby mitigating legal risks and reducing administrative overhead. Keeping pace with evolving regulations demands continuous monitoring – a service that a PEO with specialized knowledge and local insights can readily provide.

2

Services Offered

PEOs offer a range of services, but the specific offerings can vary. While most PEOs provide core services like payroll processing, HR support, employee benefits administration, and assistance with visas and work permits, some businesses may need additional support.

If your company’s needs extend beyond these basics, consider PEOs that also offer specialized services, such as:

  • Talent acquisition and recruitment, particularly in competitive sectors like IT
  • Contract drafting and negotiation
  • Ensuring employment contract compliance with Jordanian labor regulations
  • Facilitating work permits and visas for non-EU employees
  • Legal advisory support
  • Managing severance and termination procedures
  • Tax filing administration and structuring competitive compensation packages
  • Dispute resolution and oversight of exit processes in accordance with local laws

Partnering with a PEO that offers all the necessary services is crucial to avoiding potential challenges related to hiring and managing international employees.

3

Pricing Models

PEOs in Jordan generally use two primary pricing structures, each designed to accommodate different business requirements and financial models.

  • Flat Fee Per Employee: This model involves a consistent monthly charge for each employee, offering predictable budgeting and cost management. It’s particularly well-suited for businesses seeking transparent and stable expenses, regardless of variations in individual employee salaries.
  • Percentage of Total Payroll: With this model, the PEO’s fee is calculated as a percentage of the total payroll, meaning costs will fluctuate in line with employee wages. This approach can be good for companies with a highly adaptable workforce or variable salary structures.

Choosing the right pricing model depends on factors such as company size, workforce demographics, and financial planning considerations. Businesses should carefully analyze each model’s cost implications and thoroughly discuss with potential PEO partners before entering into an agreement.

4

Reputation and Customer Service

Choosing a PEO in Jordan requires careful evaluation of their past performance, industry standing, and customer service quality. Businesses should examine client feedback, case studies, and testimonials to gauge the PEO’s reliability and effectiveness.

Key factors to consider include responsiveness, access to dedicated account managers, and the availability of support services. A reputable PEO should provide timely assistance, proactive guidance on compliance matters, and clear communication to efficiently address workforce challenges.

For companies with international operations, 24/7 support may be essential to ensure compliance and resolve HR issues promptly, regardless of time zones. Thorough due diligence is crucial to avoiding potential risks.

Partner With a PEO in Jordan To Expand Your Business Successfully

Expanding into the Jordanian market has serious growth potential, but navigating the complexities of employment laws, tax regulations, work permits, and payroll can be daunting for international businesses. Maintaining full compliance with Jordanian labor laws while simultaneously managing daily HR operations demands a lot of local expertise.

A PEO offers a streamlined and compliant approach to establishing a presence in Jordan, managing everything from payroll processing and tax deductions to employment contracts and benefits administration. By partnering with a PEO, you can eliminate bureaucratic obstacles, reduce administrative burdens, and concentrate on long-term growth within the Jordanian market.

Unsure which PEO to pick in Jordan? Contact Remote People, your trusted PEO, to be the best solution for your business. We provide top-rated PEO services that help unlock your business potential in Jordan. Reach out today to get started!

Frequently Asked Questions

PEOs operate in Jordan by co-employing staff and taking on responsibilities such as HR, payroll processing, and compliance. A PEO enters into a co-employment agreement with its clients, becoming the employer of record. As the legal employer, the PEO withholds proper taxes, pays unemployment insurance taxes, and provides workers' compensation coverage. However, it's important to note that, technically, a PEO requires the client company to have established a legal entity in Jordan.

No, there is no Labor Leasing Act in Jordan. However, the Labour Code of 1996 governs employment laws in Jordan. The Ministry is in charge of the organization of the labor market and of career guidance and shall draw up the necessary guidelines for the promotion of jobs and recruitment opportunities for Jordanians within the Kingdom and abroad.

Hiring a PEO in Jordan offers numerous benefits, including access to expert knowledge of local legislation, compliance with regulations, and protection from potential legal or reputational damages. PEOs handle government contributions such as social security or unemployment insurance, ensuring that the business has fulfilled its legal duties and cannot be penalized for unlawful practices.