Hiring & Firing

Labor relations governing the employment of all workers and employees in the Republic of Azerbaijan are regulated by the Labor Code, effective 1 July 1999 (the Labor Code), together with other laws issued pursuant to the Labor Code.

The main legislative act regulating labor issues is the Labor Code adopted in 1999 that codified the legislative acts adopted in the early years of independence and number of lower tier normative legal acts that expand certain provisions of the Labor Code.

A standard working week is 40 hours. Overtimes and work during days-off (which are Saturdays, Sundays, public holidays and a mourning day) are compensated in the manner provided for in law.

Employment relations are established by virtue of execution of an employment contract, which is made without a fixed term in most cases. In limited cases (such as seasonal nature of work, work under a fixed term project or assignment, agreement of employer and employee) employment contract can be made for a fixed term. Probation period of up to 3 months is allowed in most cases and the contract can be terminated by either party upon giving a 3-day notice.

Fixed-term contract will be deemed to be extended unless terminated by a notice within 7 days of the expiration of the original term of the contract.

A contract without a fixed term can be terminated by employer in cases specified such as gross violation of labor duties by an employee, redundancies, determination of an employee's qualification as inadequate for performance of his duties, change of labor conditions etc.

An employer is under a duty to give a termination notice. The general term of such a notice is 2 months (e.g. redundancies). However, certain exclusions are available (e.g. in case of gross violation of labor duties). An employee can terminate a contract at any time upon giving a 1-month notice. In certain cases when employment is terminated by the employer, the employer shall allocate to an employee a fixed number of days in a working week to allow an employee look for a different workplace.

Termination of employment with certain categories of employees (e.g. pregnant women, women with children below 3 years of age) is prohibited.

In cases of termination of employment due to redundancy, termination of work place or liquidation of an enterprise employer shall pay to the employee severance payment, which may total to up to three months of employee's salary.

Generally, legal entities are required to make monthly social insurance contributions in the amount of 22% of the salary fund of its employees. Legal entities are also under an obligation to withhold employees' social insurance contribution in the amount of 3% of employees' gross salaries and transfer same on behalf of the employees to the State Social Fund.

Individual entrepreneurs are, generally, required to pay social insurance contributions in the amount of 20% of the average statistical monthly salary for the previous year. Different rates are provided for certain categories of individual entrepreneurs (such as auditors, private notaries, auditors, accountants etc.)

Azeri law also provides for obligatory medical insurance procured by employers.

Compensation in Foreign Currency

All salaries paid in Azerbaijan must be paid in manats.

Probationary Period

To have force in law, a probationary period can be stated in an employment contract and may not exceed three months.

Minimum Wage

Employee remuneration may not be lower than the minimum monthly wage, currently 150,000 manats (approximately US$ 33) per month.

Work Week

The regular work week is 40 hours, reduced for certain groups of people. Overtime is, as a rule, not enforceable unless necessary for state defense, public safety, ensuring the supply of public utilities, and in certain other situations. The duration of overtime work may not exceed a certain limit established by the Labor Code. For each hour of overtime work, an employee must be compensated at a rate at least twice his or her normal hourly rate.

Holidays

Employees are entitled to 17 official public days off, 16 of which are public holidays and one is a day of mourning. The minimum paid annual leave is 21 calendar days, more for certain groups of employees.

Sick Leave

Except for the first 14 days of any absence, compensation for sick leave is provided by the State Social Protection Fund, not the employer.

Maternity Leave

Women are entitled to be paid maternity leave for 70 calendar days prior to and 56 days (70 in certain cases) after the birth of a child. Maternity pay is provided by the State Social Protection Fund.

Dismissal

Grounds for dismissal include, among other things: staff redundancy; employee’s lack of ability to perform required employment duties; and violation of employment duties as determined by the employment contract. There are certain restrictions covering the dismissal of certain categories of employees. In certain cases an employer is required to report an employee’s dismissal to the appropriate state authorities.

Cost of Employment

Employers are required to pay social security contributions (see Section 6.3.8 above) on behalf of their employees.

Income Tax

The employer is obliged to withhold income taxes for its employees and certain social contributions.

Foreign Workers in Azerbaijan

Foreign employees who are employed by enterprises (affiliates or representative offices) operating in Azerbaijan are subject to Azerbaijani labor law, except for those working in enterprises, branches or representative offices located in Azerbaijan under employment contracts concluded in the foreign state where the employer is located.

Foreign nationals wishing to work in Azerbaijan are required to register at their place of residence and obtain a work permit. Work permits are issued by the Ministry of Labor and Social Protection. Heads of representative offices and branches of foreign legal entities (and their deputies) are not required to obtain a work permit in Azerbaijan.