Employ Candidates Compliantly in Azerbaijan

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  1. Overview: Azerbaijan
  2. Global PEO and payroll
  3. Global HR Compliance
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Azerbaijan

If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Azerbaijan Guide below will help you understand the nuances of labor legislation in the country.

Companies hire international workforce for various reasons but in most cases they are:

  • entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
  • hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.

Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.

If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Azerbaijan, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Azerbaijan and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.

We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Azerbaijan.

Hiring and Firing Workforce in Azerbaijan Guide

# Employment Agreements

Collective agreements are not common in Azerbaijan; however, they are comprehensively regulated by law. The parties to a collective contract shall consist of employers and the trade union. If there is no trade union at the enterprise, the second party to a collective contract shall be a Labor collective.

Collective contract shall include the mutual obligations of the parties in relation to the following matters:

  • Improving the productivity and economic performance of the enterprise
  • Defining the procedure and amount of compensation, monetary rewards, benefit payments, extra payments, and other payments
  • The mechanism for regulating compensation based on price increases and the level of inflation
  • Employment, training, professional development, conditions for laying off employees
  • Working hours, time off, and vacations
  • Cultural and consumer services, social guarantees and benefits for employees and members of their families
  • Performance evaluation, establishment, and revision of labor quotas
  • Improving working conditions for women and minors
  • Defining additional guarantees to improve occupational safety
  • Compensation for damage to employees in connection with performance of their jobs;
  • Formation of a body to hear individual employment disputes and the procedure by which it shall operate
  • Definition of additional preferential terms and conditions for employee medical and social insurance
  • Consultation and coordination with the trade union if an individual employment agreement is terminated at the employer’s initiative
  • Environmental safety and protection of employee health
  • Deduction of membership fees from trade union members’ salaries and creating conditions for the efficient organization of trade unions’ charter activities
  • Agreement on additional means for governing collective labor disputes
  • Oversight for compliance with the terms of the collective agreement
  • Liability of the parties for breach of a collective contract
  • Enforcement of Labor discipline. 

A collective contract may be executed for a period from one to three years and shall take effect when it is signed or on the date indicated therein.

Fixed-term/open-ended contracts. An employment contract may be executed without specified term (open-ended) or for a period up to 5 years (fixed-term).

Unless an employment contract states the term for which it is being executed, it shall be open-ended.

n employment contract executed without specified term may not be unilaterally replaced by a term employment contract without the mutual consent of the parties.

Fixed term individual labor contract is concluded, if in connection with the character of labor function, the terms of its execution (seasonal work, substitution of the temporary absent employee), or interests of the employee the conclusion of an open-end contract is impossible, and in cases, directly stipulated by the legislation.

# Employment Termination and Severance Pay (Dismissal)

An employee may terminate an employment contract by notifying the employer in writing one calendar month in advance.

At the end of one calendar month, the employee shall have the right not to go to work and to demand a final accounting. The employer shall be obliged to meet the employee’s demands.

If there are specific, valid reasons, such as the employee’s being of retirement age, his disability, admission to an educational institution, move to a new place of residence or entering an employment contract with another employer, or in other cases provided by law, the employee may terminate his employment contract on the date he has indicated in his application.

An employee who has submitted notice of termination of his employment contract shall be entitled to rescind this notice or submit a new application to the employer to cancel this notice within the term of notice. In this case the termination shall not be allowed, and the employment contract shall not be terminated, provided that the employer has not submitted written notice to the employee concerning another employee’s involvement in said position (profession). Upon termination of the employment contract pursuant to the rules defined herein, the employee’s request to rescind or cancel his notice shall be invalid.

# It is prohibited to dismiss

The employer shall be prohibited from terminating the employment contracts of the following individuals:

  • Pregnant women and women with children under age three
  • Employees whose only income source is the enterprise where they work and who are bringing up children under school age alone
  • Employees temporarily disabled
  • Individuals because they are members of trade unions or other political parties.

# Notice period

If an employment contract is terminated the employee shall be officially notified by the employer two months. An employee can terminate an employment contract by notifying the employer in writing one calendar month in advance of termination. The employee can terminate his/her employment without giving a month’s notice for specific reasons including being of retirement age, disability, admission to an educational institution, moving to a new place of residence or entering into an employment contract with another employer, or in other cases provided by law.

Severance payments

On termination of the employment contract on the grounds of liquidation of the enterprise or staff redundancies, an employer must pay an employee as follows, depending on the years of service:

  • Less than one year: the amount of the average monthly salary
  • One to five years: at least 1.4 times the average monthly salary
  • Five to ten years: at least 1.7 times the average monthly salary
  • More than ten years: at least twice the average monthly salary.

If an employment contract is terminated due to the following reasons an employer must pay an employee an allowance equal to twice the average monthly wage:

A change in terms and conditions of employment

  • The employee is called for military or alternative service
  • The employee cannot perform his/her job for more than six months because of complete and permanent disability (unless the law sets a longer period.

If an employment contract is terminated due to the death of the employee, the heirs of the deceased will receive an allowance equal to three times the average monthly wage.

# Employee Benefits and Contributions

 Mandatory benefits required by law to be provided by an employer:

  • Vacation, consisting of base and additional vacation time
  • Social leave for maternity and childcare
  • Educational and creative leave for continuing education and pursuing scientific research
  • Unpaid leave
  • Paid sick leaves
  • Labor pensions
  • A funeral allowance
  • An allowance for medical treatment at resorts (full or partial payment)
  • In special circumstances, benefits for families taking care of a child or children.

Non-mandatory benefits that are offered by an employer:

Annual bonuses, health insurance (including insurance for family members), endowment assurance, meal vouchers, gym vouchers.

# Probationary period

Probation periods are acceptable, though they cannot exceed three months. 

# Overtime

An employee cannot be required to work overtime except in unusual circumstances. “Blue-collar” workers are paid 1.5 times the normal rate during the first two hours of overtime and double time thereafter.

# Work hours

An employee shall have a five-day work week with two days off. Depending on the nature of the industry, service, and terms of employment, an employer or the relevant authority may establish a six-day week with one day off within weekly working hours. In a six-day work week, daily working hours may not exceed 7 hours for a weekly quota of 40 hours; 6 hours for a weekly quota of 36 hours; and 4 hours for a weekly quota of 24 hours.

# Annual Leave

In Azerbaijan, the Minimum Annual Leave entitlement is 21 days for employees over the age of 18. This entitlement increases in line with the number of years of employment within a single company, as follows:

5-10 years of ServiceAdditional 2 days of leave per annum
10-15 years of Service  Additional 4 days of leave per annum
15 or more years of ServiceAdditional 6 days of leave per annum 

Annual leave can be broken down into multiple leave periods; however, one of the leave periods must be two weeks in length.

# Sick Leave

Sick pay for temporarily disabled insured employees during the first 14 days of absence from work is paid by the employer, and for subsequent days out of compulsory national social insurance

# Parental Leave

Woman shall be granted pregnancy and maternity leave of 126 days, starting seventy (70) calendar days prior to childbirth, and ending fifty-six (56) calendar days after childbirth. In the event of abnormal or multiple births, women shall be granted seventy days leave after childbirth. In the event of abnormal or multiple births, women will be granted 70 days leave after the birth. This leave is considered as fully paid.

Paternity rights.

Men can take up to 14 days’ leave while their wives are on maternity leave. Single fathers directly caring of a child up to three years old has the right to take partially paid.

Acumen International can help you fast-track your possibilities of entering and expanding your business in Azerbaijan by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.

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