Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in Azerbaijan. Your candidate is hired via Globalization Partners’ Azerbaijan PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
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Our solution enables customers to run payroll in Azerbaijan while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in Azerbaijan.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in more than 185 countries around the world, quickly and painlessly.
Azerbaijan is a small country with a secularist government located on the western edge of the Caspian Sea. The Azeri’s are a highly family oriented people and a hierarchical society. Business protocol can be complicated, with Azeri’s attuned to status and title, which affects who can enter the room first, and where and in what order people sit. In addition to this formality, in order to arrange a first meeting, a letter must be sent asking for the meeting and outlining the background of the company, its history, and details about what the meeting will cover. The concept of “face” is important in Azerbaijan, so be diplomatic with refusals and during negotiations. As with many countries, good relationships are key to getting anything done, so take seriously the time allowed for chatting before getting down to business.
Basic Facts About Hiring in Azerbaijan
Foreign employees are required to have individual work permits issued by the State Migration Service. Employers that fail to obtain the work permit can be subject to harsh penalties.
An employment agreement may not exceed the duration of the work permit, which itself cannot exceed one year. The permit may be renewed (extended) a maximum of four times.
When negotiating terms of an employment contract and offer letter with an employee in Azerbaijan, it may be useful to keep the following in mind:
Public Holidays in Azerbaijan
- New Years Day
- New Years Day Holiday
- Novruz (a multi-day holiday)
- Victory Day
- Republic Day
- National Salvation Day
- Azerbaijan Armed Forces Day
- Ramazan Bayrami (a multi-day holiday)
- Gurban Nayrami Holiday
- Independence Day
- Flag Day
Public holidays that fall on a weekend are moved to the following Monday. Independence Day, Constitution Day and National Revival Day are working holidays.
Bonus in Azerbaijan
Bonuses are commonly given in Azerbaijan. Their structure varies by company.
Working Hours in Azerbaijan
A normal working day cannot exceed eight hours, and the normal working week is five days, with two days off. The day before holidays, nationwide mourning days, and voting day is reduced by one hour.
For six day working weeks, the daily hours should not exceed seven per day.
Vacation in Azerbaijan
Generally, employees are allowed 21 days of vacation leave. Some specialist and managerial positions provide 30 days of leave. Two weeks of leave should be taken together.
In general, employees are not entitled to leave during their first year of employment.
Sick Leave in Azerbaijan
Employees may take sick leave within reasonable limits if they are covered by State Social Insurance.
After four months, the employee may be dismissed unless the sickness occurred on the job, or the employee is on maternity leave.
Payments during sick leave are recoverable from the State Social Protection Fund.
Maternity/Paternity Leave in Azerbaijan
- Pregnant women are entitled to a total of 126 days of paid maternity leave, which consists of 70 days before and 56 days after the expected date of delivery.
- After a difficult delivery or the birth of two or more children, women are entitled to 70 days of paid leave after the birth. This amounts to 140 days in total.
- Maternity leave is paid for by the State Social Protection Fund and is equal to 100 percent of gross average monthly earnings over the previous 12 months.
- Fathers are entitled to 14 days of unpaid paternity leave after the birth of a baby.
- An employment contract with a pregnant woman, or a woman with children under three years old, cannot be terminated
- Pregnant women and women with children of 18 months and under are subject to reduced working hours up to a maximum of 36 hours per week
- Pregnant women, or women with a child or children under three years old, cannot be requested to work night shifts
- Women with two children under 16 years old are entitled to two days of additional vacation
- Women with three or more children under 16 (or with a disabled child under 16 years old) are entitled to five days of additional vacation
- A woman (or single father) with children under 16 years old is entitled to up to 14 days of unpaid leave
Termination/Severance in Azerbaijan
Generally, a probation period of up to three months is allowed.
Azerbaijan has strict termination laws, which protect the employee and must be followed closely, and the employer must document the termination of employment.
In general, employment contracts may be terminated for:
- expiration of the fixed term
- change of employment conditions
- circumstances outside the employee and employer’s control
- inability of the employee to perform the work
- staff reduction or downsizing
- failure to pass the probationary period
- reaching pensionable age
- and grounds as laid out in the employment contract
If an employee’s job has been made redundant, the employer must give two months notice to the employee.
Generally, the employee is awarded to three months’ severance pay.
Taxes in Azerbaijan
Employee’s social security contributions are 3% of the employee’s salary on income up to AZN 200 plus 10% on any amount beyond that. For employees in the oil and gas and government sectors, the rate is 3%. The contribution is paid to the Social Protection Fund (SPF).
The employer’s social security contributions are 22% of the employee’s salary, including bonuses, on income up to AZN 200 plus 15% for any amount above that. For employees in the oil and gas and government sectors, the rate is 22%.
Health Insurance in Azerbaijan
Azerbaijan is in the process of putting in a new mandatory health insurance system.
Additional Benefits in Azerbaijan
Employers in Azerbaijan often offer private medical insurance to supplement limited free care.
Bottom Line on Benefits in Azerbaijan
Generally, we recommend budgeting 25% for benefits on top of the gross salary to calculate the total employee cost including benefits in Azerbaijan.
Employment Contracts in Azerbaijan
- Written employment contracts are legally required in Azerbaijan.
- Contracts can be for a fixed term of up to five years or an indefinite term.
- Contracts must contain the following information:
- The full name and address of the employee and employer
- The employee’s position and place of work
- The date from which the contract becomes valid and the employee’s first day of work
- How long the contract is valid for
- Employees’ duties
- General labour terms and conditions: salary, working hours and break times, annual leave, labour protection and social insurance
- Details of any other insurance provided
- Obligations the employer and employee must adhere to
- Any other agreed terms and conditions
There should be at minimum two copies of the contract. All copies must be signed or sealed by both the employer and the employee. Employees keep their own copy. Employment contracts are only valid if they are signed or sealed.
Why Globalization Partners
Establishing a branch office or subsidiary in Azerbaijan to engage a small team is time-consuming, expensive and complex. Azerbaijan’s labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into Azerbaijan. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Azerbaijan PEO and Employer of Record solution provides you peace of mind so that you can focus on running your company.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in Azerbaijan, please contact us.