Payroll and Benefits Guide Azerbaijan
Last updated: May 02, 2023
Contributions
Employer
Employer Payroll Contributions
|
Oil and Gas Industry: |
|
|
22.00% |
Social Security |
|
0.50% |
Unemployment |
|
2.00% |
Mandatory Medical Insurance |
|
*Private Sector: |
|
|
2.00% up to 200 AZN; 15% above 200 AZN + 44 AZN |
Social Security |
|
0.50% |
Unemployment |
|
1.00% up to 8,000 AZN; 0.5% above AZN 8000 + 160 AZN |
Mandatory Medical Insurance* |
|
* (for the period 1/1/21 to 31/12/21, a 50% discount has been applied to the non-state and non-oil sectors mandatory medical insurance; both the employee and the employer contributions will be 1% for the income earned up to AZN 8,000.) *Rate for Private Sector employees lasts for 7 years, after which it is the same as for Oil and Gas Industry employees. |
|
|
22.00% |
Total Employment Cost |
Employee
Employer Payroll Contributions
|
Oil and Gas Industry: |
|
|
3.00% |
Social Security |
|
0.50% |
Unemployment |
|
2.00% |
Mandatory Medical Insurance |
|
*Private Sector: |
|
|
3.00% under 200 and 10% on excess of 200 AZN + 6 AZN |
Social Security |
|
0.5% |
Unemployment |
|
1% up to 8,000 AZN; 0.5% above AZN 8000 + 160 AZN |
Mandatory Medical Insurance* |
|
* (for the period 1/1/21 to 31/12/21, a 50% discount has been applied to the non-state and non-oil sectors mandatory medical insurance; both the employee and the employer contributions will be 1% for the income earned up to AZN 8,000.) *Rate for Private Sector employees lasts for 7 years, after which it is the same as for Oil and Gas Industry employees. |
|
|
5.50% |
Total Employee Cost |
Employee Income Tax
|
Oil and Gas Industry employees: |
|
|
14.00% |
Wage Tax for monthly salaries below 2,500 AZN |
|
350 AZN + 25% of anything above 2,500 AZN |
Wage tax for monthly salaries above 2,500 AZN |
|
*Private Sector employees: |
|
|
0.00% |
Wage Tax for monthly salaries up to 8,000 AZN |
|
14.00% of the amount exceeding 8,000 AZN |
Wage Tax for monthly salaries above 8,000 AZN |
|
*Rate for Private Sector employees lasts for 7 years, after which it is the same as for Oil and Gas Industry employees. |
Employer taxes
Employee taxes
Minimum Wage
General
The monthly minimum wage is 345AZN.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In accordance with the Labor Code of Azerbaijan (LCA), monthly salaries should be divided into two parts (advance and remaining portions of the wage) and paid to employees twice a month with an interval not exceeding 16 days. Annual salaries should be paid not less than once a month, which is now becoming the normal practice.
13th Salary
There is no requirement for the 13th salary payment in Azerbaijan.
Working Hours
General
Standard working hours are set for employees over the age of 18 at no more than 8 hours a day and 40 hours per week, with a working week set at five working days and two days off.
In accordance with the Azerbaijan Resolution, working days for 2022 are set at 241 days. The annual rate of working time in 2022 will constitute 1921 hours for 40 hours weekly work and will be applicable to both five-day and six-day working weeks.
In certain industries, the employer may impose a six-day working week; in such situations, the daily working time limits may not exceed 7 hours (if the weekly total is 40 hours), 6 hours (if the weekly total is 36 hours), or 4 hours (if the weekly total is 24 hours) a day.
Overtime
Overtime is any additional time to the employee’s contracted standard working hours. No employee should be assigned to work overtime hours for more than two consecutive working days of more than four additional hours. In workplaces with difficult and harmful working conditions, there should be no more than 2 hours of overtime.
The general calculation of overtime is based on the following criteria:
If the salary is based on time worked, the amount paid per hour shall be calculated at 200% of the regular salary.
If the salary is based on the production of piecework, overtime hours must be paid at an amount no less than the regular hourly wage of employees within the same pay scale.
Differing payment calculation methods for overtime work may be stipulated in employment contracts and collective agreements. Overtime hours cannot be substituted as time off in lieu/additional days’ leave.
Working Week
Monday-Friday
Leave
Paid Time Off
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 Service – Additional 2 days of leave per annum
10-15 years of Service – Additional 4 days of leave per annum
15 or more years of Service – Additional 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.
If weekly days off and non-working days coincide, that day off shall be transferred to the working day immediately after the holiday. When the holidays of Eid al-Adha (Gurban) and Ramadan coincide with a non-working day, the next working day shall be considered a day off.
Public Holidays
There are 24 public holidays in Azerbaijan. In accordance with the Resolution, the following days will be considered as rest days due to coincidence of holidays with the weekends:
- 3, 4 January, 25 March, 30 May, 27 June, 11, 12 July with respect to five-day working week;
- 3 January, 25 March, 27 June, 11 July with respect to six-day working week
Sick Days
Employees unable to work due to sickness will be paid in full for the first 14 days by the employer; thereafter, the payments will be made by the State Social Protection Fund. In order to receive the sick pay benefit, the employee must provide a medical certificate.
Maternity Leave
Women are entitled to a total of 126 days of Maternity Leave, of which 70 days are to be taken prior to the expected due date of the child and 56 days after the birth. Should it be a difficult birth or multiple births, the maternity leave can be extended for an additional 14 days.
Maternity pay is calculated at 100% of the average of the mother’s previous 12 months’ salary payments and is to be paid by the State Social Protection Fund.
Pregnant women or women with young children are also covered under special circumstances in relation to employment law, the main clauses include:
- A pregnant woman or a woman with a child under the age of 3 years old cannot be terminated.
- A pregnant woman or woman with a child under the age of 18 months old is entitled to a reduced workweek. The maximum number of hours permitted is 36 hours a week.
- A pregnant woman or woman with a child under the age of 3 years old cannot be asked to work night shifts.
PAID MATERNITY LEAVE (DAYS)
Paternity Leave
Fathers can take 14 days of unpaid Paternity Leave following the birth of a child.
Parental Leave
In Azerbaijan, there are various stipulations for parental rights, inclusive of additional time off should it be required; the main clauses being:
- A woman with two children under the age of 16 is entitled to 2 additional days of paid leave; a woman with three or more children under the age of 16 is entitled to 5 days of additional paid leave.
- A woman or single father with children under the age of 16 is entitled to 14 days of unpaid leave per year.
- Female employees adopting children under two months of age are entitled to 56 calendar days of social leave.
Other Leave
In Azerbaijan, employees studying in addition to work are provided study leave in order to participate in training sessions in the relevant academic season, to take state exams, prepare a diploma project, etc. During the period of paid educational leave, an employee shall be paid an average salary. However, the number of days varies in accordance with the nature of work and leave requirements.
Employees who donate blood are also given an additional day’s leave with an average salary; generally, this day is added to the annual leave entitlement.
Termination
Termination Process
In general, the termination of an employment contract in Azerbaijan is strict and must be managed in accordance with the Employees Act (Angestellten-Gesetz).
The final payment must be delivered at the very latest by the final day of employment, and the resignation of employment agreement should be registered in an electronic information system on the last working day together with the notification to the MLSPP providing details of the role and salary of the employee being terminated.
Notice Period
The notice period for an employee is set out in Section 20 of the Employees Act (Angestellten-Gesetz). All employees must give at least one month’s notice, regardless of their length of service. However, contractually the notice period can be increased up to six months. The standard notice period that the employer must give to an employee is also dependent on the employee’s length of service:
- 2 years service or less – 6 weeks’ notice.
- Between 2- and 5-years’ service 2 months’ notice.
- Between 4- and 15-years’ service 3 months’ notice.
- Between 15- and 25-years’ service – 4 months’ notice.
- More than 25 years’ service – 5 months’ notice.
All employees must give at least one month’s notice, regardless of their length of service. The notice period can be increased up to six months, subject to contractual agreement.
When terminating an employment agreement due to downsizing, two months’ notice is required. During this 2-month period, the employee can take one day of paid time off per week for the purpose of finding new employment.
Severance Pay
For employees who are terminated based on redundancy, a minimum of 3 month’s severance pay is required.
In general, Severance pay varies depending on the length the employee has been employed:
- 1 years’ service or less 1 month salary
- Between 1- and 5-years’ service 1.4 the monthly salary
- Between 5- and 10-years’ service 1.7 the monthly salary
- More than 10 years’ service 2X the monthly salary
In addition to general severance pay, a termination payment of 2 months’ salary must be given if:
- Terms of employment were changed
- The employee is called for Military Service
- The employee can no longer perform their duties due to a permanent disability
In the event that the employee dies whilst still in employment, three month’s salary allowance is given to their family members.
Probation Period
In Azerbaijan, the standard probation period is up to 3 months.
During this time, either the employee or employer can cancel the employment agreement with three days’ notice.
VISA
VISA
Foreign individuals wishing to work in Azerbaijan must obtain a work permit from the State Migration Service of the Republic of Azerbaijan through their employers. The work permit only lasts up to one year at a time; therefore, an employee would have to be re-issued with this multiple times during their employment.
Within 15 days of arrival in the country, an application should be made via the electronic services of the official website of the State Migration Service of the Republic of Azerbaijan, e-government portal, and e-mail (qeydiyyat@migration.gov.az) or in-person to the regional migration department, or “ASAN service” centres. The following documentation would be required for this submission;
- A completed application form
- A copy of an employee’s passport (other border crossing documents including the visa page and pages indicating the last entry to the country).
All visitors to Azerbaijan are recommended to obtain a visa prior to their arrival. Passports without visas are retained by the immigration authorities at the airport. Visitors then must apply to the Consular Department of the Ministry of Foreign Affairs during working hours to retrieve their passport with a visa.
Once the work permit is issued, it serves as the basis for obtaining a temporary residence permit. Temporary residence permits are initially issued for up to one year based on the submitted application and may subsequently be extended for no more than two years at a time.
The maximum timeframe for obtaining a temporary residence permit is 20 working days after submission of the complete application package.
VAT
General
The standard VAT rate in Azerbaijan is 18.00%.
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Payroll and Benefits Guide
in Azerbaijan
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Day | Date | Holiday | Notes |
|---|---|---|---|
| Sunday | Jan-1 | New Year's Day | |
| Monday | Jan-2 | Second Day of the New Year | |
| Friday | Jan-20 | Martyrs Day | |
| Wednesday | Mar-8 | International Women’s Day | |
| Monday | Mar-20 | Spring Festival | |
| Tuesday | Mar-21 | Second Day of the Spring Festival | |
| Wednesday | Mar-22 | Third Day of the Spring Festival | |
| Thursday | Mar-23 | Fourth Day of the Spring Festival | |
| Friday | Mar-24 | Fifth Day of the Spring Festival | |
| Saturday | Apr-22 | Festival of Breaking the Fast | |
| Sunday | Apr-23 | Second Day of the Festival of Breaking the Fast | |
| Tuesday | May-9 | Victory Day | |
| Sunday | May-28 | Republic Day | |
| Monday | May-29 | Republic Day | In lieu |
| Thursday | Jun-15 | National Salvation Day | |
| Monday | Jun-26 | Azerbaijan Armed Forces Day | |
| Thursday | Jun-29 | Feast of the Sacrifice | |
| Friday | Jun-30 | Second Day of the Feast of the Sacrifice | |
| Wednesday | Nov-8 | Azerbaijan Victory Day | |
| Thursday | Nov-9 | Flag Day | |
| Sunday | Dec-31 | International Azerbaijanis Solidarity Day |
Should an employee receive payment for unused vacation? If yes, are their reasons why they wouldn’t receive payment?
No matter the reason for termination, an employee must receive payment for unused vacation.