Azerbaijan PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Azerbaijan to companies willing to enter the Azerbaijan market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Azerbaijan.  However our solution allows you to start the operations in Azerbaijan within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Azerbaijan fast facts

Population, million: 10.1

Land area, sq. km: 86,600 km2

Capital: Baku

Local currency: Manat (₼) (AZN)

Hiring, Negotiating and Doing Business in Azerbaijan

Necessity of written employment contract

The Labour Code defines an employment contract as a written contract between an employer and an individual employee describing the basic conditions of employment and the rights and obligations of the parties.

Under Article 44.1 of the Labour Code, an employment contract must be executed in writing. Although there is no legal requirement for the agreement to be written in the Azerbaijani language, it is strongly recommended to execute the contract in that language.

Under Article 45, employment contracts can be executed with no specified term (indefinite) or for a fixed period of up to five years (term). Unless the agreement states the term of the employment, it will be considered to be unlimited.

Azerbaijan Employment Contract

Possibility and specific for different forms of engagement 

Azerbaijani law distinguishes two categories of worker: employees and contractors/freelancers.

The Labour Code defines employees as individuals who perform their work in accordance with an employment contract.

Employees have a long-term, permanent commitment to a company. Under their employment contract, they must receive and complete work on a regular, ongoing basis.

Contractors/freelancers conclude service agreements for providing specific services to legal entities and individuals in accordance with the relevant provisions of the Civil Code. They have no permanent obligation to the companies that request work from them. Companies seek out contractors to complete set amounts of work as and when they need it, but the contractors can accept or reject requests as they choose. If they do accept the work, they are only obliged to work for the company for as long as that set amount of work takes.

Azerbaijan working hours

Daily working hours in Azerbaijan cannot exceed eight hours. Consequently, normal weekly working hours cannot exceed 40 hours.

Reduced working hours apply to certain employees as follows:

• Employees under the age of 16: 24 hours per week.
• Employees aged 16 to 18, category I and II disabled employees, pregnant women and women with a child under the age of one-and-a-half: 36 hours per week.

(Article 91.1, Labour Code.)

Legislation also allows an employee and an employer to agree on part-time work. Shorter working hours, working days and weeks can be established by agreement between the employer and employee on execution of an employment contract.

Part-time work will be defined according to compensation, time spent on the job or by agreement of the parties.

Vacation leave in Azerbaijan

Employees are entitled to take paid holiday leave regardless of their position, profession, terms of employment or the effective period of their employment contract.

While an employee is on leave, his/her job, position and average monthly salary must be retained, their employment contract cannot be terminated, and they cannot be disciplined at the employer’s initiative.

Base vacation. Under Article 114 of the Labour Code, at least 21 calendar days of paid base vacation must be granted to employees. In addition, certain types of employees are eligible for 30 days of paid base vacation per year as follows:

• Agricultural employees.
• Public officials, managers and experts holding responsible positions at institutions.
• Administrators and administrative support personnel, as well as non-teaching managers of educational institutions, except those governed by special regulations.
• Foremen, instructors, librarians, laboratory technicians, cleaning women, attendants, and art directors at educational institutions.
• Scientific personnel without academic degrees.
• Doctors, mid-level medical personnel, and pharmacists.

Special rules apply to teachers and researchers and other educational employees, disabled employees and minors, war veterans and artistes (Articles 118 to 121, Labour Code).

Sick leave: 

Entitlement to paid time off depends on providence of medical certificate, issued in strict accordance with the specific instructions adopted by the resolution of the Cabinet of Ministers dated 1 January 1993.

Entitlement to unpaid time off

• Unpaid leave is permitted if an employee needs to take time off to solve urgent family, personal or other social problems, to study, engage in creative scientific work, or due to his/her age or medical condition.
• The conditions for unpaid leave are specified in Chapter 20 of the Labour Code. Employees can be granted unpaid leave at the discretion of the parties by mutual agreement of the employer and employee and in the cases provided by the contract, including under the terms of employment contracts, but not more than for six months.

Azerbaijan Maternity Leave

Women are entitled to pregnancy and maternity leave of 126 days, starting 70 calendar days before and ending 56 calendar days after the birth. In the event of abnormal or multiple births, women will be granted 70 days leave after the birth (Article 125.1, Labour Code). This leave is considered as fully paid.

Under Article 125.2 of the Labour Code, women working in industry are entitled to the following pregnancy and maternity leave:

• 140 calendar days for normal childbirth (70 days before birth, 70 days after birth).
• 156 calendar days in the event of abnormal birth (70 calendar days before birth, 86 days after birth).
• 180 calendar days in the event of multiple births (70 days before birth, 110 calendar days after birth).

Azerbaijan Severance Laws

Notice periods

The dismissal notice period for employees depends on their years of service. In a redundancy scenario, an employee must be officially notified by the employer within the relevant period before the employer terminates the employment contract (Article 77, Labour Code).

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 (Article 69, Labour Code).

Severance payments

On termination of the employment contract on the grounds of liquidation of the enterprise or staff redunancies, 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.

Azerbaijan Tax

From 1 January 2019, monthly income of employees who are engaged in employment for non-oil-gas and non-government sectors shall be exempted for a seven-year period, as follows: 

The standard rates that are applicable to the employees of the oil and gas and government sectors, and which will be applied after the seven-year grace period, are as follows:

Social security contributions

From 1 January 2019, the mandatory social security contribution rates for employment income (other than oil and gas and government sectors) are as follows for a seven-year period:

The standard rates that are applicable to the employees of the oil and gas and government sectors, and which will be applied after the seven-year grace period, are as follows:

• Employee: 3%

• Employer: 22%

All foreign employees are subject to social security contributions at these rates, except persons with diplomatic status and expatriate employees working under PSAs.

Entrepreneurs who are physical persons are liable to social security contributions at rates that vary depending on the type of activities and region of operation of such entrepreneurs.

Additional Benefits in Azerbaijan

Employers in Azerbaijan often offer private medical insurance.

Azerbaijan Holidays

• 1 and 2 January: New Year.
• 8 March: Women’s Day.
• 9 May: Victory Day.
• 28 May: Republic Day.
• 15 June: Day of National Salvation of the Azerbaijan People.
• 26 June: Armed Forces Day.
• 9 November: Day of the National Flag of the Republic of Azerbaijan;
• 31 December: Azerbaijan World Solidarity Day.
• 20 January: The day of National Mourning.
• Novruz (five days), Gurban (two days), Ramadan (two days): dates are announced each year by the relevant authority.
• Ballot days.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.