Expanding to Kazakhstan: A Guide to Hiring Employees and Understanding Employment Laws

Kazakhstan, a vast country rich in natural resources, offers numerous opportunities for businesses looking to expand in Central Asia. As the largest landlocked country in the world, it covers an area of approximately 2.7 million square kilometers and has a population of around 19 million. Kazakhstan’s GDP is estimated to be over $180 billion, with an inflation rate of approximately 8.5%. The country ranks 25th in the World Bank’s Ease of Doing Business Index, reflecting its business-friendly reforms and regulatory environment. To successfully navigate the Kazakh business landscape, it’s essential to understand the local employment laws and practices. This guide provides an overview of how to hire employees, working hours, days off, maternity leave, severance, and more.

Business Environment in Kazakhstan

Kazakhstan boasts a robust economy driven by oil, gas, mining, and agriculture. The country has implemented significant reforms to improve its business climate, including simplifying the process of starting a business and enhancing protections for minority investors. These efforts have contributed to Kazakhstan’s rising position in global ease of doing business rankings.

Hiring Employees in Kazakhstan

When hiring in Kazakhstan, businesses must adhere to local regulations to ensure compliance and avoid legal issues. The recruitment process typically involves advertising job vacancies through local job boards, recruitment agencies, and social media platforms.

Legal Requirements and Documentation Employers must ensure that potential hires possess the necessary work permits and visas if they are foreign nationals. All employees, whether local or foreign, must be provided with a written employment contract outlining the terms and conditions of their employment. This contract should include details such as job responsibilities, salary, working hours, and conditions for termination.

Working Hours and Conditions

Kazakhstan’s Labor Code governs the working hours and conditions for employees. The standard working week is 40 hours, with an eight-hour workday. Overtime is permitted but must be compensated at a higher rate, typically 1.5 times the regular hourly wage for the first two hours and double the regular rate for subsequent hours. Employers must also ensure that the workplace meets health and safety standards to protect employees from occupational hazards.

Days Off and Public Holidays

Employees in Kazakhstan are entitled to annual leave and public holidays. The standard annual leave entitlement is at least 24 calendar days. In addition to annual leave, Kazakhstan observes several public holidays, including New Year’s Day, International Women’s Day, and Independence Day, among others. Employees are generally entitled to paid leave on these holidays.

Sick Leave Policies Employees are entitled to sick leave, which is compensated based on medical certificates. The amount of compensation depends on the employee’s length of service and is typically covered by the employer.

Maternity and Paternity Leave

Kazakhstan provides generous maternity leave benefits. Female employees are entitled to 126 days of paid maternity leave—70 days before the expected due date and 56 days after childbirth. In the case of multiple births or complications, the postnatal leave is extended to 70 days. Maternity leave benefits are covered by social insurance.

Paternity Leave Provisions While there is no specific paternity leave, fathers can take unpaid leave or use their annual leave days to support their partners during childbirth and early child-rearing.

Severance and Termination

Understanding the rules around severance and termination is crucial for employers. Termination of employment must be based on legally acceptable grounds, such as redundancy, misconduct, or mutual agreement. Employers are required to provide notice of termination, which varies depending on the length of service. For instance, employees with less than one year of service require a one-month notice period, while those with longer service may require up to two months.

Severance Pay Regulations Employees are entitled to severance pay, which is typically one month’s salary for each year of service. In cases of unlawful termination, employees may be entitled to additional compensation.

Taxes for Employees and Employers

Taxation is a crucial aspect of doing business in Kazakhstan. Employees are subject to personal income tax, which is currently a flat rate of 10% on most types of income. Employers are responsible for withholding this tax from their employees’ salaries and remitting it to the tax authorities.

Employee Taxes Employees are subject to a flat personal income tax rate of 10%. This tax is deducted directly from their salaries by the employer. Additionally, employees contribute to the social security system, which includes pension, social, and medical insurance contributions.

Employer Taxes Employers must contribute to social security on behalf of their employees, which includes pension contributions, social insurance, and medical insurance. The overall rate for these contributions is approximately 31% of the employee’s gross salary, with specific rates for each type of insurance.

Importance of Compliance

Compliance with local employment laws and regulations is critical for businesses operating in Kazakhstan. Non-compliance can result in legal penalties, financial losses, and reputational damage. Ensuring adherence to labor laws, tax regulations, and social security requirements is essential for maintaining a stable and lawful business operation.

Importance of Working with Global EOR/International PEO Companies

Partnering with global Employer of Record (EOR) or International Professional Employer Organization (PEO) companies like WeHireGlobally can significantly ease the process of entering the Kazakh market. These organizations manage all aspects of employment, including recruitment, payroll, compliance with local labor laws, and tax obligations. This allows businesses to focus on their core operations without worrying about the complexities of local employment regulations. Utilizing an EOR or PEO ensures compliance with Kazakh laws, reduces administrative burden, and mitigates risks associated with international hiring. Moreover, partnering with companies like WeHireGlobally can mitigate your employment risks, speed up the process of entering new markets, and provide expertise in managing local employment issues. This strategic partnership can be invaluable for businesses looking to establish a presence in Kazakhstan quickly and efficiently.

Conclusion

Navigating the employment landscape in Kazakhstan requires a thorough understanding of local laws and practices. By adhering to legal requirements and maintaining fair employment practices, businesses can successfully hire and retain employees, contributing to their overall growth and success in this dynamic market. For businesses looking to expand into Kazakhstan, staying informed and compliant with local employment regulations is key to a smooth and successful operation