Kazakhstan

Kazakhstan PEO & Employer of Record: A Complete Guide to Hiring and Managing Employees

Expanding your business into Kazakhstan offers immense opportunities, thanks to its strategic location, resource-rich economy, and growing market. However, navigating the complexities of local labor laws, tax regulations, and hiring practices can be daunting. This is where WeHireGlobally (WeHG) comes in. As a leading provider of Professional Employer Organization (PEO) and Employer of Record (EOR) services, WeHG simplifies the process of entering the Kazakhstani market, enabling businesses to hire and manage local and expatriate employees efficiently and compliantly.

In this comprehensive guide, we’ll explore everything you need to know about hiring, compensating, and retaining employees in Kazakhstan, including the benefits of using an EOR like WeHG.


Why Kazakhstan? Fast Facts and Business Opportunities

Kazakhstan is the largest landlocked country in the world, with a population of over 18.7 million and a land area of 2.725 million square kilometers. Its capital, Nur-Sultan, is a hub of political and economic activity, while Almaty, the largest city, serves as the financial and cultural center.

Key Economic Indicators

  • GDP per capita: $11,250

  • Total GDP: $38.7 billion

  • Currency: Kazakhstani tenge (KZT)

Kazakhstan’s economy is driven by its vast natural resources, including oil, gas, and minerals, as well as a growing focus on diversification into sectors like agriculture, technology, and manufacturing. The country ranks 25th in the World Bank’s Ease of Doing Business Index, reflecting its business-friendly reforms and commitment to attracting foreign investment.


The Traditional Approach vs. WeHG’s Employer of Record Solution

Traditionally, entering the Kazakhstani market required establishing a local subsidiary—a time-consuming and costly process involving legal, administrative, and financial hurdles. However, WeHG’s Employer of Record (EOR) solution offers a faster, more cost-effective alternative.

How WeHG Works

  1. Rapid Market Entry: WeHG enables businesses to start operations in Kazakhstan within days, eliminating the need for a local entity.

  2. Compliant Hiring: WeHG recruits employees on your behalf, ensuring full compliance with local labor laws. Legally, employees are on WeHG’s payroll, but they work exclusively for your business.

  3. Operational Control: You retain full control over day-to-day operations, while WeHG handles payroll, benefits, tax filings, and compliance.

This approach not only saves time and money but also minimizes risks associated with non-compliance and administrative errors.


Hiring in Kazakhstan: Key Considerations

Employment Contracts

Kazakhstani labor law mandates that all employment relationships be formalized through a written contract. Contracts must include:

  • Job responsibilities

  • Salary and benefits

  • Working hours

  • Termination conditions

There are two main types of employment agreements:

  1. Indefinite Contracts: Open-ended agreements with no fixed term.

  2. Fixed-Term Contracts: Limited to one year, renewable twice.

Hiring Foreign Employees

Employers in Kazakhstan can hire foreign citizens, but they must obtain a work permit. The number of work permits issued annually is subject to a government-imposed quota. The process involves:

  • Labor market testing to prove the unavailability of local talent.

  • Submission of required documents, including proof of qualifications and a clean criminal record.

Recruitment Practices

Kazakhstan’s workforce is highly educated, with many professionals fluent in both Kazakh and Russian. Employers often use online job portals, recruitment agencies, and professional networks to attract talent. Offering competitive salaries and benefits is key to securing top candidates.


Compensation and Statutory Benefits in Kazakhstan

Kazakhstani labor laws ensure that employees receive fair compensation and benefits. Here’s an overview of the key requirements:

Minimum Wage

As of 2024, the minimum wage in Kazakhstan is KZT 85,000 per month.

Working Hours

The standard workweek is 40 hours, with overtime compensated at:

  • 1.5x the regular rate for the first two hours.

  • 2x the regular rate for subsequent hours.

Annual Leave

Employees are entitled to 24 business days of paid annual leave. Unused leave can be carried over, but employees cannot accumulate more than 48 days (equivalent to two years’ worth of leave).

Maternity Leave

Female employees are entitled to 126 days of paid maternity leave:

  • 70 days before childbirth.

  • 56 days after childbirth.
    This period extends to 155 days for multiple births or complications.

Social Security Contributions

Employers are required to contribute 9.5% of an employee’s gross salary to social security, covering:

  • Pensions

  • Healthcare

  • Unemployment benefits


Termination and Severance Laws

Terminating an employment contract in Kazakhstan can be complex, with 25 legally recognized grounds for dismissal. However, most reasons are tied to employee misconduct or poor performance, making it challenging to terminate employees without cause.

Key Points to Note

  • Notice Period: Employers must provide one month’s notice before termination.

  • Severance Pay: There is no statutory requirement for severance pay, except in cases of redundancy or liquidation.

  • Mutual Agreement: The most straightforward way to terminate employment is through mutual agreement or voluntary resignation.


Taxation in Kazakhstan

Income Tax

Individuals in Kazakhstan are subject to a flat income tax rate of 10%. Dividend income is taxed at 5%, unless specifically exempted.

Social Tax

Employers must pay a 9.5% social tax on employees’ gross salaries, covering social security contributions.


Health Insurance and Additional Benefits

Health Insurance

Foreign employees are required to obtain voluntary health insurance to access medical services in Kazakhstan. Employers often cover this cost as part of their benefits package.

Supplemental Benefits

To attract and retain top talent, many employers offer additional benefits, such as:

  • Housing allowances

  • Transportation allowances

  • Company cars

  • Education allowances


Public Holidays in Kazakhstan

Kazakhstan observes several public holidays, including:

  • New Year (January 1-2)

  • International Women’s Day (March 8)

  • Nauryz Holiday (March 21-23)

  • Kazakhstan’s People Solidarity Holiday (May 1)

  • Victory Day (May 9)

  • Capital Day (July 6)

  • Constitution Day (August 30)

  • First President’s Day (December 1)


Why Choose WeHireGlobally?

WeHG’s Employer of Record solution is designed to simplify global expansion, allowing businesses to focus on growth while we handle the complexities of hiring and compliance.

Key Benefits of WeHG

  1. Compliance Assurance: We ensure adherence to local labor laws, tax regulations, and social security requirements.

  2. Efficient Hiring: We handle recruitment, onboarding, and payroll, saving you time and resources.

  3. Cost Savings: By eliminating the need for a local entity, we reduce setup costs and administrative burdens.

  4. Risk Management: We manage employment-related risks, such as disputes or wrongful termination claims.


Conclusion

Kazakhstan’s dynamic economy and business-friendly environment make it an attractive destination for global expansion. However, successfully hiring, compensating, and retaining employees requires a deep understanding of local labor laws, cultural norms, and competitive practices.

Partnering with an Employer of Record like WeHireGlobally simplifies the process, ensuring compliance, efficiency, and cost-effectiveness. With our expertise, you can focus on building a high-performing team and achieving your business goals in Kazakhstan.

By leveraging Kazakhstan’s strengths and adopting best practices, your organization can thrive in this vibrant and rapidly growing market.

 

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