Kazakhstan

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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
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GDP per capita: $11,250
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Total GDP: $38.7 billion
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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
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Rapid Market Entry: WeHG enables businesses to start operations in Kazakhstan within days, eliminating the need for a local entity.
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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.
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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:
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Job responsibilities
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Salary and benefits
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Working hours
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Termination conditions
There are two main types of employment agreements:
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Indefinite Contracts: Open-ended agreements with no fixed term.
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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:
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Labor market testing to prove the unavailability of local talent.
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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:
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1.5x the regular rate for the first two hours.
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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:
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70 days before childbirth.
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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:
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Pensions
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Healthcare
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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
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Notice Period: Employers must provide one month’s notice before termination.
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Severance Pay: There is no statutory requirement for severance pay, except in cases of redundancy or liquidation.
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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:
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Housing allowances
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Transportation allowances
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Company cars
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Education allowances
Public Holidays in Kazakhstan
Kazakhstan observes several public holidays, including:
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New Year (January 1-2)
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International Women’s Day (March 8)
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Nauryz Holiday (March 21-23)
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Kazakhstan’s People Solidarity Holiday (May 1)
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Victory Day (May 9)
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Capital Day (July 6)
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Constitution Day (August 30)
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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
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Compliance Assurance: We ensure adherence to local labor laws, tax regulations, and social security requirements.
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Efficient Hiring: We handle recruitment, onboarding, and payroll, saving you time and resources.
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Cost Savings: By eliminating the need for a local entity, we reduce setup costs and administrative burdens.
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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.