Payroll & Employment Guide Azerbaijan

Azerbaijani labour law mandates that employment agreements must be in writing. If an employment contract is not put in writing, a written notification must be provided within three days to comply with legal requirements.

Notice periods: Ranging from two weeks to two months

Termination of employment: Termination can occur through normal processes, immediate dismissal for cause, or mutual agreement, depending on the scenario.

Employers in Azerbaijan must provide mandatory employment benefits as outlined in the country’s labour code. To attract and retain top talent, many also offer additional perks. Understanding both mandatory and optional benefits is key to building a competitive employment offering.

• Mandatory benefits: State healthcare, social security, pension contributions, paid leave entitlements (annual, sick, and maternity leave).
• Common perks: Voluntary private health insurance, meal allowances, transport reimbursements, flexible work arrangements, training budgets.
• Leave policies: Paid annual leave, sick leave, parental leave.

Azerbaijan has a structured tax system that applies to both individuals and businesses. Employers are responsible for withholding personal income taxes and social security contributions. Specific tax rules also apply to dividends, royalties, and VAT.

Personal income tax rate: 14% (flat rate up to AZN 8,000/month); 25% on income exceeding that.

VAT: 18%

Tax allowances: Standard personal allowance, certain deductions for dependents and disability status.

Additional tax reliefs: Income tax exemptions for IT specialists (valid until 2026); regional tax incentives in certain zones.

In Azerbaijan, employers must pay salaries in accordance with individual or collective employment agreements, and wages must not fall below the statutory minimum set by the government. Salaries are generally paid on a monthly basis, unless a different arrangement is agreed upon.

Salary payment deadline: By the end of the relevant pay period (usually by the end of the month).

Taxes and contributions payment deadline: By the 20th of the following month.

Payroll declarations deadline: By the 20th of the following month

Payroll currency: AZN, EUR, or USD.

Azerbaijan’s labour law is defined by the national Labour Code. This covers all the essential aspects of employment, including employment types, minimum wage, probation periods, payroll, and other employer obligations. Staying compliant with the country’s regulations requires understanding these local frameworks.

Total employment cost:

• Employer’s social security contributions: 22%
• Employer’s health insurance costs: Included in social security contributions
• Employees’ social security contributions: 3%
• Employees’ health insurance costs: Included in social security contributions

Minimum wage: AZN 400 per month

Probation period: Up to three months

Foreign citizens working in Azerbaijan are required to obtain the appropriate work permits and visas. The process, permit type, and costs are different depending on the applicant’s nationality, job role, and length of stay.

Types of permits: EU, US, and Kosovo nationals can get a five-year Unique permit; other foreign nationals may receive permits of varying lengths.

Process length: Up to 3 months

Process cost: 1800€

Using EOR services in Azerbaijan enables you to hire employees legally in the country without the need to establish a local legal entity. The EOR assumes full legal responsibility as the official employer, which includes:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Native Teams offers a payroll calculator tailored to Azerbaijan’s labour regulations. With our tool, you can quickly and accurately estimate net and gross salaries, employer and employee contributions, as well as other required deductions in Azerbaijan.