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What are the minimum wage requirements?
As of January 2022, the minimum salary in Azerbaijan is of 300 Azeri manats, or roughly $170. The minimum salary in Baku is considerably higher, although the rate is nationwide.
Contributions & Taxes
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.
The employer’s social security contributions are 22% of the employee’s salary, including bonuses, on income up to AZN 200 plus 15% for any amount above that. For employees in the oil and gas and government sectors, the rate is 22%.
In Azerbaijan, the Corporate Income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. The benchmark we use refers to the highest rate for Corporate Income. Revenues from the Corporate Tax Rate are an important source of income for the government of Azerbaijan.
Employee’s social security contributions are 3% of the employee’s salary on income up to AZN 200 plus 10% on any amount beyond that. For employees in the oil and gas and government sectors, the rate is 3%. The contribution is paid to the Social Protection Fund (SPF).
In Azerbaijan, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends. The benchmark we use refers to the Top Marginal Tax Rate for individuals. Revenues from the Personal Income Tax Rate are an important source of income for the government of Azerbaijan.
What is the payroll cycle?
In accordance with the Labor Code of Azerbaijan (LCA), monthly salaries should be divided into two parts (advance and remaining portions of the wage) and paid to employees twice a month with an interval not exceeding 16 days.
Is there 13th salary in Azerbaijan?
There is no requirement for the 13th salary payment in Azerbaijan.
Standard working hours are set for employees over the age of 18 at no more than 8 hours a day and 40 hours per week, with a working week set at five working days and two days off.
In accordance with the Azerbaijan Resolution, working days for 2022 are set at 241 days. The annual rate of working time in 2022 will constitute 1921 hours for 40 hours of weekly work and will be applicable to both five-day and six-day working weeks.
In certain industries, the employer may impose a six-day working week; in such situations, the daily working time limits may not exceed 7 hours (if the weekly total is 40 hours), 6 hours (if the weekly total is 36 hours), or 4 hours (if the weekly total is 24 hours) a day.
Overtime is any additional time to the employee’s contracted standard working hours. No employee should be assigned to work overtime hours for more than two consecutive working days of more than four additional hours. In workplaces with difficult and harmful working conditions, there should be no more than 2 hours of overtime.
The general calculation of overtime is based on the following criteria:
If the salary is based on time worked, the amount paid per hour shall be calculated at 200% of the regular salary.
If the salary is based on the production of piecework, overtime hours must be paid at an amount no less than the regular hourly wage of employees within the same pay scale.
Differing payment calculation methods for overtime work may be stipulated in employment contracts and collective agreements. Overtime hours cannot be substituted as time off in lieu/additional days’ leave.
Probation period rules
In Azerbaijan, the standard probation period is up to 3 months. During this time, either the employee or employer can cancel the employment agreement with three days’ notice.
All employees must give at least one month’s notice, regardless of their length of service. The notice period can be increased up to six months, subject to contractual agreement.
For employees who are terminated based on redundancy, a minimum of 3 month’s severance pay is required. In general, Severance pay varies depending on the length the employee has been employed: 1 years’ service or less 1 month salary. Between 1- and 5-years’ service 4X the monthly salary.
Leave and Benefits
Leave and Benefits rules
There are 24 public holidays in Azerbaijan. In accordance with the Resolution, the following days will be considered as rest days due to the coincidence of holidays with the weekends:
·3, 4 January, 25 March, 30 May, 27 June, 11, 12 July with respect to five-day working week;
·3 January, 25 March, 27 June, 11 July with respect to a six-day working week
Employees unable to work due to sickness will be paid in full for the first 14 days by the employer; thereafter, the payments will be made by the State Social Protection Fund. In order to receive the sick pay benefit, the employee must provide a medical certificate.
Maternity leave & Paternity leave
Women are entitled to a total of 126 days of Maternity Leave, of which 70 days are to be taken prior to the expected due date of the child and 56 days after the birth. Should it be a difficult birth or multiple births, the maternity leave can be extended for an additional 14 days.
Maternity pay is calculated at 100% of the average of the mother’s previous 12 months’ salary payments and is to be paid by the State Social Protection Fund.
Pregnant women or women with young children are also covered under special circumstances in relation to employment law, the main clauses include:
A pregnant woman or a woman with a child under the age of 3 years old cannot be terminated.
A pregnant woman or woman with a child under the age of 18 months old is entitled to a reduced workweek. The maximum number of hours permitted is 36 hours a week.
A pregnant woman or woman with a child under the age of 3 years old cannot be asked to work night shifts.
Fathers can take 14 days of unpaid Paternity Leave following the birth of a child.
In Azerbaijan, there are various stipulations for parental rights, inclusive of additional time off should it be required; the main clauses being:
- A woman with two children under the age of 16 is entitled to 2 additional days of paid leave; a woman with three or more children under the age of 16 is entitled to 5 days of additional paid leave.
- A woman or single father with children under the age of 16 is entitled to 14 days of unpaid leave per year.
- Female employees adopting children under two months of age are entitled to 56 calendar days of social leave.
Other leave (marriage, bereavement, exam leave)
In Azerbaijan, employees studying in addition to work are provided study leave in order to participate in training sessions in the relevant academic season, to take state exams, prepare a diploma project, etc. During the period of paid educational leave, an employee shall be paid an average salary. However, the number of days varies in accordance with the nature of work and leave requirements.
Employees who donate blood are also given an additional day’s leave with an average salary; generally, this day is added to the annual leave entitlement.
Health Security & Private Insurance
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