Definitive Guide to Hiring in Kazakhstan

Hiring in Kazakhstan

Hiring employees compliantly in Kazakhstan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Kazakhstan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Kazakhstan; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Kazakhstan

Employee Probation Period

• The probation period must be established in the contract and must not exceed three months.

Annual Leave in Kazakhstan

• Employees are generally entitled to a minimum of 18 days of paid annual leave and should be paid at least 3 days before the employee goes on leave.

Holidays in Kazakhstan

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Kazakhstan:

Maternity Leave Kazakhstan

• Female employees are generally entitled to 70 calendar days of employer paid leave before the birth and 56 days after the birth, or 70 days for a multiple birth.

Paternity Leave Kazakhstan

• No paternity leave

Sick Leave in Kazakhstan

• Sick leave is calculated on the basis of the average monthly remuneration rate.
• The amount of sick leave allowance is computed at the average wage rate, but the maximum required payment is 10 monthly payment indicators, or 8,230 KZT or approximately USD 54.

Working Hours in Kazakhstan

• Normal working hours should not exceed 40 hours per week
• The Law also establishes shorter hours of work in several cases:
  • Hours of work should not exceed 24 hours per week for employees aged between 14 to 16 and not over 36 hours per week for employees aged between 16 to 18
  • Hours of work not to exceed 36 hours of work for employees engaged in heavy manual work and work in harmful conditions of labor.

Overtime in Kazakhstan

• Overtime should not exceed 2 hours in one day.
• Payment for overtime work must be at least 1.5 times the regular payment (Article 76 of the LL).
• Payment for work on holidays or days off must be at least twice the regular payment.
• Payment for night work (between 10:00 pm and 6:00 am) must be at least 1.5 times the regular payment.

Termination of Employment in Kazakhstan

• An employment contract concluded for a specific period shall be terminated in connection with expiry of its term of validity
• The employer shall serve at least one month’s written notice on the employee of cancellation of the employment contract, unless the employment contract or collective bargaining agreement envisaged a longer notice period.
• With the written consent of the employee, the employment contract may be cancelled before expiry of the notice period.
• Cancellation of employment contracts with employees who are members of a trades union shall be carried out in consideration of the reasoned opinion of the trades union of the given organization in the manner envisaged by the collective bargaining agreement.

Notice Period in Kazakhstan

• The employee must be notified in writing and must be given at least one month’s notice.
• With the written consent of the employee, the employment contract may be cancelled before expiry of the notice period.

Severance in Kazakhstan

• A one-time compensation equivalent to the monthly wage is to be paid to the employee.

Kazakhstan Salary and Wages

13 / 14th Month Salary in Kazakhstan

• No
• There is no statutory requirement to pay the 13th and the 14th month salary.
• Employers may give their employees discretionary bonuses in the form of insurance.

Social Tax

• Social tax is payable by employers in respect of employees (both locals and expatriates) at 9.5% on top of the employee’s gross remuneration.

Obligatory social insurance contributions

• Obligatory social insurance contributions are payable by employers at the rate of 3.5% to the State Pension Centre of Pension Payments.
• Obligatory social insurance contributions are capped at 3.5% of seven times the minimum monthly wage (approximately 30 United States dollars [USD]) per month, and are deductible from social tax.
• Only Kazakhstan citizens, foreigners holding a residence permit in Kazakhstan, and citizens of member countries (i.e. Russia, Belarus, Armenia, and Kyrgyzstan) of the Eurasian Economic Union (EAEU or EEU), who have a local employment agreement are subject to obligatory social insurance.

Immigration Kazakhstan

The employer obtains the Work Permit through the submission of the documents to the local authorities under two main procedures, which are the general regime and intra-corporate transfer.

General Regime

• Work Permit quota.
  • Work Permits are issued by the local authorities within the quota allocated by the Ministry of Labor and Social Protection on an annual basis.
• For the purpose of obtaining a Work Permit under the general regime, all foreign individuals are classified into the following categories:
  • Category 1: Chief-executive officers (CEOs) and deputy CEOs of companies
  • Category 2: Leaders of business divisions/departments
  • Category 3: Professionals
  • Category 4: Qualified workers
• There is a restriction on the number of foreign employees that can be hired by a Kazakhstan employer/local host entity, which is the so-called “ratio requirement.
• ” Currently, the total number of foreign employees of a Kazakhstan employer/local host entity should not exceed the following:
  • 30% of the total number of the Category 1 and Category 2 employees.
  • 10% of the total number of Category 3 and Category 4 employees.
• When obtaining or extending work permits, an employer is charged a state duty for the issuance or extension of the work permit.
• The amount of the duty is established by the government of Kazakhstan and depends on the type of business of the employer and the category of the foreign employee.
• The amount of state duty ranges from approximately USD900 to USD3,500, depending on the sector of the economy, category of the employee and validity period of the Work Permit.
• A Work Permit under the general regime is issued for the following durations:
  • Category 1: for one, two and three years with an annual extension for one, two or three years
  • Category 2: for 12 months, with an annual extension for 12 months, but no more than 3 times
  • Category 3: for 12 months, with an annual extension for 12 months, but no more than 3 times
  • Category 4: for 12 months with no extension

Value Added Tax (VAT) in Kazakhstan

• The current VAT rate is 12%.
• This tax is applicable to the sales value of goods, works, and services, as well as to imports.
• Exports of goods and international transportation services are taxed at 0% VAT.
• As of 1 January 2022, all foreign companies supplying goods and providing services online to individuals in Kazakhstan are subject to VAT.

Mandatory Benefits in Kazakhstan

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, severance pay and 13th month pay
• Mandatory benefits also include social security benefits.

Payroll Accrual in Kazakhstan

Country Accruals Additional Information

Description

Obligatory social insurance contributions
Obligatory social insurance contributions are payable by employers at the rate of 3.5% to the State Pension Centre of Pension
Payments. Obligatory social insurance contributions are capped at 3.5% of seven times the minimum monthly wage (approximately 26
United States dollars [USD]) per month, and are deductible from social tax. Only Kazakhstan citizens, foreigners holding a residence
permit in Kazakhstan, and citizens of member countries (i.e. Russia, Belarus, Armenia, and Kyrgyzstan) of the Eurasian Economic
Union (EAEU or EEU), who have a local employment agreement are subject to obligatory social insurance.
Obligatory medical insurance contributions (OMIC)
Starting from 1 January 2020, employer’s OMIC are increased to the rate of 2%. All employers, including branches and representative
offices, should pay OMIC for all their employees, including Kazakhstan citizens and foreigners holding Kazakhstan residence permit, or
citizens of member countries of the Eurasian Economic Union. The monthly income accepted for calculating deductions and
contributions should not exceed ten times the minimum monthly wage (in 2019, the calculation of income is not more than KZT
425,000). Until 2019, the maximum limit was 15 times the minimum monthly wage.
And starting from 1 January 2021, employee OMIC are withheld at a rate of 2% out of employees' gross income and paid to the Social
Health Insurance Fund. The gross income subject to employee OMIC is capped at 10 times the minimum monthly wage per employee
per month. Subject to employee OMIC are Kazakhstan citizens, foreigners holding Kazakhstan residence permit, and citizens of
member countries of the Eurasian Economic Union.

Payroll Accruals Additional Information

Accrued Benefits in Kazakhstan

Why use Global Expansion to hire in Kazakhstan

Establishing a branch office or subsidiary in Kazakhstan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Kazakhstan labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Kazakhstan law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Kazakhstan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Kazakhstan Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.