Definitive Guide to Hiring in Mongolia

Hiring in Mongolia

Hiring employees compliantly in Mongolia means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Mongolia 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 Mongolia; or

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

Labor Laws in Mongolia

Employment laws in Mongolia are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Mongolia employment laws and Mongolia policies here.

Employee Probation Period

• The maximum trial/probation period is 3 months.

Annual Leave in Mongolia

• Employees are generally entitled to 15 days of annual paid leave.
• Additional leave is granted as follows:
  • 6-10 years of service: 3 days
  • 11-15 years: 5 days
  • 16-20 years: 7 days
  • 21-25 years: 9 days
  • 26-31 years: 11 days
  • 32+ years: 14 days

Holidays in Mongolia

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 Mongolia:

Maternity Leave Mongolia

• Female employees are generally entitled to 120 days of maternity leave at 70% of pay.
• Women with children under the age of three are also eligible for baby care leave.

Paternity Leave Mongolia

• There is no paternity leave

Sick Leave in Mongolia

• An employee is entitled to a one-time pro-rated medical leave allowance as follows:
  • Between 3 months  and 5 years, 50% of their monthly salary
  • Between 5 years and 14 years, 55% of their salary
  • More than 14 years, 75% of their salary

Working Hours in Mongolia

• In general, the work week is 40 hours, with five, eight-hour days.

Overtime in Mongolia

• If an employee who has worked overtime or on the weekly rest days has not been compensated with other rest days, he shall be paid one and half times or more of his average remuneration.

Termination of Employment in Mongolia

• A labor contract can be terminated upon initiation by either the employee or the employer.
• Unless otherwise stated in the contract, employees are able to leave their position after 30 days of giving notice.
• Grounds for terminating employment include:
  • Mutual agreement by the parties to do so
  • If the employer or employee has died
  • If the labor contract has expired and both parties have decided not to extend the contract
  • If a legal authority has so demanded
  • If an unjustifiably dismissed employee has been reinstated o their previous position
  • If an employee has been enlisted for army service
  • If a court decision prevents an employee from performing their work duties as a result of a criminal offence

Notice Period in Mongolia

• Employees are entitled to the following notice periods: -
  • 30 days (in case of economic redundancy or incompetence of employees)
  • 45 days (in all other cases)

Severance in Mongolia

• In general employees are entitled to at least one month’s wages on dismissal.

Mongolia Salary and Wages

13th / 14th Month Salary in Mongolia

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Employees may agree on bonuses with their employers or through collective bargaining.

• Citizens of Mongolia, foreign citizens, and stateless persons employed on a contract basis by all types of economic entities, organizations, civil servants, religious or other organizations, and foreign economic entities carrying out activities in Mongolia are subject to the following compulsory social insurance taxes:
  • Currently, the employer’s contribution varies from 12.5% to 14.5%, depending on the industry, while the employee’s contributions are taxed at a rate of 11.5%, capped at 632,500 Mongolian tugrik (MNT) per month.

Immigration Mongolia

• For traveling to Mongolia for the purpose of business, the following three types of visas are available:
  • B visa (business visa)
  • HG visa (work visa)
  • T visa (investor visa)
• All of the above visas should be obtained from a Mongolian embassy or consul before traveling to Mongolia.
• A B visa is a single-entry business visa that is valid for a visit up to 30 days.
• After arrival, it is possible to have a B visa extended once for the same period while the existing B visa is valid.
• A B visa holder cannot legally work while in Mongolia.
• This visa is mainly for visitors attending meetings, conferences and exhibitions and engaging in other similar activities.
• This visa is only available with an invitation letter issued by the Ministry of Foreign Affairs, which is based on a request letter from company operating in Mongolia.
• A T visa can be obtained by foreign-invested companies and representation offices for usually one or two persons (typically, for the senior management of the company).
• T visas are issued to individual foreign investors in Mongolian companies or to foreign executive directors of Mongolian companies.
• T visas are issued as either a six-month or one-year multiple-entry visa, which can be renewed annually.
• Long-term residency permits are also issued to T visa holders.
• After the visitor arrives in Mongolia, he or she must apply for a long-term residency permit.
• HG visas allow foreign visitors to work in Mongolia.
• In addition to an HG visa, a work permit from the Ministry of Labor and a long-term residency permit must be obtained to work in Mongolia.
• Like the B visa, a single-entry HG visa and a temporary work permit must be obtained before traveling to Mongolia.
• On arrival, the HG visa is extended for up to a year and a long-term work permit and residency permit are issued.
• A fully registered Mongolian company must apply for this visa for all of its foreign workers.
• A limited number of HG visas and work permits are issued per company because the Mongolian government publishes annual quotas on the number of foreign workers allowed.
• This quota is issued annually by the government of Mongolia. In general, 10% to 60% of a company’s work force can be foreign, depending on the industry and the total number of employees.
• In summary, only T visa and HG visa holders can work in Mongolia.
• They can work after an eligible Mongolian company receives the required approval from respective state authorities.

Value Added Tax (VAT) in Mongolia

• A VAT at the rate of 10% is imposed on the supply of taxable goods and services in the territory of Mongolia and on imports into Mongolia.
• International postal parcel that was sent under the name of an individual, the value of which does not exceed ten times the minimum monthly wages (for notebook not exceeding 30 times the minimum monthly wages), and that comprises of not more than two similar goods is exempted from VAT and customs duty.

Mandatory Benefits in Mongolia

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

Payroll Accrual in Mongolia

Country Accruals Additional Information

Description

The Mongolian Social Security System provides benefits such as pension, health, disability and unemployment, amongst others. Participation in Social Security is mandatory for all Mongolian nationals, foreigners and stateless persons who are employed within the territory of Mongolia.

Both employers and employees are required to pay social security contributions, at rates which are established by the Social Insurance Law of Mongolia. Employer contribution rates currently vary from 12.5 to 14.5 percent, depending on the industry. Employee contribution rates are currently 11.5 percent (from salary and similar income).

However, employee monthly contributions are currently capped at MNT483,000 per month.

Payroll Accruals Additional Information

Accrued Benefits in  Mongolia

Why use Global Expansion to hire in Mongolia

Establishing a branch office or subsidiary in Mongolia 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 Mongolia labor laws are complex.

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

Global Expansion makes it easy for you to expand into Mongolia. 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 Mongolia 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.