Hire Employees in Mongolia

Two routes exist. Registering a Mongolian entity gives you direct employment and permit sponsorship, followed by enrolment with the tax authority and the Social Insurance General Office.

An Employer of Record removes that setup. The EOR is the legal employer, runs payroll across all five social insurance branches and withholds income tax, while day-to-day direction stays with you.

Contractor engagements deserve care. Compulsory insurance attaches not only to employment contracts but also to work performance contracts and hire agreements, so the label on the document does not by itself determine the obligation — see the risk check further down this page.

Total social insurance is 24%, split roughly 12.3% to 14.2% employer and 11.5% employee. The rate was legislated to rise to 26% from January 2021, but strong public opposition meant the planned two-point increase was never applied.

A reform package adopted in July 2026 moved in the employer’s favour on two fronts. The industrial accident and occupational disease branch was cut from 0.5%, 1.5% and 2.5% to 0.3%, 1.2% and 2.2% according to occupational health and safety requirements and workplace risk. And for the first time a ceiling was placed on the employer’s contributory payroll, which had been uncapped while the employee side was already limited.

The reform also exempts older people, students and young people from contributions where they work, and shifts the first five days of incapacity benefit — currently an employer cost — entirely onto the benefit insurance fund.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Mongolian entity somewhere between 12 and 18 employees. Model both — see EOR vs Entity for the framework.

Contributions run across five branches — pension, benefit, health, unemployment and industrial accident and occupational disease. The employee pays 11.5% in total; health insurance is 4% overall, split 2% from each side.

The employer rate varies by workplace risk. The industrial accident branch is charged at one of three rates depending on occupational health and safety requirements and the risk conditions of the workplace. Since the July 2026 amendments those rates are 0.3%, 1.2% and 2.2%, reduced from 0.5%, 1.5% and 2.5%. That is why the same salary costs differently in an office and on a mine site.

The employee contribution ceiling is ten times the minimum wage — MNT 7,920,000 a month, giving a maximum employee contribution of MNT 910,800. Above that, no further contribution is deducted.

The employer ceiling is new and phases in gradually. The amendments set the employer’s contributory wage fund at twelve times the minimum wage in 2028, eleven times in 2029 and ten times from 2030 — aligning it with the employee limit over time. Around 96,500 insured persons currently earn above ten times the minimum wage, which is what prompted the change. Confirm with the Social Insurance General Office whether any ceiling applies before 2028.

Self-employed and voluntarily insured persons pay 13.5% — pension 11.5%, benefit 1.0% and industrial accident 1.0% — calculated on declared income with a floor at the minimum wage, giving MNT 106,920 a month at the floor, and a ceiling of seven times the minimum wage.

Gross monthly salaries in tögrög. The average nominal monthly salary was MNT 2.9 million in the first quarter of 2026 and the median MNT 2.5 million.

Benchmarks below are gross monthly salaries in tögrög. Add 12.3% to 14.2% for employer contributions, with the rate depending on the occupational risk classification of the workplace.

Payroll is monthly. Social insurance is deducted from gross first, and income tax is then calculated on the remainder — so the contribution reduces the taxable base.

Personal income tax is no longer a flat 10%. From 2023 the scale became progressive, running from 10% up to 20% for higher earners. Payroll still applying a single 10% rate will under-withhold from senior staff.

A change to the lower bands has been proposed but not enacted. The draft amendments to the social insurance package would remove income tax entirely on salary up to MNT 792,000 and apply 1% between MNT 792,000 and MNT 2,000,000. Treat that as a proposal until confirmed.

Per diem is treated inconsistently between the two systems, which catches payroll out. Business trip daily allowances are not taxable income, but part of the amount does count toward the social insurance contribution base. The two calculations therefore diverge on the same payment.

Night work between 22:00 and 06:00 attracts a 40% premium on the ordinary hourly rate. Bonuses and awards are subject to income tax, and a thirteenth-month payment can push an employee into the next tax band or up against the contribution ceiling in the month it is paid.

Late contribution payment attracts 0.3% a day, capped at 50% of the amount due.

The scale below applies after the employee’s social insurance contribution has been deducted. A nil band up to MNT 792,000 and a 1% band to MNT 2,000,000 have been proposed but are not yet in force.

The Labour Code governs employment, with contributions under the General Law on Social Insurance as amended in July 2026.

The minimum wage has been MNT 792,000 a month since 1 April 2025, set by resolution 3 of 2024 of the National Tripartite Committee on Labour and Social Consensus. It is confirmed in the Health Insurance Fund’s 2026 budget documentation.

The minimum wage does more than set a pay floor: it anchors the contribution ceiling at ten times its value, the voluntary insurance floor, and several state-funded contribution subsidies.

A large share of the workforce sits at or below the floor. Of 850,800 people paying social insurance in the first quarter of 2026, 12.5% earned at or below MNT 792,000 a month, while 34.1% earned between MNT 1.5 million and MNT 3 million.

Written contracts are the norm and should record pay, hours, leave, notice and termination terms.

Establish the workplace risk classification before quoting. It determines whether the industrial accident branch is charged at 0.3%, 1.2% or 2.2%, which is a two-point spread on total employer cost.

Register the employee with the Social Insurance General Office and the tax authority before the first payroll run.

The standard week is 40 hours. Night work between 22:00 and 06:00 attracts a 40% premium on the ordinary hourly rate.

Overtime and public holiday work attract premiums under the Labour Code.

Because employer contributions vary with occupational risk rather than salary alone, shift patterns and site conditions affect cost through the risk classification as well as through premium pay.

Mongolia observes national and Buddhist public holidays, with multi-day breaks for Tsagaan Sar in spring and Naadam in July. Lunar dates shift annually and are confirmed closer to the time.

Mongolia observes public holidays across national and Buddhist observances, with multi-day breaks for Tsagaan Sar in spring and Naadam in July. Lunar dates shift annually. Dates and any substitution rules are set out below.

Social insurance covers pensions, benefits, health, unemployment, and industrial accident and occupational disease.

The July 2026 amendments shift the first five days of incapacity benefit from the employer to the benefit insurance fund, removing a direct employer cost that previously fell outside the contribution rate.

The same package exempts older people, students and young people from contributions where they take up work, which is intended to support employment in those groups.

Mongolia is also building a legal framework for private supplementary pension funds. Around 135,000 people currently hold accumulations of roughly MNT 80 billion in insurance and pension savings vehicles, with employer tax relief among the incentives under discussion.

Termination follows the Labour Code, with notice and severance requirements set by statute.

Final pay including accrued leave is due on separation and must be reflected in the social insurance report for the period.

Because the contribution floor is tied to the minimum wage, a part-month final payroll still attracts contributions on the statutory floor where the pro-rated figure falls below it.

Late payment of any resulting contribution attracts 0.3% a day, capped at 50% of the sum due.

Foreign nationals need a work permit and residence permit, both employer-sponsored.

Expatriate demand is concentrated in mining, infrastructure and specialist services, where salaries sit well above the national average of MNT 2.9 million a month.

Foreign employees contribute on the same basis as nationals, within the same floor and ceiling.

Using the pre-July 2026 industrial accident rates overstates cost. They fell from 0.5%, 1.5% and 2.5% to 0.3%, 1.2% and 2.2%. Most published guidance still carries the old figures.

Applying a flat 10% income tax under-withholds from senior staff. The scale became progressive in 2023 and now runs to 20%.

Per diem sits in one base but not the other. Business trip allowances are outside taxable income but partly inside the social insurance base, so the two calculations diverge on the same payment.

Note also that the employer contribution ceiling is new and phases in from 2028 at twelve times the minimum wage, tightening to ten times by 2030; that compulsory insurance attaches to work performance and hire agreements as well as employment contracts; and that the total rate has stayed at 24% despite legislation once setting it at 26%.

Work backwards from the start date. An EOR hire takes two to four weeks; entity registration and social insurance enrolment runs one to three months.

Establish the workplace risk classification first — it sets the industrial accident rate and moves total employer cost by nearly two points.

Load the post-July 2026 rates, apply the progressive income tax scale rather than a flat 10%, check the salary against the MNT 792,000 floor, and confirm with the Social Insurance General Office whether any employer contribution ceiling applies before the 2028 phase-in.