Employment Law

In Kazakhstan, employment relationships are regulated by the Labor Code of the Republic of Kazakhstan, which aims to protect the rights of employees while ensuring that employers can effectively manage their workforce.

Employment Contracts

All employees must have a written employment contract, which serves as the foundational document outlining essential terms of employment. This contract includes details such as job duties, compensation, working conditions, and the rights of both parties.

Fixed Term

Indefinite

Probation Period

A probation period allows employers to assess a new employee's performance and suitability for the role.

➔ Duration:

The probation period can last up to three months, although it may extend to six months for senior management positions.

➔ Termination Notice:

During the probation period, either party can terminate the contract with just three days' notice, allowing for a more flexible trial phase.

Termination Notice Period

The notice period required for termination of employment varies based on the circumstances:

➔ Employer's Notice Period:

Generally, if an employer intends to terminate an employee, they must provide at least one month’s notice. The specific notice period may vary depending on the reason for dismissal.

➔ Employee Resignation:

Employees are also required to provide a minimum of one month’s notice when resigning from their position.

Severance Pay

Severance pay is an important consideration during termination, offering financial support to employees who lose their jobs:

➔ Dismissal for Cause:

If an employee is dismissed for misconduct or a serious violation, they are not entitled to severance pay.

➔ Unjustified Dismissal:

Employees who are terminated without valid cause may be entitled to severance ranging from one to three months' salary, reflecting the impact of the dismissal.

➔ Redundancy:

In cases of redundancy, where positions are eliminated due to restructuring, employees are entitled to receive severance equal to one month’s average salary.

Holiday Policy

Holidays are an important aspect of employment, ensuring that employees have the opportunity to rest and recharge.

Paid Annual Leave

Employees in Kazakhstan are entitled to 24 calendar days of paid annual leave, which is a legal requirement to promote work-life balance.

➔  For Hazardous Jobs:

Employees engaged in particularly dangerous occupations may receive an increased entitlement of 30 calendar days of leave.

➔  Use of Leave:

It is important for employees to utilize their annual leave within the year, as unused leave may be forfeited unless otherwise agreed upon.

Public Holidays

➔ Kazakhstan observes 13 public holidays, which are designated days off for all employees.

➔ Payment for Work on Holidays:

If employees are required to work on these holidays, they are entitled to double pay, providing an incentive for working on designated days off.

Termination during Leave or Holiday

To protect employees, the law stipulates that employers cannot terminate an employee while they are on annual leave, maternity leave, or during public holidays. This provision safeguards employees’ rights and ensures they are not unduly penalized during their time away from work.

Working Hours

Understanding working hours is essential for both employers and employees to maintain productivity and ensure compliance with labor regulations.

Standard Working Hours

The standard workweek in Kazakhstan consists of 40 hours, typically structured as 8 hours per day over a 5-day week. However, some employers may adopt a 6-day workweek.

Overtime

Overtime regulations are in place to ensure that employees are compensated fairly for additional work beyond their standard hours:

➔ Limitations:

Overtime is capped at 2 hours per day and a total of 12 hours per month. This helps prevent excessive workloads and protects employees' well-being.

➔ Overtime Pay:

Employees receive 1.5 times their regular hourly wage for overtime hours worked, while hours worked on public holidays or weekends must be compensated at double the regular rate.

Taxation

Taxation in Kazakhstan plays a critical role in funding social services and public infrastructure.

Individual Income Tax

Kazakhstan employs a flat individual income tax rate of 10% for residents, which simplifies tax calculations and ensures transparency.

➔  Non-Residents:

Non-residents working in Kazakhstan are taxed at a higher rate of 20% for income earned within the country.

Social Contributions

Employers are required to contribute to various social funds on behalf of their employees to support social welfare programs:

➔ Pension Fund:

Employers contribute 10% of the gross salary to the pension fund, ensuring employees have financial support upon retirement.

➔ Social Security Contributions:

A 3.5% contribution is made towards social security, also capped.

➔ Health Insurance:

Employers contribute 2% of salary towards health insurance, which is crucial for providing employees with access to healthcare services.

Dismissal and Severance

Dismissal procedures are closely regulated to protect employee rights while allowing employers to manage their workforce effectively.

Grounds for Dismissal

Valid grounds for dismissal include:

➔ Employee Misconduct or Underperformance:

Employers have the right to terminate employees who fail to meet performance standards or engage in unacceptable behavior.

➔ Redundancy:

Positions may be eliminated for economic or organizational reasons.

➔ Organizational Restructuring:

Changes in the company's structure may necessitate employee layoffs.

Severance Pay

In cases of redundancy or mutual termination, employees are entitled to receive one month of severance pay, providing them with financial support during their transition to new employment. In instances of wrongful termination, employees may seek additional compensation.

Insurance

Kazakhstan has established a robust insurance framework to protect employees in various situations.

Health Insurance

Kazakhstan's Mandatory Social Health Insurance (MSHI) system, introduced in 2020, ensures that all employees have access to essential healthcare services.

➔ Employer and Employee Contributions:

Both employers and employees contribute 2% of the employee's salary to the health insurance fund, enabling coverage for medical services and treatments.

➔ Additional Coverage:

Employees may opt for private health insurance for additional services not covered by the MSHI.

Pension

The Unified Accumulated Pension Fund requires employers to contribute 10% of each employee’s salary to secure their financial future upon retirement.

Social Insurance

Kazakhstan’s state social insurance system offers benefits to employees, covering:

➔ Sickness Benefits:

Financial support during periods of illness.

➔ Maternity and Parental Leave:

Assistance for new parents during maternity and paternity leave.

➔ Disability and Unemployment Benefits:

Financial aid for employees who are disabled or unemployed.

Salary and Benefits

Understanding salary and benefits is crucial for attracting and retaining talent in the competitive labor market.

Minimum Wage

As of 2024, the minimum monthly wage in Kazakhstan is 70,000 KZT (approximately USD 150), ensuring a basic standard of living for employees.

Additional Benefits

Employers often provide various additional benefits to enhance their compensation packages:

➔ Bonuses:

Performance-based bonuses are common, incentivizing employees to achieve targets.

➔ Housing Allowance:

Certain sectors, particularly those like oil and gas, may offer housing allowances or employer-provided accommodations.

➔ Transportation Benefits:

Companies may provide transportation support, especially in remote areas where commuting may be challenging.