Kazakhstan

Overview

Kazakhstan, a post-Soviet country, has the ninth largest landmass among all the countries in the world. Its GDP of $461 billion is primarily generated by the oil and gas industry. Besides, the country also has vast reserves of other minerals. Kazakhstan contributes 35 percent to global uranium production. The country’s combined imports and exports equal 53 percent of its GDP, thus signifying the importance of foreign trade to its economy. Kazakhstan offers a lot of tax incentives to foreign investors with an aim to diversify its economy.

Currency: Kazakhstani Tenge

Principal language: Kazakh

Government: Presidential Republic

Capital City: Astana

Major Cities: Almaty, Shymkent, Karagandy, Taraz

Employment Contracts

The labor code stipulates a written formal employment agreement between the employee and the employer. Employment agreements may be for a fixed-term (but not less than a year) or indefinite, for working on a project, for seasonal work or for replacing a temporarily unavailable employee. The usual period of contract is one year. When an agreement expires, the parties can extend it for an indefinite term or a fixed duration of at least one year or longer.

Extension of an employment agreement that comes to an end in less than one year can be extended only twice. On further continuation, the agreement is treated as binding for an unfixed term. Employees can be put under a probationary period of three months, which can be extended to six months for some employees such as chief accountants and their deputies, company executives and their deputies, and managers.

Work/Time Regulations

In Kazakhstan a standard workweek is for 40 hours, usually comprising of five eight-hour working days, although the workweek may entail six working days. Sunday is the usual day off, but another day can be substituted in its place when business circumstances necessitate it.

Overtime
The number of additional hours above 40 in a week are considered overtime and their remuneration needs to be 50 percent extra. Employees who work on a national holiday get double pay. The Labor Code restricts overtime to two hours a day (one hour for hazardous jobs), 12 hours a week and 120 hours annually.

Overtime work is permitted only with a written consent of the employee. Pregnant women, children aged less than 18, and people with disabilities cannot be made to work overtime. Night work, which is as any work performed between 10 p.m. and 6 am, is remunerated at 150 percent of the regular rate.

Leave

Employers need to give fully paid leaves to employees on public holidays. Employees working on these holidays are entitled to double pay for their work.

Holidays
The public holidays in Kazakhstan are:

  • Jan. 1 and 2: New Year
  • Jan. 7: Orthodox Christmas
  • March 8: International Women's Day
  • Nauryz
  • May 1: Unity Day
  • May 7: Defender's Day
  • May 9: Victory Day
  • July 6: Astana Day
  • Aug. 30: Constitution Day
  • Kurban-Ait
  • Dec. 1: First President's Day
  • Dec. 16 and 17: Independence Day

Annual Leave
Employers need to give 24 days of paid annual vacation to employees for a year. Collective bargaining agreements may allow for more vacation time with full pay. Employers need to provide employees who work in unsafe conditions and employees with disabilities an extra 15 days of paid vacation every year.

Maternity Leave
Female employees get paid maternity leave of 70 calendar days before and 56 calendar days after childbirth. In cases of birth-related complications or the birth of more than one children, the maternity leave is stretched to 70 calendar days post childbirth. In addition, the mother is allowed to take unpaid childcare leave until the child is three years of age. The employer pays for maternity leave in Kazakhstan.

Paternity Leave
Working fathers are entitled to paid leave of 56 calendar days after childbirth or a newborn’s adoption and unpaid childcare leave until the child reaches age 3.

Sick Leave
Employers are responsible for payment of employee sick benefits. Benefits are based on the employee's average monthly wages.

Other Leave

  • Five days of personal leave after death of a close relative
  • Educational leave for taking exams or other educational task based on employment contract, training contract or a collective bargaining agreement

Benefits

Employers need to make an 11 percent contribution to the pension fund from their remuneration. Employers must also pay 5 percent of total workers’ remuneration to disability and survivor's insurance funds.

Pension Fund Contributions
Employers are required to withhold 10% of their employees’ gross salary and remit it to the pension fund every month. Employees with monthly salaries more than 75 times the MMS (Minimum monthly Salary) are not required to make mandatory pension fund contributions.

Social Insurance Contributions
Employers are required to contribute 5% of salaries of employees who are Kazakh citizens, foreigners, and stateless individuals with a residence permit. Employees with monthly salaries more than 10 times the MMS are not required to contribute toward social insurance. If the insured’s income is less than the MMS, then the MMS is used as the monthly base for contributions toward social insurance.

Social Medical Insurance
Employers are required to make monthly contributions toward the Social Medical Insurance Fund at the following rate:

  • From 1 January 2017: 2%
  • From 1 January 2018: 3%
  • From 1 January 2019: 4%
  • From 1 January 2020: 5%

Old-age Pension
Under the mandatory individual retirement scheme, the age of retirement is 63 for men and 58 for women. An employee needs to make 35 years of contributions to be eligible for a full pension. Benefits are based on employee contributions plus accrued interest but cannot be less than 17,490 Tenge per month.

Employees with a minimum six months' service prior to Jan. 1, 1998, are eligible for “solidarity pension’’ funded by employer. Employer contributions for this are 11 percent of payroll, and eligibility begins at age 63 for men with a minimum 25 years of contributions, and age 58 for women with a minimum 20 years of contributions.

Work-related Injury
Benefit for any damage to the health of an employee is covered by Kazakh civil law. Each employee gets benefits in case of occupational injuries or death which is reimbursed by either the employer or an insurance company.

The employee receives medical and care benefits as well as compensatory remuneration. In the event of death, the employee’s dependents are entitled to survivor benefits.

Unemployment Insurance
Employed persons, including foreign workers and even persons without citizenship who have worked and lived permanently in Kazakhstan, become eligible for unemployment insurance benefits provided the program has covered them for at least six months. The monthly benefit is determined on the basis of average monthly insured earnings during the last 24 months, the covered period rate, and the income replacement rate.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Kazakhstan and hire their employees without having to establish a branch office or subsidiary in Kazakhstan.

  • Your candidate is hired via our Kazakhstan PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Kazakhstan laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.