Global PEO Services (GPS) helps companies hire employees in Kazakhstan without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Kazakhstan, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Kazakhstan labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Kazakhstan. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Kazakhstan - Country Overview
Kazakhstan, a post-Soviet country, has the 9th largest landmass among all the countries in the world. The oil and gas is the predominant industry. Besides, the country also has vast reserves of other minerals. Kazakhstan contributes 35% of the total uranium production in the world. Also, imports and exports contribute significantly to the growth of GDP. The GDP growth projections for 2019 and 2020 are 3.3% and 2.8% respectively. Kazakhstan offers attractive tax incentives to foreign investors with an aim to diversify its economy.
Almaty, Shymkent, Karagandy, Taraz
Employment Contracts in Kazakhstan
The labor code stipulates a formal written 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 a 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 3 months, which can be extended to 6 months for some employees such as chief accountants, company executives, and managers.
Working Hours in Kazakhstan
In Kazakhstan a standard workweek is for 40 hours, usually comprising 5 working days with 8 hours each. Though the work schedule may also extend to 6 working days. Sunday is the usual off day, but another day can be substituted in its place when business circumstances necessitate it.
Any additional work time more than 40 hours in a week is 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 2 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.
Employee Leave in Kazakhstan
The public holidays in Kazakhstan are:
- Jan. 1 and 2: New Year
- Jan. 7: Orthodox Christmas
- March 8: International Women’s Day
- March 22 – 23: Oriental New Year
- May 1: Unity Day
- May 7: Defender’s Day
- May 9: Victory Day
- July 6: Astana Day
- Aug. 30: Constitution Day
- Dec. 1: First President’s Day
- Dec. 16 and 17: Independence Day
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.
Employers need to give 24 days of paid annual vacation to employees in 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.
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 1 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 3 years of age. The employer pays for maternity leave in Kazakhstan.
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.
Employers are responsible for payment of employee sick benefits. Benefits are based on the employee’s average monthly wages.
- 5 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.
Employee Benefits in Kazakhstan
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 2019: 4%
- From 1 January 2020: 5%
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 6 months’ service prior to Jan. 1, 1998, are eligible for “solidarity pension” funded by the 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.
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.
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 6 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.