Quick facts

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Azerbaijan, located at the crossroads of Eastern Europe and Western Asia, has a growing economy primarily driven by its oil and gas industry. The country has invested heavily in infrastructure and modernization, and its employment laws reflect a blend of traditional and modern practices. The labor market is highly regulated, offering strong protections for employees.

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Employment Contracts

Employment contracts in Azerbaijan are signed digitally through the Unified Labour and Employment Subsystem (EMAS) using electronic signatures. Contracts can be either indefinite or fixed-term, with the common practice being temporary contracts of up to one year. If a fixed-term contract is not terminated on time, it is automatically extended. After five years, a temporary contract converts into an indefinite one.

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Probation Period

The maximum probation period in Azerbaijan is 3 months, though for contracts lasting less than 6 months, the probation period cannot exceed 2 weeks. There are no probation periods for certain categories of workers.

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Working Hours

The standard workweek is 40 hours, with 8 hours per day across five days. Employees are entitled to weekends off, and overtime pay applies as per the labor laws.

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Vacation Days

Employees are entitled to a minimum of 21 calendar days of paid annual leave. Managers receive 30 calendar days. Additionally, employees with longer work experience are entitled to extra vacation:

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• 2 days for 5-10 years of service.
• 4 days for 10-15 years.
• 6 days for more than 15 years.

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Unused vacation is compensated upon termination, and vacation pay must be provided no later than 3 days before the start of the leave.

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Sick Leave

Employees who are unable to work due to illness must inform their employer and provide a medical certificate to qualify for sick leave compensation. Sick pay depends on the employee's work experience:

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• 60% of salary for employees with less than 8 years of experience.
• 80% for 8-12 years.
• 100% for over 12 years.

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The employer covers sick pay for the first 14 days, after which social insurance takes over. Sick leave is available for up to 1 year, after which, if a disability is confirmed, the employment contract can be terminated.

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Wages and Salary Payment

Wages can be paid once or twice a month depending on company policy. Salaries must be set in Azerbaijani manats (AZN) under the EMAS system, with possible exceptions for foreign currencies expected in the future. The minimum wage is 345 AZN (approximately $200 USD).

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Public Holidays

Azerbaijan recognizes 19 public holidays, including:

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• January 1-2: New Year
• March 20-24: Novruz Holiday
• May 9: Victory Day over Fascism
• May 28: Independence Day
• December 31: Solidarity Day of World Azerbaijanis

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Employer Taxes

Employers in Azerbaijan are responsible for several social insurance contributions:

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• State Social Insurance: 22% of salary up to 200 AZN, and 15% for amounts above.
• Unemployment Insurance: 0.5% of salary.
• Compulsory Health Insurance: 2% of salary up to 8,000 AZN, and 0.5% for amounts above.

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Employee Taxes

Employees pay the following:

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• Personal Income Tax: 14% on income exceeding 8,000 AZN.
• State Social Insurance: 3% on salary up to 200 AZN, and 10% for amounts above.
• Compulsory Health Insurance: 2% on salary up to 8,000 AZN, and 0.5% for amounts above.
• Unemployment Insurance: 0.5% of salary.

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Notice Period

During the probation period, the notice period is 3 days for both the employer and employee. After the probation period, the standard notice period for an employee resignation is 1 month, although in specific cases (retirement, relocation, harassment), the employee can resign with just 1 day notice. Employers must provide notice for various termination reasons, including redundancy and misconduct, with specific legal requirements depending on the situation.

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Termination and Severance Pay

• During probation: No severance pay is required.
• Mutual agreement: Employers and employees can agree on termination terms, including severance pay, depending on negotiations.
• Expiration of a fixed-term contract: No severance is required unless otherwise agreed.
• Redundancy: Employers must pay severance, typically equal to one month’s salary per year of service.
• Other cases: Severance may apply for terminations due to unjust dismissal, disability, retirement, or relocation.