Employer of Record in Armenia

Expanding your team into Armenia offers access to a talented workforce, but navigating international employment can present complexities. Companies looking to hire employees in Armenia generally have a few primary options, each with distinct advantages and requirements. Understanding these methods is crucial for a compliant and efficient global expansion strategy.

Here are the common ways to engage talent in Armenia:

• Establishing a local legal entity: This involves setting up a subsidiary or branch office, which requires significant time, investment, and adherence to local corporate and employment laws.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows you to hire employees in Armenia quickly and compliantly without establishing your own entity. The EOR acts as the legal employer, managing all local HR, payroll, and compliance aspects.
• Hiring independent contractors: While offering flexibility, this option requires careful consideration to ensure proper classification. Misclassifying an employee as an independent contractor can lead to significant penalties and legal challenges under Armenian labor laws.

How an EOR Works in Armenia

An Employer of Record simplifies global employment by handling the intricate details of local labor laws on your behalf. When you partner with an EOR in Armenia, they become the legal employer of your chosen talent, while you retain full control over their day-to-day work and responsibilities. The EOR takes on critical administrative and legal duties, including:

• Payroll processing: Ensuring timely and accurate salary payments, including all necessary deductions and contributions.
• Tax compliance: Managing all employer and employee tax obligations according to Armenian regulations.
• Benefits administration: Providing and managing statutory benefits such as social security, health insurance, and paid leave.
• Employment contracts: Drafting and issuing compliant employment contracts that adhere to Armenian labor law.
• HR compliance: Handling termination processes, severance, and other HR-related legal requirements.
• Risk mitigation: Protecting your company from misclassification risks and non-compliance penalties.

Benefits for Companies Hiring in Armenia Without a Local Entity

Choosing an EOR offers several compelling advantages for businesses seeking to hire in Armenia without the commitment of establishing a physical presence. These benefits enable faster market entry and reduced operational burdens:

• Rapid market entry: Hire employees in Armenia in days or weeks, rather than the months it takes to set up a local entity.
• Reduced costs and administrative burden: Avoid the expenses associated with entity registration, managing local payroll, and hiring dedicated HR and legal staff.
• Assured compliance: Leverage the EOR's expertise in Armenian labor laws, tax regulations, and HR best practices, minimizing your legal and financial risks.
• Flexibility and scalability: Easily scale your team up or down in Armenia without the complexities of managing a foreign entity.
• Focus on core business: Delegate administrative and compliance tasks to the EOR, allowing your team to concentrate on strategic initiatives and growth.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Armenia includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Armenia.

Employers in Armenia must contribute 5% of each employee's gross salary to social security and withhold 20% income tax from employee wages, remitting both to the tax authorities monthly. They are also responsible for submitting monthly reports on these contributions and filing annual tax returns, with deadlines enforced to avoid penalties. Employees may benefit from standard deductions and other allowances, provided they maintain proper documentation.

Foreign workers and companies face additional considerations, including residency status affecting taxation scope, double tax treaties to prevent double taxation, and rules around permanent establishments. Expatriates may access specific tax benefits, but professional consultation is recommended for compliance.

Armenia's labor market in 2025 shows significant salary variation across industries and roles, with tech and finance sectors offering the highest compensation. For example, software engineers earn between 300,000 and 800,000 AMD monthly, while project managers can earn up to 900,000 AMD. Minimum wage remains at 75,000 AMD per month, and employers must comply with this regulation, which is subject to updates.

Common compensation practices include annual bonuses (~one month's salary), performance-based incentives, and allowances such as transportation, meals, housing, and education, depending on the industry and company size. Salaries are typically paid monthly via bank transfers, with payroll taxes and social contributions deducted at source.

Key salary data points:

Salary trends indicate rising wages driven by increased demand for IT talent, inflation, and government initiatives, with benefits and perks becoming more prominent to attract skilled workers. The labor market remains dynamic, requiring employers to adapt compensation strategies to stay competitive.

Armenia's labor laws mandate a minimum of 20 working days of annual paid leave, with longer durations for hazardous or irregular work conditions. Employees accrue leave based on service length, must take it within the calendar year, and can carry over unused days under specific agreements. Employers are required to pay the employee's average salary at least three days before leave commencement.

Public holidays are observed throughout the year, with most businesses closed and employees receiving full pay on these days. Key holidays include New Year, Christmas, Labor Day, Independence Day, and others, with substitute days provided if holidays fall on weekends.

Sick leave is available with the first five days paid by the employer, followed by social security benefits. Maternity leave lasts 70 days before and after delivery, paid at 100% salary, with extensions possible for complicated births. Paternity and adoption leaves are also provided, typically with social security compensation. Additional leave types include bereavement, study, sabbatical, marriage, and military leave, each with varying durations and conditions.

Armenia's labor law mandates key employee benefits including paid annual leave (minimum 20 days), public holidays, sick leave, maternity leave, social security contributions, and work injury insurance. Employers must contribute to the state social security fund, ensuring benefits like pensions and unemployment support. Many companies enhance these mandatory benefits with optional offerings such as private health, life, and disability insurance, along with professional development, transportation, meal allowances, wellness programs, and Employee Assistance Programs (EAPs).

Health insurance in Armenia features a public healthcare system providing basic services, supplemented by private insurance plans often sponsored by employers, covering private hospitals and specialist care. The cost varies based on coverage level and provider. The pension system combines mandatory state pensions—funded by employer and employee contributions—and voluntary private pension plans, which some employers support through contributions or matching.

Large companies tend to offer comprehensive packages, including private health, life, disability insurance, and pension plans, especially in competitive sectors like IT. SMEs typically focus on mandatory benefits with limited optional perks. Offering attractive benefits is vital for talent retention and economic growth in Armenia.

Armenia mandates written employment agreements for all employees, detailing key terms such as parties, job description, start date, work location, working hours, compensation, leave entitlements, and termination conditions. There are two main contract types: fixed-term (up to five years, renewable) and indefinite-term, with the latter offering greater job security.

Probationary periods are limited to three months, during which either party can terminate with three days' notice, but employees retain full rights. Confidentiality and non-compete clauses are common; the latter must be reasonable in scope and duration. Contract modifications require written consent from both parties, and termination must follow Armenian Labor Code procedures, including notice and potential severance.

Armenia is increasingly adopting remote work, driven by globalization and technological progress. While there is no specific legislation for remote work, general labor laws apply, requiring clear employment contracts that specify remote work terms, including working hours, responsibilities, and protections under the Labor Code. Employers must ensure data security, provide necessary equipment or reimburse expenses, and maintain communication channels. Remote workers have the same rights as on-site employees, including minimum wage, social security, and safe working conditions.

Flexible work arrangements are expanding, offering options such as telecommuting, flexible hours, and part-time work, which cater to diverse employee needs. Employers should establish clear policies, address data protection, and support remote workers to ensure productivity and compliance. The following table summarizes key aspects:

This evolving landscape emphasizes the importance for employers to develop comprehensive policies to create sustainable remote work programs in Armenia.

Armenian labor law mandates specific procedures for lawful employment termination, emphasizing notice periods, severance pay, and documentation. Employers must follow these rules to prevent legal disputes, including providing adequate notice, documenting reasons, and settling final payments properly.

Notice periods vary by contract type and employee tenure: for indefinite contracts, 1 month for up to 1 year of service, 2 months for 1-5 years, and 3 months for over 5 years. Severance pay is mandatory in redundancy and employer-initiated terminations without cause, calculated based on the employee's average daily wage and length of service:

Termination reasons include misconduct, poor performance, mutual agreement, contract expiration, retirement, or health issues. Employers must adhere to procedural requirements such as providing written notices, maintaining documentation, consulting in redundancy cases, and ensuring final settlements. Employees are protected against unfair or discriminatory dismissals, with legal recourse including reinstatement or compensation if unlawful termination is proven.

Armenia is experiencing a rise in freelancing and independent contracting, driven by businesses seeking specialized skills and individuals valuing autonomy. Understanding the legal framework is crucial for compliance, focusing on correct classification between employees and contractors as governed by the Labor and Civil Codes. Misclassification can result in penalties such as back taxes and social contributions. Key factors distinguishing contractors from employees include control over work, integration into the organization, financial dependence, provision of tools, nature of work, and duration of engagement.

Contracts for independent contractors in Armenia should clearly define scope, deliverables, payment terms, and IP rights to avoid disputes. Contractors are responsible for their own taxes and social contributions, often operating under regimes like Micro-Entrepreneurship or Turnover Tax. Key industries utilizing independent contractors include IT, creative services, consulting, education, and healthcare, benefiting from the flexibility and specialized skills these arrangements offer.

Armenia offers various visa types for foreign workers, primarily including work permits and dependent visas. The work permit process requires securing a job offer, demonstrating a labor market test (showing no local candidates are available), and submitting comprehensive documentation such as passport copies, educational credentials, medical certificates, and employment contracts. The standard processing time is approximately 15 business days, with fees varying based on permit type and duration.

Employers play a key role in sponsorship, monitoring permit validity, and ensuring legal compliance, while employees must maintain valid visas, adhere to permit conditions, and report personal or employment changes. Foreign nationals can transition from work permits to permanent residency through pathways like investment, family reunification, long-term employment (typically after three years), or exceptional contributions. Dependents can join work permit holders via dependent visas, which generally do not grant automatic work rights unless separately authorized.