Employer of Record in Azerbaijan

An Employer of Record (EOR) in Azerbaijan is a company that helps you hire employees in the country without needing to set up a local legal entity. Think of an EOR as your local HR department. They handle all the legal and administrative tasks of employment for you. This includes payroll, taxes, benefits, and making sure you follow Azerbaijan's labor laws. You find the talent and manage their day to day work, while the EOR takes care of the rest. This lets you focus on growing your business. For companies looking to hire in Azerbaijan, an EOR provider like Rivermate can make the process much simpler.

How an Employer of Record (EOR) Works in Azerbaijan

Using an EOR in Azerbaijan is a straightforward process. Here’s a step by step look at how it works:

1. You Find the Candidate You identify the person you want to hire in Azerbaijan.
2. The EOR Hires on Your Behalf The EOR legally hires the employee for you. They create a locally compliant employment contract that covers salary, benefits, and work hours.
3. Onboarding The EOR manages the entire onboarding process. They make sure all the necessary paperwork is completed and registered with the Ministry of Labor and Social Protection.
4. Payroll and Benefits The EOR takes care of all payroll matters. This includes calculating wages, withholding taxes, and making social security contributions. They also manage employee benefits as required by Azerbaijani law.
5. Ongoing HR Support The EOR provides continuous HR support to your employees. They handle any employment related issues, ensuring everything remains compliant with local labor laws.
6. You Manage Your Team While the EOR handles the legal and administrative side, you manage your employee's daily tasks and responsibilities.

Why use an Employer of Record in Azerbaijan

Using an EOR in Azerbaijan offers several advantages, especially for companies new to the market. It simplifies your expansion and lets you tap into the local talent pool quickly and efficiently. By handling the complexities of local labor laws, an EOR reduces risk and administrative burdens.

Here are some key benefits:

• Fast Market Entry You can hire employees and start operations much faster than it would take to set up a legal entity in Azerbaijan.
• Compliance Assurance EORs are experts in local labor laws and regulations. They ensure that your hiring practices are fully compliant, which minimizes legal risks.
• Cost Savings You can avoid the high costs of setting up and maintaining a foreign subsidiary, such as legal fees and administrative overhead.
• Focus on Your Business With the EOR managing HR and administrative tasks, you can concentrate on your core business activities and growth.
• Access to Expertise You gain access to local HR and legal expertise, which is invaluable when navigating an unfamiliar market.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Azerbaijan 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 Azerbaijan.

Hiring in Azerbaijan requires a clear understanding of the local labor laws, which provide strong protections for employees. The main governing document is the Labor Code of Azerbaijan. All employment contracts are now managed digitally through an electronic system, which streamlines the process but also demands careful attention to detail from the outset. Whether you're bringing on full-time employees or engaging contractors, getting the relationship right from day one is key to avoiding complications.

Employment contracts & must-have clauses

In Azerbaijan, you must have a written employment contract. These contracts are registered electronically through the Unified Labour and Employment Subsystem (EMAS). While it’s not legally required for the contract to be in Azerbaijani, it's a common and recommended practice.

You can use two main types of contracts:

• Indefinite Term: This is the standard for permanent, ongoing positions.
• Fixed-Term: This type of contract is for a specific period, not to exceed five years, and is typically used for temporary projects or seasonal work. If a fixed-term contract continues uninterrupted for more than five years, it automatically becomes an indefinite contract.

Your employment contracts should always include:

• Full name and address of both the employee and employer
• Position and place of work
• Start date and, if applicable, the term of the contract
• Working hours and rest periods
• Employee's duties
• Salary and compensation details
• Information on any provided insurance
• Leave entitlements

Probation periods

You can include a probation period in the employment contract to assess a new hire's suitability for the role.

• The maximum probation period is three months.
• For specific roles like heads of enterprises or chief accountants, this can be extended to six months.
• During the probation period, either you or the employee can terminate the contract with just three days' written notice.
• If the employee continues to work after the probation period ends, they are considered to have passed, and the standard contract terms apply.

Working hours & overtime

The standard workweek in Azerbaijan is straightforward.

• A typical workweek is 40 hours, based on an eight-hour day, five days a week.
• In some industries, a six-day workweek is possible, but daily hours are adjusted accordingly.

Overtime is regulated to protect employees.

• Overtime work is generally limited. Employees should not work more than four hours of overtime over two consecutive days.
• For jobs with hazardous conditions, overtime is capped at two hours per day.
• Overtime pay is calculated at double the employee's regular hourly rate if their salary is based on time worked.

Public & regional holidays

Employees in Azerbaijan are entitled to paid time off for public holidays. The official public holidays for 2024 are:

Note: Holiday dates for Ramazan and Gurban Bayram are based on the lunar calendar and may vary.

Hiring contractors in Azerbaijan

You can hire independent contractors for specialized, project-based work. However, you need to be careful to classify them correctly. The key difference between an independent contractor and an employee comes down to the level of control and independence.

An independent contractor typically:

• Works autonomously without set working hours.
• Uses their own tools and equipment.
• Can work for multiple clients.
• Is not entitled to employee benefits like paid leave or social security.

Misclassifying an employee as a contractor to avoid providing benefits or paying certain taxes carries significant risks. If authorities determine a worker is misclassified, you could face penalties, including back taxes and social security contributions.

An Employer of Record (EOR) helps you avoid these risks. When you partner with an EOR, the EOR legally employs the worker on your behalf. This ensures they are classified correctly and receive all legally mandated benefits and protections. The EOR handles all the administrative and legal responsibilities of employment, allowing you to focus on managing your team's day-to-day work without worrying about compliance.

In Azerbaijan, handling compensation and payroll means following clear government rules. You need to understand the local laws for paying your team correctly and on time. This includes everything from how often you pay to the specific taxes you withhold. Getting these details right is key to staying compliant and keeping your employees happy.

Payroll cycles & wage structure

You should pay your employees monthly or twice a month. If you choose to pay twice a month, the time between payments cannot be more than 16 days. While some companies still pay twice a month, paying once a month is becoming more common.

Your employment contracts must be in writing and clearly state the employee's pay. You can pay salaries through a bank transfer.

Overtime & minimums

The standard work week in Azerbaijan is 40 hours, based on an eight-hour workday. Any work done beyond these hours is overtime. You must pay employees double their regular hourly rate for any overtime work.

There are limits to overtime. An employee cannot work more than four hours of overtime over two consecutive days.

As of early 2025, the national minimum wage is 400 AZN per month.

Employer taxes and contributions

As an employer, you are responsible for several contributions. These are calculated based on your employee's gross salary.

Employee taxes and deductions

You must withhold taxes and contributions from your employees' salaries. The rates can depend on the industry and the employee's income.

When you hire in Azerbaijan, you need to understand the local labor laws. This includes providing the right benefits and leave. Getting this wrong can lead to fines and unhappy employees. This guide breaks down what you need to know about benefits and leave in Azerbaijan.

Statutory leave

Azerbaijan's laws provide several types of leave for employees.

• Annual Leave: Employees get a minimum of 21 paid vacation days each year. Some roles, like managers or specialists, receive 30 days.
• Sick Leave: There is no yearly limit for sick leave. The employer pays for the first 14 days. After that, the State Social Protection Fund covers the cost. For absences longer than six months due to the same illness, a medical commission must assess the employee's ability to work.
• Maternity Leave: Female employees get 126 days of paid maternity leave. This is typically split into 70 days before the birth and 56 days after. The State Social Protection Fund pays 100% of the employee's average monthly salary from the previous 12 months.
• Paternity Leave: Fathers can take 14 days of unpaid leave after a child is born.
• Parental Leave: Mothers with two children under 16 get two extra paid leave days. For three or more children under 16, they get five extra days. A woman or single father with a child under 16 can also take 14 days of unpaid leave each year.
• Other Leave: Employees who are studying can take paid leave for exams and training.

Public holidays & regional holidays

Employees in Azerbaijan get paid time off for public holidays.

Typical supplemental benefits

Beyond the required benefits, many companies offer extra perks to attract and keep employees.

How an EOR can help with setting up benefits

Setting up a compliant benefits package in a new country is complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your workers in Azerbaijan. They handle all the legal and HR tasks, including benefits administration. This means you don't have to set up a local entity or become an expert in Azerbaijani labor law.

Here’s how an EOR can help:

• Compliance: An EOR ensures your benefits packages meet all of Azerbaijan's legal requirements.
• Administration: They manage everything from enrolling employees in health plans to tracking leave.
• Local Expertise: EORs understand the local market. They can help you offer competitive benefits that attract top talent.
• Saves Time: You can focus on your business goals while the EOR handles the complexities of benefits management.

Using an EOR makes it faster and easier to hire in Azerbaijan. You can be confident that you are providing your team with the right benefits from day one.

When an employment relationship ends in Azerbaijan, you need to follow a specific process. The country's labor laws protect employees, so you must handle termination and offboarding carefully. This involves providing the correct notice, paying any required severance, and completing the necessary paperwork. On the employee's last day, you must provide their final pay and any other compensation they are owed. You also need to register the termination with the government's electronic information system.

Notice periods

When you terminate an employment contract, you must give your employee advance notice. The length of this notice period depends on how long the employee has worked for your company.

Here are the minimum notice periods you must provide:

Source: GRATA international

If you are downsizing, you need to give two months' notice. During this time, you must give the employee one paid day off each week to look for a new job. An employee who decides to resign must generally give one month's notice.

Severance pay

In certain situations, you are required to pay severance to a terminated employee. This is common in cases of redundancy or liquidation. The amount of severance pay is based on the employee's average monthly salary and their length of service.

If you and the employee agree, you can pay them in place of their notice period. The payment amount is based on their average monthly salary and the required notice period. For example, to replace a nine-week notice period, you would pay two times the average monthly salary.

For terminations due to redundancy, a minimum of three months' severance pay is required. In other cases, the severance amount can vary.

How an Employer of Record handles compliant exits

Navigating employee terminations in a different country can be complex. An Employer of Record (EOR) simplifies this process for you. We make sure that every termination complies with Azerbaijan's labor laws.

Here is how we help:

• Ensure Compliance: We stay up-to-date on local labor laws to make sure every step of the termination process is compliant.
• Manage Documentation: We handle all the necessary paperwork, including issuing a formal termination order and updating the government's electronic system.
• Calculate Final Pay: We calculate and process the employee's final wages, including any unused vacation time and required severance pay.
• Reduce Risk: By managing the process correctly, we help you avoid the risk of wrongful dismissal claims and potential financial penalties.

Using an EOR gives you peace of mind that you are handling employee exits correctly and respectfully.

Navigating the visa and work permit process in Azerbaijan is straightforward when you understand the requirements. If you plan to hire someone to work in the country, they will need a work permit. The employer is responsible for securing this permit on behalf of the employee. This process involves the State Migration Service of Azerbaijan and requires specific documentation from both the company and the individual.

Employment visas & sponsorship realities

An Employer of Record (EOR) can sponsor work permits for foreign employees in Azerbaijan. This is a practical solution if your company does not have a legal entity in the country. The EOR acts as the legal employer and manages the entire immigration process.

Here's what you need to know about EOR sponsorship:

• Labor Market Test: The EOR will handle the labor market test. This involves demonstrating that no qualified local candidates are available for the position.
• Minimum Salary: To obtain a work permit for a foreign employee, there is a required minimum monthly salary.
• Process: The EOR will apply for the work permit and temporary residence permit. The work permit is typically issued for one year and can be renewed annually.

Using an EOR simplifies the process of hiring foreign talent in Azerbaijan. They ensure compliance with local laws and manage all the necessary paperwork.

Business travel compliance

For short-term business trips, a business visa is required. This visa allows for activities like attending meetings, conferences, and trade fairs. It is important to note that a business visa does not permit you to work in Azerbaijan.

Key aspects of business travel compliance include:

• E-Visa: Many nationalities can apply for an e-visa online, which simplifies the application process.
• Invitation Letter: A letter of invitation from the company you are visiting in Azerbaijan is a key requirement for a business visa.
• Registration: If your stay in Azerbaijan will exceed 15 days, you must register with the State Migration Service. Hotels often assist with this process, but it is the traveler's responsibility. Failure to register can result in a fine.

Understanding the distinction between business travel and work is crucial for compliance. If the activities go beyond business meetings and involve productive work, a work permit is necessary.