Employer of Record in Kazakhstan

Expanding operations into Kazakhstan in 2025 presents unique opportunities, but it also requires a clear understanding of the country's employment regulations. Foreign companies looking to hire local talent generally have a few primary avenues to consider, each with its own level of administrative complexity and legal responsibility. Navigating the nuances of local labor codes, social contributions, and payroll requirements is crucial for compliant and successful market entry.

Here are the main options for hiring employees in Kazakhstan:

• Establishing a local legal entity, which involves significant setup costs, time, and ongoing administrative burdens to manage payroll, taxes, and HR functions.
• Engaging an Employer of Record (EOR), such as Rivermate, which handles all legal and HR responsibilities for your employees in Kazakhstan, allowing you to focus solely on their day-to-day work.
• Hiring individuals as independent contractors, a flexible option that avoids employer obligations but comes with specific risks regarding worker misclassification if the working relationship resembles employment.

How an EOR Works in Kazakhstan

An Employer of Record service in Kazakhstan acts as the legal employer for your workforce, assuming all the responsibilities and liabilities associated with local employment while you retain full control over daily management and tasks. This approach simplifies global expansion significantly.

• Payroll processing and tax withholding: Ensuring accurate and timely salary payments, along with correct calculation and remittance of all mandatory social contributions and income taxes to Kazakh authorities.
• Compliance with local labor laws: Adhering to all aspects of the Labor Code of the Republic of Kazakhstan, including employment contracts, working hours, leave entitlements, and termination procedures.
• Employee benefits administration: Managing and administering statutory benefits such as social insurance, pension contributions, and any additional benefits provided to employees.
• Onboarding and offboarding processes: Handling all necessary paperwork and procedures for new hires and managing compliant termination processes, if required.
• Management of employment contracts: Drafting and maintaining legally compliant employment contracts in line with Kazakh regulations.

Benefits of Using an EOR in Kazakhstan

For companies seeking to enter the Kazakh market or expand their team without the complexity of establishing a local entity, an EOR offers substantial advantages:

• Rapid market entry: Quickly hire employees in Kazakhstan without the delays and costs associated with setting up a subsidiary.
• Reduced compliance risk: Mitigate the risks of non-compliance with complex Kazakh employment, payroll, and tax laws, as the EOR bears this responsibility.
• No need for a local entity: Operate legally in Kazakhstan without the significant investment and ongoing administrative burden of a registered local business.
• Access to local expertise: Leverage the EOR's in-depth knowledge of Kazakhstan's legal and HR landscape.
• Streamlined HR and payroll: Consolidate HR and payroll functions under a single, experienced provider, freeing up internal resources.

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

Employers in Kazakhstan must fulfill various social security and payroll tax obligations, including paying a 9.5% social tax on payroll funds, withholding 10% mandatory pension contributions (MPC), and contributing 3% to the Mandatory Social Health Insurance (MSHI). Additionally, they deduct 2% from employees' salaries for social health insurance. These contributions fund social security, healthcare, and pension schemes.

For income tax, employers are responsible for withholding a flat 10% individual income tax (IIT) from employee salaries and submitting monthly and annual reports. Employees benefit from deductions such as MPC, voluntary pension contributions, medical expenses, mortgage interest, and a standard deduction based on minimum wages.

Key compliance deadlines include:

Foreign workers' tax treatment depends on residency status (spending 183+ days in Kazakhstan), with potential benefits from tax treaties. Foreign companies must consider permanent establishment rules and VAT registration if applicable.

Kazakhstan's salary landscape in 2025 reflects economic growth and sector-specific variations. Key industries like oil and gas, finance, and technology offer annual salaries ranging from approximately 7 million to 15 million KZT (USD 15,500–33,000), with entry-level roles starting around 2.5 million KZT and senior positions exceeding 12 million KZT. Salary increases are forecasted at 5-8%, influenced by demand for skilled labor, inflation, and government policies.

Employers must comply with a statutory minimum wage of 85,000 KZT/month (USD 185), with mandatory deductions including 10% income tax, 10% pension contributions, and social health insurance. Compensation packages often include bonuses (performance, holiday, annual), allowances (housing, transportation, meals), and private medical insurance. Payments are predominantly made via bank transfer on a monthly cycle, with reporting obligations to tax authorities.

Kazakh labor law mandates a minimum of 24 calendar days of paid annual leave for all employees, which can be taken fully or divided, with at least 14 days in one period. Employers must ensure timely payment, at least three days before leave begins, and unused leave can generally be carried over for up to two years. Public holidays in 2025 include New Year, International Women's Day, Nauryz, Victory Day, and others, with some falling on weekends, leading to substitute days off.

Employees are entitled to sick leave upon providing a medical certificate, with initial payments covered by the employer for up to three days and subsequent payments from the Social Insurance Fund, typically at 60-80% of salary. Maternity leave spans approximately 126 days (70 prenatal, 56 postnatal), fully paid via social insurance, with extensions possible for complicated births. Fathers have unpaid paternity leave, while childcare leave until age three is unpaid but job-protected. Adoption leave mirrors maternity leave conditions.

Kazakhstan's labor laws mandate several employee benefits, including social insurance, pension contributions, health insurance, paid annual leave (minimum 24 days), public holidays, sick leave, maternity leave, and childcare leave. Employers are responsible for contributions to the State Social Insurance Fund (SSIF) and Mandatory Social Health Insurance (MSHI), ensuring social security and healthcare access for employees. Compliance with these statutory benefits is essential, with employers required to maintain accurate records and make timely payments.

Beyond mandatory benefits, many employers enhance packages with supplementary health insurance, additional pension contributions, life and disability insurance, allowances (for transportation, meals, mobile phones), and wellness programs. The healthcare system combines public and private providers, with private insurance increasingly expected by employees. The pension system includes mandatory contributions managed by the UAPF, with voluntary contributions offered by some employers, and retirement ages are gradually rising to 63 for men and 61 for women by 2025.

Employers vary benefits based on company size and industry, with large multinationals offering comprehensive packages, while SMEs tend to provide basic statutory benefits plus select perks. Ensuring legal compliance and offering competitive benefits are crucial for attracting and retaining talent in Kazakhstan.

Employment agreements in Kazakhstan are governed by the Labor Code, requiring contracts to clearly define rights, responsibilities, and employment terms. Employers must include mandatory clauses such as job description, start date, work location, salary, working hours, leave entitlements, social insurance, and termination conditions. Non-compliance can lead to legal penalties, making careful drafting essential.

Kazakhstan recognizes two main contract types: fixed-term (up to five years, renewable or convertible) and indefinite-term (ongoing until termination). Probation periods are limited to three months, extendable to six months for senior roles, with the employer able to terminate during this period with at least three days' notice. Confidentiality and non-compete clauses are common; enforceability depends on reasonableness, with typical non-compete durations ranging from six months to one year.

Employment contract modifications require mutual consent and must be documented. Termination can occur through mutual agreement, expiration, resignation, or employer-initiated reasons such as redundancy or misconduct, with strict procedural compliance including written notices and potential severance payments.

Remote work in Kazakhstan is increasingly adopted by businesses seeking flexibility, with legal and practical considerations evolving. Employers must incorporate clear remote work clauses in employment contracts, address data security, ensure legal compliance, and provide necessary equipment and support. Employees have rights to request remote arrangements, especially for caregiving or health reasons, and employers are responsible for maintaining a safe remote work environment.

Key flexible work options include full-time remote, hybrid, compressed workweeks, flextime, and job sharing. Data protection is critical, requiring policies on security, encryption, secure network access, and privacy compliance. Equipment and expense reimbursement policies should specify provisions for devices, internet, and home office setup, with clear documentation. A strong technology infrastructure—reliable communication tools, cloud services, IT support, and cybersecurity—is essential for effective remote work.

Kazakhstan's labor laws specify clear procedures for employment termination, emphasizing compliance to prevent legal disputes. Notice periods vary by contract type: at least one month for indefinite contracts, a minimum of one week for fixed-term contracts (or as specified), and three days during probation. Severance pay is mandatory in cases such as employer-initiated dismissals, workforce reduction, or health-related dismissals, amounting to at least one month's average salary. Severance is not required if the employee is at fault.

Key grounds for termination include performance issues, violations of regulations, misconduct, or health conditions preventing work. Termination with cause requires documented evidence, while without cause involves procedures like notification, consultation, and offering suitable transfers. Employees are protected against wrongful dismissal, with rights to appeal, potential reinstatement, and compensation, especially for vulnerable groups like pregnant women or employees with disabilities.

Kazakhstan is increasingly adopting flexible work arrangements, with many professionals choosing freelance or independent contractor roles. This trend is influenced by global remote work practices, the desire for autonomy, and businesses' need for specialized skills without the costs of traditional employment. For companies, understanding the legal framework for engaging contractors is essential to avoid misclassification risks and penalties. Key distinctions between employees and contractors in Kazakhstan include control, integration, financial dependence, relationship nature, and contractual terms. Misclassification can lead to liabilities such as back taxes and legal claims.

Independent contractor agreements in Kazakhstan are governed by the Civil Code and should clearly define the scope of work, deliverables, payment terms, and other essential clauses. Intellectual property rights typically belong to the contractor unless explicitly assigned to the client in the contract. Contractors must manage their own taxes and social contributions, often registering as Individual Entrepreneurs (IEs) and choosing simplified tax regimes. They are responsible for their insurance, while client companies generally do not provide coverage. Common industries using contractors include IT, creative services, consulting, education, healthcare, construction, and oil and gas, allowing businesses to access expertise flexibly.

Kazakhstan offers various visas for foreign workers, with the Work Visa (Category M) being the primary option for employment, valid up to 3 years and extendable. Other common visas include the Business Visa (up to 90 days), Investor Visa (up to 5 years), and Family Reunification Visa, which allows family members to join foreign workers under similar validity periods.

The work permit process requires employers to secure a quota from the Ministry of Labor, followed by submitting an application with documents such as a passport, educational credentials, employment contract, medical and criminal clearance, and payment proof. Processing times are typically 15-30 business days for permits and 5-10 days for visas, with fees ranging from $200 to $800. Foreign nationals must meet qualification, health, and security criteria to qualify.

Long-term residents (after five years of legal residence and work) can apply for permanent residency, which grants most rights except voting and public office. Dependents, including spouses and children, can obtain visas by providing relevant documents and proof of support. Both employers and employees must adhere to compliance obligations, such as maintaining valid permits, reporting changes, and adhering to immigration laws, with non-compliance risking fines, deportation, or bans.