Employer of Record in Mongolia

Mongolia, located in East-Central Asia, occupies a unique geographic corridor, linking China and Russia. It holds major global importance due to its vast mineral wealth. Both China and Russia rely heavily on Mongolia for these minerals and the export of its raw cashmere wool.

Foreign investors are attracted to Mongolia because of its mineral reserves, proximity to Asia's massive consumer market, and its diversification into a Technology and Innovation Hub in East-Central Asia.

Sixty percent of the Mongolian population is under 35. In recent years, Mongolia has implemented several growth strategies that have increased employment and shifted the economy toward upper-middle-income status. Labour laws have also been improved to provide workers with stronger protections and improved statutory benefits.

Mongolia is largely foreign-investment-friendly and encourages international companies to hire locally, but the process can be lengthy without the support of local HR and legal experts. An alternative exists that doesn’t require you to register a legal entity in Mongolia.

A Mongolia Employer of Record, like Rivermate, becomes the legal employer for your team, handling payroll, taxes, benefits and compliance. This allows you to enter the labor market quickly and hire individual workers or teams.

How an Employer of Record (EOR) Works in Mongolia

Rivermate uses a simple yet effective process in Mongolia to hire your employees and handles compliance on your behalf. Here is how it works:

1. You Find the Talent. You recruit and select the best candidate for your team in Mongolia.
2. The EOR Hires Them. The EOR legally hires the employee on your behalf. They handle the employment contract, ensuring it complies with Mongolia's labor laws.
3. Onboarding Begins. The EOR manages the entire onboarding process. This includes any necessary registrations with local authorities.
4. You Manage Daily Work. You manage your employee's daily tasks and responsibilities, just like any other member of your team.
5. The EOR Handles HR. The EOR takes care of payroll, personal income tax, benefits, and ensures everything stays compliant with local regulations.

Why use an Employer of Record in Mongolia

Foreign companies gain several advantages from using an EOR in Mongolia. The main benefits are:

• Stay Compliant. An EOR ensures that employment agreements, payroll, benefits administration, and termination processes comply with local laws.
• Save Time and Money. Setting up a local entity can be a long and expensive process. An EOR allows you to hire employees quickly without this step.
• Manage Benefits Easily. An EOR administers employee benefits. This includes healthcare, pension enrollment, and statutory leave.
• Simplify Global Payroll and Taxes. The EOR ensures accurate payroll processing and the calculation of taxable employment income. Employers in Mongolia contribute around 12.5% of gross salary in payroll taxes for social security and healthcare.
• Sponsor Work Visas. An EOR can legally sponsor work visas for your employees if you do not have your own entity in the country.

Mongolia has a young, well-educated population that is largely bilingual, speaking Mongolian and a foreign language (Russian, English, Korean or Japanese). While English proficiency is still relatively low, it is increasing, especially in the capital city of Ulaanbaatar.

The Mongolian labor market can be challenging because young skilled professionals leave to find work in Russia or China. Despite this, foreign employers often hire for roles in mining, engineering, IT, finance, education and project management in Mongolia.

A major factor in successful hiring in Mongolia is starting the hiring process early. Top talent in the major industries often receive more than one employment offer. This means the process can take longer than expected.

Foreign companies must comply with the same labor laws as local employers. Working conditions, hours of work, the statutory minimum wage and benefits are regulated by the Revised Labor Law of Mongolia.

Employment contracts & must-have clauses

Employment contracts in Mongolia must follow the standard template approved by the Ministry of Family, Labor, and Social Protection. The agreement must be written in Mongolian and translated into a foreign language upon the employee's request.

Make sure your employment contract includes these essential clauses:

• Parties to the agreement: Full legal names of you and your employee.
• Job title and description: A clear explanation of the employee's role and responsibilities.
• Workplace: Where the employee will be working.
• Start date: The first day of employment.
• Working hours: The daily and weekly work schedule.
• Salary and payment: How much the employee will be paid and how often.
• Leave entitlements: Details on annual leave, sick leave, and other time off.
• Social insurance: Information on contributions to social insurance funds.

Probation periods

In Mongolia, you can include a probationary period in the employment contract to see if an employee is a good fit for the job.

• The maximum probation period is typically three months.
• For jobs that require special skills, it can sometimes be extended to six months.
• During probation, employees have the same rights as regular employees, including salary and social insurance.

Working hours & overtime

The standard workweek in Mongolia is 40 hours, usually eight hours a day, five days a week.

• The maximum number of work hours in a week, including overtime, is 56.
• Overtime pay is generally 1.5 times the employee's regular pay.
• If an employee works on a public holiday, they should be paid double their normal rate.

Public & regional holidays

Your employees in Mongolia are entitled to paid time off for public holidays. It's a good idea to have a clear policy on this.

Here is a list of public holidays in Mongolia:

Date	Holiday
January 1	New Year's Day
February 10–12	Lunar New Year (Tsagaan Sar)
March 8	International Women's Day
May 23	Vesak Day
June 1	Children's Day
July 11–15	Naadam Festival
November 2	Chinggis Khaan's Birthday
November 26	Republic Day
December 29	Independence Day

Note: Some holiday dates are based on the lunar calendar and may change each year.

Hiring contractors in Mongolia

The mining and engineering sector in Mongolia relies most on contractors, with IT contractors increasing rapidly. Major global firms hire independent consultants as technical consultants, project managers, site auditors, UX/UI designers and NGO workers.

Short-term contracting remains viable in Mongolia, but long-term contracts are a greater compliance risk. Following sweeping labor reforms, authorities have cracked down on misclassification. This is when a worker is a contractor in name only but is, by definition, an employee.

Under the updated framework, Mongolia has funneled non-standard work, including remote employees, freelancers and ‘at-home’ workers, into structured employment agreements rather than civil service agreements.

True independent contractors are self-employed individuals and must operate under the B2B framework governed by the Civil Code of Mongolia.

Using EOR services can help you avoid a misclassification risk. An EOR acts as the legal employer for your workers in Mongolia, taking care of compliance, payroll, and HR. This lets you work with talent in Mongolia without having to set up a local entity or worry about misclassification.

Mongolia is considered a low-employment-cost hiring market compared with neighboring countries like China and Russia. Total employment costs are between 112% and 114% of gross salary, with employer contributions between 12.5% and 14.5%. China has the most complex employer contribution system and can reach up to 40% of gross salary, with Russia at 30%.

Payroll cycles & wage structure

In Mongolia, the payroll cycle is typically monthly. You will usually pay your foreign employee once a month, often near the end of the month. Payments are almost always made by bank transfer.

While performance or holiday bonuses are common, there is no law that requires you to pay a 13th month salary.

Overtime & minimums

A standard workweek in Mongolia is 40 hours, based on an 8-hour day.

• Overtime Pay: If an employee works beyond the standard 40 hours, you must pay them 150% of their regular hourly wage.
• Holiday Pay: For work done on a public holiday, the pay rate is 200% of the basic salary.
• Overtime Limit: Overtime is generally limited to a maximum of 4 hours per day.
• Minimum Wage: The national minimum wage is 792,000 Mongolian Tugriks (MNT) per month.

Employer taxes and contributions

As an employer, you are responsible for contributing to social security on behalf of your employees. These contributions are a percentage of the employee's salary.

Contribution	Rate
Pension Insurance	8.5%
Benefit Insurance	1.0%
Health Insurance	2.0%
Unemployment Insurance	0.5%
Industrial Accident Insurance	0.5% - 2.5% (varies by industry)
Total	12.5% - 14.5%

Employee taxes and deductions

You must also deduct taxes and social security contributions from your employees' wages.

Social Security Deductions

Contribution	Rate
Pension Insurance	8.5%
Benefit Insurance	1.0%
Health Insurance	2.0%
Unemployment Insurance	0.2%
Total	11.7%

Income Tax

Employee income tax is progressive.

Annual Income Bracket (MNT)	Tax Rate
Up to 120 million	10%
120 million – 180 million	15%
Above 180 million	20%

In Mongolia, providing the right benefits and leave is essential for attracting and keeping good employees. The country's labor laws set out specific minimums that you must provide. These rules cover everything from annual vacation to social insurance. Understanding these requirements is the first step to building a compliant and competitive benefits package for your team.

Statutory leave

Mongolian law provides several types of leave for employees.

• Annual Leave All employees get a baseline of 15 working days of paid annual leave. Employees under 18 receive 20 days. This entitlement increases with an employee's years of service.
  • 6-10 years: 3 extra days
  • 11-15 years: 5 extra days
  • 16-20 years: 7 extra days
  • 21-25 years: 9 extra days
  • 25-31 years: 11 extra days
  • 32+ years: 14 extra days
• Maternity Leave Female employees are entitled to 120 days of paid maternity leave, typically split into 60 days before birth and 60 days after. The social insurance fund pays this leave if the employee has made sufficient contributions.
• Paternity Leave New fathers receive at least 10 working days of paid leave.
• Parental Leave Mothers and single fathers can take childcare leave until their child turns three. The employer must continue to pay social insurance contributions on the employee's behalf during this time.
• Sick Leave Employees can take paid sick leave if they provide a valid medical certificate. The social insurance fund covers the payment for a specific period.

Public holidays & regional holidays

Employees are entitled to paid days off for public holidays. If an employee needs to work on a public holiday, you must pay them at a higher rate, typically double their usual pay, or offer them another day off in return.

Here are the public holidays for 2025.

Date	Holiday
January 1	New Year's Day
March 1-3	Tsagaan Sar (Lunar New Year)
March 8	International Women's Day
June 1	Children's Day
June 4	Buddha's Birthday
July 11-15	Naadam Festival
November 21	Chinggis Khaan's Birthday
November 26	Republic Day
December 29	Independence Day

Typical supplemental benefits

While the law requires certain benefits, many companies offer more to stay competitive. Here’s a look at what is required by law versus what you might offer as an additional perk.

Statutory Benefits (Required by Law)	Non-Statutory Benefits (Common but Not Required)
Social Insurance Contributions (pension, health, unemployment)	Private health insurance
Paid Annual Leave	Flexible working hours
Paid Sick Leave	Additional paid time off
Paid Maternity, Paternity, and Parental Leave	Professional development and training budgets
Overtime Pay	Meal allowances or subsidized lunches
Severance Pay	Transportation stipends

How an EOR can help with setting up benefits

Setting up a benefits plan in a new country can be complicated. You need to understand local laws, cultural expectations, and market standards. This is where an Employer of Record (EOR) can help.

An EOR simplifies the entire process. We act as the legal employer for your team in Mongolia, which means we handle all the HR tasks for you. This includes:

• Ensuring your benefits package is fully compliant with Mongolian labor law.
• Administering statutory benefits like social insurance and paid leave.
• Advising on competitive supplemental benefits to attract top talent.
• Managing payroll and ensuring all contributions are made correctly and on time.

Using an EOR saves you time and reduces risk. You can focus on growing your business, knowing that your team's benefits and payroll are in expert hands.

Under local labor laws, employment can be terminated for legally valid reasons. Both the employer and employee must provide 30 days' written notice. Employers must pay workers a severance payment based on their length of service (one to four months of base salary).

Both local and foreign workers have the same rights and protections during the dismissal process. If an employee disagrees with their termination, they can file a complaint with the Labor Dispute Settlement Commission within 30 days.

Notice periods

When you end an employment contract in Mongolia, you need to provide a notice period. Both you and your employee must give at least 30 days' written notice. This allows time for a smooth handover of responsibilities.

For situations involving mass layoffs, the rules are different. If you are liquidating the business, you must inform the employee's representatives at least 45 days before the termination date. For other types of mass layoffs, you need to provide a 30-day notice to the local labor organization.

Your employment contract might specify a longer notice period than the legal minimum. If so, the longer period is the one you must follow.

Severance pay

Employees in Mongolia are typically entitled to severance pay when their employment is terminated. If the termination is due to the liquidation of your company, you must pay a severance amount equal to at least one month's average salary. In many cases, employees are entitled to about 30 days of their regular pay as severance.

The final payment to your employee should include their salary for the time worked and any other outstanding payments.

How Rivermate handles compliant exits

Navigating employee terminations in a different country can be complex. We make sure every step of the offboarding process is compliant with Mongolian Labor Law.

Here’s how we manage it:

• Documentation: We handle all required paperwork, including drafting and delivering the formal written termination notice.
• Compliance Checks: Our team ensures the reason for termination is legally valid and that all procedural requirements are met.
• Final Payments: We calculate and process all final payments, including salary, unused vacation time, and legally required severance.
• Clear Communication: We facilitate clear communication between you and the employee to ensure a respectful and professional exit process.

Using an Employer of Record like Rivermate removes the guesswork. We manage the details so you can focus on your business, confident that your offboarding practices are fair and fully compliant.

Mongolia has a structured application process linking both the labor permit and residence permit. A Mongolian company must sponsor an employee to obtain a work permit.

Either a Type-HG or Type-C visa is applicable to foreign employment in Mongolia. Type-HG is for standard employment and Type-C for specific industries and scarce skills. The Immigration Agency currently lists C1–C11 categories that qualify for the Type-C visa.

Employment visas & sponsorship realities

The most common route for employing foreign talent in Mongolia is through an HG visa, which is specifically for work purposes. As the employer, you are responsible for sponsoring this visa and initiating the application process. This means you, or an Employer of Record (EOR) acting on your behalf, must have a registered legal entity in Mongolia.

An EOR can legally sponsor work visas for your employees, which is a practical solution if you don't have your own entity in the country. The EOR handles the administrative tasks of the visa process, ensuring compliance with local immigration and labor laws.

Here are the key realities of sponsoring an employment visa:

• Work Permit First: Before applying for a work visa, you must first obtain a pre-work permit from the General Authority for Labor and Social Welfare.
• Quotas Matter: The Mongolian government sets annual quotas on the number of foreign workers a company can employ. These quotas can vary by industry.
• Location Specific: Work permits are often tied to a specific work location, particularly in industries like mining or construction.
• Process Timeline: Be prepared for a process that can take between 30 and 45 days from start to finish.

It's important to note that independent contractors are not eligible for an HG work visa and must follow a different process.

Business travel compliance

For short-term business trips, a business visa (B visa) is the appropriate choice. This visa is for activities that do not count as employment. Think of it as a visa for business-related visits, not for work.

Permitted activities on a business visa include:

• Attending business meetings and conferences
• Participating in training or seminars
• Negotiating and signing contracts
• Exploring business opportunities

A business visa does not permit you to engage in any paid or unpaid work. The standard business visa is valid for 30 days. For U.S. citizens, visits under 90 days do not require a visa.

If you are visiting for business, you must register with the Immigration Agency of Mongolia within 48 hours of your arrival. Failure to comply with the terms of your visa can lead to fines or other penalties.