Employer of Record in Turkmenistan

Expanding your business into Turkmenistan requires a strategic approach to local employment. Navigating the country's specific labor laws, payroll regulations, and compliance requirements can be complex for foreign entities. Successfully onboarding employees in Turkmenistan involves a clear understanding of the local framework, which differs significantly from other global markets.

When considering hiring employees in Turkmenistan, companies generally have three primary options:

• Establishing a Local Entity: This involves incorporating a subsidiary or branch office within Turkmenistan, which is a significant undertaking requiring substantial investment in time and resources for registration, legal setup, and ongoing compliance.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows companies to hire employees in Turkmenistan without establishing their own legal entity. The EOR acts as the legal employer, handling all local employment responsibilities.
• Hiring as Independent Contractors: While seemingly straightforward, classifying workers as independent contractors carries significant risks of misclassification, which can lead to severe penalties and legal challenges under Turkmenistan's labor laws if the relationship is later deemed to be one of employment.

How an EOR Works in Turkmenistan

An Employer of Record (EOR) in Turkmenistan simplifies global employment by taking on the legal and administrative burdens associated with hiring local talent. By leveraging an EOR, your company can focus on managing your team's day-to-day tasks while the EOR handles crucial compliance aspects.

An EOR typically takes care of:

• Legal employment contracts: Ensuring all employment agreements comply with Turkmenistan's labor code.
• Payroll processing and tax withholding: Managing local payroll, including income tax, social contributions, and other mandatory deductions.
• Benefits administration: Providing compliant benefits packages, such as statutory leave, health insurance, and pension contributions.
• HR compliance: Adhering to local regulations regarding working hours, termination processes, and dispute resolution.
• Registration with local authorities: Handling all necessary registrations with government and tax agencies.
• Work permits and visas: Assisting with the necessary documentation for foreign employees, where applicable.

Benefits of Using an EOR in Turkmenistan

For companies looking to hire talent in Turkmenistan without the extensive commitment of establishing a local entity, an EOR offers several distinct advantages:

• Rapid Market Entry: Hire employees in Turkmenistan quickly, often within days, bypassing the lengthy process of entity registration.
• Reduced Risk and Compliance: Mitigate the risks of non-compliance with Turkmenistan's complex labor laws, as the EOR assumes legal responsibility.
• Cost Efficiency: Avoid the significant costs and ongoing administrative burden associated with setting up and maintaining a local subsidiary.
• Access to Top Talent: Recruit and onboard skilled professionals across Turkmenistan, regardless of your company's physical presence.
• Focus on Core Business: Free up internal resources by offloading payroll, HR, and legal complexities to experienced local experts.

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

Turkmenistan's tax system requires employers to contribute to social security funds, including pension (20%), social insurance (5%), and employment (1%) contributions based on gross salaries. Employers are also responsible for withholding progressive income taxes from employees, with rates of 8% for income up to 24,000 TMT, 12% for 24,001–60,000 TMT, and 15% for amounts exceeding 60,000 TMT. Employees may benefit from deductions such as standard allowances, dependents, and contributions to approved pension or insurance schemes.

Compliance involves monthly reporting of social security contributions and income tax withholdings, due within 15 days after each month, and an annual tax return due by March 31. Foreign entities and workers face additional considerations, including tax treaties, residency rules, and withholding taxes on foreign payments. Staying current with rate changes and reporting deadlines is crucial for legal compliance.

In Turkmenistan, salary levels vary by industry and role, with higher wages in oil and gas, construction, and telecommunications sectors. For example, monthly salaries range from 1,800 TMT for teachers to up to 15,000 TMT for oil and gas engineers. Typical roles and their salary ranges include:

The legal minimum wage is set at 980 TMT per month in 2025, and employers must adhere to this regulation to avoid penalties. Compensation packages often include bonuses such as annual, performance-based, holiday, and allowances for housing, transportation, meals, and education, especially for expatriates. Salaries are typically paid monthly via bank transfer, with employers responsible for tax and social security deductions.

Salary growth is expected to continue into 2025, driven by economic development and sector demand, though influenced by broader economic conditions. Employers should monitor trends to remain competitive and ensure compliance with local regulations.

Turkmenistan's labor law mandates various leave types to promote employee well-being, with key entitlements summarized below:

Annual Vacation Leave: Employees are entitled to a minimum of 30 calendar days of paid leave after six months of employment. Employers must pay the employee's average salary at least three days before leave begins. Additional days may be granted for hazardous work or long service.

Public Holidays: The country observes several fixed-date holidays, such as New Year's Day, International Women's Day, Victory Day, and Independence Day. When falling on weekends, these are generally not compensated with extra days off.

Sick Leave: Employees can access sick leave upon presenting a medical certificate. Full pay (100%) is provided after eight years of service; shorter service periods receive a percentage. The employer covers initial days, with the Social Insurance Fund covering subsequent days.

Parental Leave: Maternity leave includes 70 days prenatal and 56 days postnatal, fully paid. Paternity and adoption leaves are available but typically unpaid, with durations depending on specific circumstances.

Additional Leave Types: Bereavement, study, and sabbatical leaves are available under certain conditions, with terms varying by employer policies or agreements.

This overview provides essential compliance and planning information for employers managing employee leave in Turkmenistan.

Turkmenistan's labor laws require employers to provide several mandatory benefits, including social insurance contributions covering pensions, disability, and maternity, paid annual leave (minimum 24 days), sick leave, maternity leave for women, paid public holidays, and work injury compensation. These benefits aim to ensure employee welfare and financial security.

Employers often enhance their packages with optional benefits such as private health insurance, housing and transportation allowances, meal subsidies, professional development, life insurance, wellness programs, and performance bonuses to attract and retain talent. Private health insurance is increasingly common, offering access to broader healthcare services beyond the state system.

Understanding these mandatory and optional benefits helps employers in Turkmenistan develop compliant and competitive compensation packages tailored to industry and position levels, especially for executive roles that often include additional perks like company cars and extensive health coverage.

Employment agreements in Turkmenistan are essential for defining the rights and obligations of employers and employees, and must comply with local labor laws. There are two main contract types: fixed-term (up to 5 years, renewable or convertible to indefinite) and indefinite-term (ongoing until termination). Key clauses include parties involved, job details, start date, work location, working hours, salary, benefits, leave entitlements, termination conditions, confidentiality, and governing law.

Probationary periods are limited to three months, allowing employers to evaluate performance with the right to terminate with three days' notice if standards are not met. During this period, employees enjoy similar rights to permanent staff, except certain protections. Confidentiality and non-compete clauses are common; non-compete restrictions typically last up to one year and must be reasonable in scope and compensated accordingly.

Contract modifications require written agreement, and termination procedures depend on reasons such as redundancy, poor performance, or disciplinary issues. Employees must provide two weeks' notice for voluntary termination. Employers may owe severance pay in cases like redundancy.

Remote work in Turkmenistan is gradually developing, driven by global trends and the desire for increased business flexibility. Although traditional office employment remains prevalent, interest in remote and flexible arrangements is rising to attract talent and boost productivity. Currently, the legal framework does not explicitly regulate remote work, but existing labor laws imply certain requirements, such as clear employment contracts, workplace safety obligations, and liability considerations for remote employees.

Employers should specify remote work terms in contracts, ensure safety protocols, and adhere to termination rules per Turkmenistan's Labor Code. Flexible work options include flextime, compressed workweeks, job sharing, part-time, and hybrid models, allowing adaptation to business needs.

Employers should stay informed about evolving regulations and practical considerations to implement remote work successfully in Turkmenistan.

Terminating employees in Turkmenistan requires strict compliance with labor laws to avoid legal and financial penalties. Employers must observe specific notice periods based on employee category and length of service, with minimum durations as follows:

Severance pay is mandatory in cases such as redundancy, refusal to transfer, long-term illness, or military service, generally amounting to at least one to two average monthly wages, calculated based on the last three months' earnings.

Termination grounds include with cause (e.g., misconduct, poor performance, insubordination) and without cause (e.g., redundancy, company closure, mutual agreement). Proper procedural steps—documenting performance, providing written notice, paying severance, and issuing final paperwork—are essential for lawful dismissal. Employees are protected against wrongful termination, with rights to appeal, reinstatement, or compensation if dismissal is deemed unlawful. Employers should maintain thorough documentation and adhere to procedural requirements to mitigate legal risks.

Freelancing in Turkmenistan is growing, with legal distinctions between employees and independent contractors based on control, financial risk, integration, tools, and relationship duration. Misclassification risks legal and financial penalties. Key criteria are summarized below:

Contracting practices involve written agreements covering scope, payment, confidentiality, IP rights, liability, and jurisdiction. IP rights typically default to the contractor unless explicitly assigned to the company, with contracts clarifying ownership and pre-existing IP.

Tax obligations are on contractors, who must handle their own income tax, social security, VAT, and insurance. Companies do not withhold taxes but should ensure contractors comply with local tax laws. Key industries utilizing freelancers include IT, construction, consulting, creative services, education, and oil and gas sectors.

Foreign nationals wishing to work in Turkmenistan must obtain a work permit and visa through a process that emphasizes local labor market protection. Employers must demonstrate that no qualified Turkmen citizens are available for the position, often by advertising locally. The application involves submitting various documents, including a job offer, labor market assessment, educational credentials, medical and police certificates, and company registration details. The process typically takes several weeks to months, with fees varying based on nationality and permit duration.

Key visa types include the Work Visa (for employment), Business Visa (short-term activities), Student Visa, and Private Visa, each with specific purposes and durations. The most relevant for employment is the Work Visa, issued for the duration of the employment contract. Employers play a crucial role in sponsorship and permit application approval.