Employer of Record in Uzbekistan

An Employer of Record (EOR) in Uzbekistan is a company that legally hires employees on your behalf. This means you can build a team in Uzbekistan without setting up a local legal entity. The EOR handles all the legal and HR tasks that come with employment. They manage payroll, taxes, benefits, and make sure you follow local labor laws. Using an EOR like Rivermate allows you to focus on your business while they take care of the employment details.

How an Employer of Record (EOR) Works in Uzbekistan

Using an EOR simplifies hiring in Uzbekistan. Here is a simple breakdown of the process:

• You Find the Talent: You identify the candidate you want to hire in Uzbekistan.
• The EOR Hires Them: The EOR legally hires the employee under their own local business entity.
• Compliant Contracts: The EOR drafts an employment contract that complies with Uzbekistan's labor laws. The Ministry of Employment and Labor Relations of the Republic of Uzbekistan (https://mehnat.uz/en) sets the legal framework for these contracts.
• Onboarding: The EOR manages the onboarding process, including any necessary registrations with local authorities.
• You Manage Daily Work: Your new team member works for your company, following your direction and contributing to your projects. The EOR handles all the HR and legal administration in the background.

Why use an Employer of Record in Uzbekistan

Using an EOR in Uzbekistan is a strategic move for companies looking to expand. It allows you to enter the market quickly and efficiently without the major step of establishing a legal entity in the country. This approach saves you time and significant upfront costs.

Here are some key benefits:

• Fast Market Entry: You can hire employees and start operations in a fraction of the time it would take to set up your own company.
• Compliance with Local Laws: EORs are experts in Uzbek labor law, ensuring that you avoid legal trouble and costly fines. They handle all the complexities of payroll, taxes, and social security contributions.
• Reduced Risk: The EOR assumes the legal responsibility for your employees. This protects you from potential legal issues related to employment.
• Cost Savings: You avoid the high costs associated with setting up a legal entity, including legal fees, registration costs, and the expense of hiring local HR and legal staff.
• Focus on Your Business: With the EOR managing HR and administrative tasks, you can concentrate on your core business goals and managing your team's day-to-day work.

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

Hiring in Uzbekistan is becoming more common as the country's economy grows. The local workforce is well-educated and has a strong work ethic. If you are looking to hire in Uzbekistan, you need to understand the local labor laws. This will help you stay compliant and attract the best talent.

Employment contracts & must-have clauses

In Uzbekistan, you must provide a written employment contract. You can use two main types of contracts:

• Indefinite-term contracts: These are the most common type and are used for permanent positions.
• Fixed-term contracts: These contracts are for a specific period, up to a maximum of five years. They are typically used for temporary or project-based work.

Your employment contracts must include the following essential clauses:

• Identification of Parties: Full legal names of you and the employee.
• Job Title and Description: The employee's position and main responsibilities.
• Start Date: The date the employment begins.
• Workplace: The location where the employee will work.
• Remuneration: Details of the salary, including any bonuses and the payment schedule.

Probation periods

You can include a probation period in the employment contract to see if a new employee is a good fit. The probation period must be stated in the contract. If it is not, the employee is considered hired without a probation period.

The maximum length of a probation period is generally three months. For some senior roles, like heads of organizations and chief accountants, the probation period can be up to six months.

During the probation period, either you or the employee can terminate the contract with three days' written notice.

Working hours & overtime

The standard workweek in Uzbekistan is 40 hours. This can be structured as:

• An eight-hour day for a five-day workweek.
• A seven-hour day for a six-day workweek.

Any work done beyond the standard 40-hour week is considered overtime. Overtime work is limited to 120 hours per year. You must pay employees 200% of their regular hourly rate for any overtime hours worked.

Public & regional holidays

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

Hiring contractors in Uzbekistan

You can hire independent contractors for project-based work. This can offer flexibility and access to specialized skills. When you hire a contractor, the relationship is governed by a service agreement, not employment law. This means contractors are not entitled to benefits like minimum wage, paid leave, or severance pay.

It is very important to correctly classify workers. If you treat a contractor like an employee, you risk misclassification. This can lead to serious consequences, including:

• Fines and penalties.
• Back payment of taxes and social contributions.
• Legal claims for employee benefits.

An Employer of Record (EOR) can help you mitigate this risk. An EOR acts as the legal employer for your workers in Uzbekistan. They handle all aspects of compliance, including contracts, payroll, and benefits. This allows you to hire talent in Uzbekistan without the need to set up a local legal entity and reduces the risk of misclassification.

Navigating compensation and payroll in Uzbekistan requires a clear understanding of the local rules. You need to know the proper pay schedules, typical wages, and how to handle overtime. It's also key to understand the tax system for both your company and your employees. Getting these things right keeps your business running smoothly and your team happy.

Payroll cycles & wage structure

In Uzbekistan, you pay your employees monthly. The standard practice is to pay salaries on the last working day of the month. All payments must be in the local currency, the Uzbekistani so'm (UZS). If you are a foreign company, you need to manage currency exchange carefully.

While there is no required 13th-month bonus, you can offer bonuses at your discretion.

Overtime & minimums

The standard work week in Uzbekistan is 40 hours, which can be over five or six days. Any hours worked beyond this are overtime. The law does not set a specific overtime pay rate. Instead, you and the employee agree on a rate in the employment contract. A common practice is to pay 200% of the regular pay rate for overtime hours.

As of May 2023, the national minimum wage is 980,000 UZS per month.

Employer taxes and contributions

You are responsible for social security contributions for your employees. The rate you pay depends on your type of organization.

Employee taxes and deductions

Your employees have taxes and other contributions deducted from their pay. The income tax is a flat rate.

In Uzbekistan, the government sets clear rules for employee leave and benefits. This ensures you and your team know exactly what to expect. The system covers the essentials, from time off to social security protections. Understanding these local labor laws is the first step to hiring and managing your team in the country.

Statutory leave

Here are the legally required leave benefits you must provide in Uzbekistan.

• Annual Leave: Your employees get a minimum of 15 working days of paid vacation each year.
• Sick Leave: If an employee gets sick, you must provide paid sick leave. They will need a medical certificate to qualify. Pay is typically between 60% and 100% of their regular salary, depending on the circumstances.
• Maternity Leave: Female employees receive 126 calendar days of paid maternity leave. This is usually split into 70 days before the birth and 56 days after. The social security system pays for this leave.

Public holidays & regional holidays

Your team in Uzbekistan is entitled to paid time off for public holidays. The country celebrates a mix of national and religious holidays.

Note: The dates for Eid al-Fitr and Eid al-Adha change each year as they are based on the lunar calendar.

Typical supplemental benefits

To attract and keep the best talent, you may want to offer more than the legal minimum. Below is a comparison of what is required by law and what you can offer as extra perks.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your team in Uzbekistan. This means they handle all the administrative tasks related to employment.

Here is how an EOR can help:

• Compliance: An EOR ensures your benefits packages follow all of Uzbekistan's labor laws. This saves you from making costly mistakes.
• Local Expertise: They understand the local market and what benefits are most attractive to employees. This helps you compete for top talent.
• Administration: An EOR manages everything from payroll and taxes to social security contributions. This frees you up to focus on your business goals.
• Speed: You can hire employees and get your operations running quickly without needing to set up a legal entity in the country.

When an employment relationship in Uzbekistan ends, you need to follow a clear process. The Labor Code of Uzbekistan governs terminations, and you must have a legally sound reason to end an employment contract. The process involves providing written notice to the employee and ensuring all final payments are made correctly and on time. Proper documentation is key to a compliant offboarding process.

Notice periods

You must give employees written notice before termination. The length of this notice period depends on the reason for the termination.

Here are the standard notice periods you need to provide:

• 2 months' notice for termination due to redundancy, changes in the company's ownership, or liquidation of the organization.
• 2 weeks' notice if the employee is not qualified for the job or has health reasons that prevent them from performing their duties.
• 3 days' notice in cases of gross misconduct by the employee.

If an employee decides to resign, they are required to give you two weeks' written notice.

Severance pay

When you terminate an employment contract, you may need to provide severance pay. The amount of severance pay is not less than the employee's average monthly wage. The exact amount depends on how long the employee has worked for your company.

Source: Papaya Global

You must pay all outstanding wages, compensation for any unused vacation, and severance pay on the employee's last day of work.

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 Uzbekistan's labor laws.

Here is how we help you manage employee exits:

• Ensure legal compliance: We stay up to date with the local labor laws to ensure every termination is handled correctly.
• Manage documentation: We prepare all the necessary legal documents for the termination process.
• Calculate final payments: We calculate and process all final payments, including salary, unused leave, and severance pay.
• Provide clear communication: We help you communicate clearly with the departing employee to ensure a smooth process.

We handle the complexities of offboarding so you can focus on running your business.

Getting the right visas and work permits in Uzbekistan is essential for legal employment. The main route for foreign workers is the E-visa, which functions as an employment visa. To hire a foreign national, you as the employer must first secure a Corporate Work License. This license allows your company to hire a specific number of foreign employees. The process also involves a labor market test to show that no local candidates are suitable for the role. It's important to understand that a work permit and a work visa are two separate things; the permit allows employment, and the visa allows entry and residence.

Employment visas & sponsorship realities

Sponsoring a work visa in Uzbekistan means you are the legal employer responsible for the entire process. This includes obtaining the Corporate Work License and managing the work permit application. The work visa is tied directly to your company, meaning the employee cannot legally work for any other organization.

As an Employer of Record (EOR), we handle these sponsorship responsibilities. Here’s what that looks like in practice:

• We can sponsor: Foreign nationals who will be employed full-time by your company. We become the legal employer in Uzbekistan and manage all the necessary paperwork for the E-visa.
• We cannot sponsor: Individuals on tourist visas who wish to convert to a work visa from within the country. All work visa applications must be initiated from outside Uzbekistan.

The practical route to employing someone in Uzbekistan is to partner with an EOR that already has a licensed entity in the country. This simplifies the process for you, as we take on the legal requirements of sponsorship.

Business travel compliance

For short-term visits that do not involve full-time employment, a business visa is the appropriate choice. Here are the key points for compliance:

• Permitted Activities: Business visas are for activities like attending meetings, negotiating contracts, and participating in conferences. They do not permit you to carry out regular work.
• Visa-Free Travel: Citizens of over 50 countries can enter Uzbekistan for business purposes for up to 30 days without a visa. You should always check the latest regulations for your specific nationality.
• Registration: If your stay in Uzbekistan is longer than three days, you must register with the local authorities. Hotels will typically handle this for their guests.

It is critical to ensure your employees use the correct visa for their activities in Uzbekistan. Using a tourist or business visa for work-related activities that constitute employment is not compliant and can lead to legal issues.