Hire in Kazakhstan through our Employer of Record (EOR)

Kazakhstan's employment landscape is a dynamic blend of traditional industries and emerging sectors. The country's vast natural resources, particularly in oil and gas, have long been a cornerstone of its economy. However, recent years have seen a push towards diversification, with growing opportunities in technology, finance, and services. The government has been actively working to improve the business environment and attract foreign investment, which has led to an evolving job market with new opportunities for both local and international professionals.

Overview of Labor Laws

Kazakhstan's labor laws aim to balance employee protection with employer flexibility. Key aspects include:

• A standard 40-hour workweek with overtime regulations
• Minimum wage requirements that are periodically adjusted
• Mandatory social insurance contributions from both employers and employees
• Provisions for annual paid leave and public holidays
• Protections against discrimination in the workplace

Cultural Considerations

When engaging with the Kazakhstani workforce, it's important to be aware of certain cultural nuances:

• Respect for hierarchy and seniority is prevalent in most workplaces
• Building personal relationships is often crucial for successful business interactions
• Multilingualism is common, with Kazakh and Russian being widely spoken
• There's a growing emphasis on work-life balance, particularly among younger professionals

Challenges of Direct Hiring

While Kazakhstan offers numerous opportunities, direct hiring can present some challenges:

• Navigating complex labor laws and regulations can be daunting for foreign companies
• Language barriers may complicate recruitment and daily operations
• Understanding and adhering to local business practices and cultural norms
• Managing payroll and benefits in compliance with Kazakhstani law
• Keeping up with frequent changes in employment legislation

These challenges underscore the value of partnering with an Employer of Record like Rivermate, which can help navigate the intricacies of employing staff in Kazakhstan while ensuring full compliance with local laws and regulations.

Kazakhstan's payroll and tax system is a complex structure that involves various contributions from both employers and employees. This system is designed to support social welfare programs, healthcare, and retirement benefits while also generating revenue for the government. Understanding these obligations is crucial for businesses operating in Kazakhstan and for employees working in the country.

The payroll and tax landscape in Kazakhstan includes a range of contributions and deductions, such as social tax, pension contributions, medical insurance, and income tax. These elements are carefully balanced to ensure both employers and employees contribute to the country's social and economic development.

Employer Contributions

Employers in Kazakhstan bear significant responsibilities when it comes to payroll taxes and contributions. These include:

Social Tax

Employers are required to pay a social tax of 9.5% based on the employee's gross salary. This tax is entirely the responsibility of the employer and is not deducted from the employee's wages.

Social Contributions

For Kazakhstani citizens, employers must pay a 3.5% social contribution calculated on the gross salary. It's important to note that this requirement does not apply to expatriates without permanent residency in Kazakhstan.

Obligatory Professional Pension Contributions (OPPC)

In cases where employees work in hazardous conditions, employers are obligated to contribute an additional 5% of the employee's gross salary to a professional pension fund.

Obligatory Medical Insurance Contributions

As of 2023, employers are required to contribute 3% of a Kazakhstani citizen's gross salary towards medical insurance.

Corporate Income Tax (CIT)

Companies in Kazakhstan are subject to a standard Corporate Income Tax rate of 20%. This tax is levied on the company's taxable income, which is calculated by subtracting deductible expenses from the aggregate annual income.

Other Taxes

Depending on the nature of their business, employers may also be responsible for additional taxes such as property tax, land tax, and vehicle tax.

Employee Contributions

While employers bear a significant portion of the tax burden, employees in Kazakhstan also have several contributions deducted from their salaries:

Individual Income Tax (IIT)

Employees are subject to a flat 10% personal income tax rate on their salary and other employment income. This tax is withheld by the employer each month.

Obligatory Pension Contributions (OPC)

A 10% contribution towards the pension fund is deducted from the employee's gross salary. This is withheld by the employer and submitted to the pension fund.

Obligatory Social Health Insurance (OSHI)

As of 2023, employees contribute 2% of their gross salary to the Social Health Insurance Fund. This is also withheld by the employer and submitted regularly.

Standard Deductions

Tax-resident employees in Kazakhstan are eligible for standard tax deductions. The current deduction amount is based on 14 times the Minimum Calculation Index (MCI).

Additional Deductions

Employees may be eligible for additional deductions under specific circumstances. These can include certain insurance premiums, medical expenses, and mortgage interest payments.

Understanding these contributions and deductions is essential for both employers and employees in Kazakhstan. It ensures compliance with local regulations and helps in effective financial planning. As tax laws can change, it's advisable to stay updated with the latest regulations or consult with a local tax expert for the most current and accurate information.

Kazakhstan offers a comprehensive benefits package to employees, ensuring their social security and financial stability. As an Employer of Record (EOR), Rivermate manages these benefits, ensuring compliance with local labor laws and regulations while providing a seamless experience for both employers and employees. By partnering with an EOR, companies can navigate the complexities of Kazakhstan's benefits system, focusing on their core business operations while ensuring their workforce receives all mandatory benefits and any additional perks they choose to offer.

Mandatory Benefits

Kazakhstan's labor laws require employers to provide several mandatory benefits to their employees:

• Social Insurance:

  • Pension contributions (10% of gross salary)
  • Disability and survivor pensions
  • Basic healthcare coverage

• Paid Time Off:

  • 24 calendar days of annual leave
  • 12 public holidays
  • Minimum 3 days of paid sick leave
  • 126 days of maternity leave (70 days before and 56 days after childbirth)
  • Unpaid parental leave for children under one year
  • Leave for significant life events (marriage, bereavement)

• Additional Considerations:

  • Extra vacation days for employees in hazardous conditions

Optional Benefits

To attract and retain top talent, employers in Kazakhstan often offer additional benefits:

• Health and Wellness:

  • Enhanced health insurance plans
  • Life insurance
  • Wellness programs (gym memberships, fitness subsidies)

• Financial Security:

  • Personal accident insurance
  • Critical illness coverage
  • COVID-19 insurance

• Work-Life Balance:

  • Flexible work arrangements (remote work, flexible hours)
  • Additional Paid Time Off (PTO)
  • Extended vacation days or sick leave

By offering a mix of mandatory and optional benefits, employers in Kazakhstan can create attractive compensation packages that support employee well-being and job satisfaction. As an EOR, Rivermate ensures that all benefits are properly administered and compliant with local regulations, providing peace of mind for both employers and employees.

The process of termination and offboarding in Kazakhstan is governed by a structured legal framework outlined in the Labor Code of the Republic of Kazakhstan. This framework ensures that both employers and employees are protected during the termination process, providing clear guidelines for lawful dismissal, notice requirements, and severance pay.

In Kazakhstan, employment can be terminated for various reasons, including mutual agreement, expiration of a fixed-term contract, employee initiative, or employer-initiated dismissal. The Labor Code specifies valid grounds for employer-initiated dismissal, such as repeated failure to perform work duties, gross violations of work responsibilities, absenteeism, and actions that lead to a loss of trust from the employer.

Notice Requirements

When it comes to terminating employment, both employers and employees are required to provide written notice. The standard notice period is typically one month, although this may vary depending on the specific circumstances of the termination. For instance, if a fixed-term contract is ending naturally, the notice period may be different.

Severance Pay

Kazakhstan's labor laws mandate severance pay in certain situations. These include:

1. Liquidation of the employer
2. Reduction in staff (redundancy)
3. Employee's refusal to relocate with the employer
4. Termination due to incompatibility with the position or insufficient qualifications
5. Termination due to health reasons

The amount of severance pay varies based on the specific circumstances of the termination.

Offboarding Process

While the Labor Code doesn't explicitly outline an offboarding process, it's essential for employers to handle terminations professionally and in compliance with the law. This typically involves:

1. Providing the required written notice
2. Conducting an exit interview
3. Retrieving company property
4. Settling any outstanding payments, including severance if applicable
5. Providing necessary documentation, such as a letter of termination and employment records

By following these guidelines and adhering to the Labor Code, employers in Kazakhstan can ensure a smooth and lawful termination and offboarding process. This approach helps maintain positive relationships with departing employees and protects the company from potential legal issues.

Kazakhstan, a Central Asian country known for its diverse landscapes and rich cultural heritage, has specific visa and work permit requirements for foreign nationals seeking employment within its borders. Understanding these regulations is crucial for both employers and international workers to ensure compliance with Kazakhstani law.

Visa Requirements

Foreign workers typically need to obtain a work visa before entering Kazakhstan. The process usually involves the following steps:

1. Secure a job offer from a Kazakhstani employer
2. Obtain an invitation letter from the employer
3. Apply for a work visa at a Kazakhstani embassy or consulate in their home country
4. Submit required documents, including a valid passport, passport-sized photos, and proof of employment

Work Permit Process

Once in Kazakhstan, foreign workers must obtain a work permit. The employer is generally responsible for initiating this process:

1. The employer applies for a foreign workforce quota
2. Upon approval, the employer submits a work permit application to the local labor authorities
3. The authorities review the application and issue the work permit if approved
4. Work permits are usually valid for one year and can be renewed

Important Considerations

• Some professions may require additional certifications or recognition of qualifications
• Certain nationalities may be exempt from visa requirements for short-term stays
• Work permit quotas may limit the number of foreign workers in specific sectors
• Employers must demonstrate that they cannot find suitable local candidates for the position

Conclusion

Navigating Kazakhstan's visa and work permit requirements can be complex. It's advisable for both employers and foreign workers to consult with legal experts or partner with a global employment solution provider like Rivermate to ensure full compliance with local regulations and a smooth transition for international employees.