Rivermate | Azerbaijan flag


Benefits and Entitlements Overview

Learn about mandatory and optional employee benefits in Azerbaijan

Mandatory benefits

In Azerbaijan, employers are required to provide several mandatory benefits to their employees. These benefits include paid time off, social security contributions, and compensation in certain situations.

  • Annual Leave: Employees in Azerbaijan are entitled to a minimum of 21 days of paid annual leave each year. In some cases, specialists or managers may be eligible for extended leave periods, reaching up to 30 days.

  • Public Holidays: Azerbaijan observes 15 public holidays throughout the year. Employees are entitled to paid days off for these holidays, some of which are multi-day celebrations.

  • Sick Leave: Employees can take sick leave under the coverage of State Social Insurance, with limitations on the total duration. While specific details on limitations aren't readily available, sources indicate dismissal after four months of sick leave.

  • Parental Leave: Azerbaijan offers comprehensive parental leave policies:

    • Maternity Leave: Pregnant employees are entitled to 126 days of paid maternity leave, starting 70 days before childbirth and ending 56 days after.

    • Paternity Leave: While information on dedicated paternity leave is limited, Azerbaijani legislation likely includes some form of leave for fathers, potentially under the umbrella of general sick leave provisions.

    • Additional Leave for Parents: Employees with children under 16 may be eligible for additional paid leave depending on the number of children. Mothers with two children under 16 receive two extra days, while those with three or more get five extra days. Additionally, a woman or single father with children under 16 can take 14 days of unpaid leave per year.

    • Adoption Leave: Female employees adopting children under 2 months old are entitled to 56 days of social leave.

Social Security Contributions

Azerbaijan implemented compulsory medical insurance across the country as a pilot project initiated in 2017. This program mandates contributions from both employers and employees, providing basic healthcare coverage.

Severance Pay

In cases of redundancy or termination without cause, employees are entitled to severance pay. The amount varies depending on the length of service:

  • Less than 1 year: 1 month's salary
  • 1-5 years: 1.4 times monthly salary
  • 5-10 years: 1.7 times monthly salary
  • Over 10 years: 2 times monthly salary

Optional benefits

In Azerbaijan, many employers offer additional perks to attract and retain top talent. These optional benefits can range from financial incentives to work-life balance enhancements and other perks.

Financial Benefits

  • Voluntary Health Insurance: Many companies provide voluntary health insurance for access to private hospitals and a wider range of treatments.
  • Life Insurance: Some employers offer life insurance as a benefit, providing financial security for employees' families in case of death.
  • Performance-Based Bonuses: Companies may offer bonuses tied to individual or company performance to incentivize productivity and goal achievement.

Work-Life Balance Benefits

  • Flexible Working Hours: Some employers may offer flexible work arrangements, allowing employees to adjust their schedules for better work-life balance.
  • Remote Work Options: In certain industries, companies might allow remote work options, granting employees the flexibility to work from home or co-working spaces.
  • Additional Paid Time Off: Employers might offer additional paid time off beyond the mandatory minimum, such as vacations days or personal leave days.
  • Gym Memberships or Wellness Programs: Companies focused on employee well-being might offer gym memberships or sponsor wellness programs like fitness classes or health screenings.

Other Benefits

  • Company Car or Transportation Allowances: In some cases, employers might provide company cars or offer transportation allowances to ease employee commutes.
  • Meal Vouchers or Subsidized Meals: Subsidized meals or meal vouchers can help reduce employee lunch expenses and boost morale.
  • Professional Development Opportunities: Employers may invest in their employees' growth by offering training programs, conference attendance, or tuition reimbursement.
  • Language Learning Programs: Companies operating internationally or aiming to expand globally might offer language learning programs for their employees.

This list is not exhaustive, and the specific benefits offered by employers can vary significantly depending on the industry, company size, and company culture.

Health insurance requirements

In Azerbaijan, the health insurance system combines mandatory and voluntary components, providing a mix of state-backed and private healthcare options for employees.

Mandatory Health Insurance in Azerbaijan

Azerbaijan introduced mandatory health insurance nationwide in 2021. This program ensures basic healthcare coverage for all citizens, including employees. Both employers and employees contribute towards mandatory health insurance at a progressive rate. For salaries up to 8,000 AZN (approximately $4,709 USD), the contribution rate is 2% for both employer and employee. For salary portions exceeding 8,000 AZN, the rate reduces to 0.5% for each party.

Mandatory health insurance covers essential healthcare services, including primary care, inpatient care, emergency services, and specialized outpatient care. Additionally, it covers laboratory services, physiotherapy, and invasive radiology. It's important to note that mandatory health insurance primarily covers services provided by state-run healthcare facilities.

Voluntary Health Insurance in Azerbaijan

While mandatory insurance provides a safety net, many employers in Azerbaijan offer voluntary health insurance plans as an additional benefit. Voluntary plans typically offer a wider range of benefits compared to mandatory coverage. This can include access to private hospitals, a broader selection of specialists, and potentially shorter wait times for treatment.

The cost of voluntary health insurance plans varies depending on the specific coverage offered and the insurance provider. Employers may fully or partially cover the cost as part of their employee benefits package.

Retirement plans

Azerbaijan's retirement system is a two-tier structure that includes a mandatory state pension and optional employer-sponsored plans.

State Pension System

The State Social Protection Fund (SSPF) manages Azerbaijan's state pension system. All Azerbaijani citizens with a sufficient contribution history qualify for a state pension upon reaching retirement age. The minimum contribution period is currently 1 year, but it's gradually increasing. The state pension amount is calculated based on an individual's average salary during their working years and the total number of contribution years. Generally, the pension replaces a portion of the employee's pre-retirement income. The current retirement age in Azerbaijan is 65 years for men and 63 years for women. However, the retirement age for women is being gradually raised to match that of men by July 2026.

Employer-Sponsored Pension Plans

While not mandatory, some employers in Azerbaijan offer additional retirement plans to supplement the state pension. These plans can provide employees with a higher retirement income compared to the state pension alone. The specific benefits and contribution structures can vary depending on the employer and the chosen plan. The specific types of employer-sponsored plans available might include defined contribution plans or defined benefit plans, similar to some models found in other countries. Information on the prevalence and specific design of employer-sponsored pension plans in Azerbaijan is limited. It's advisable to consult with an HR professional or financial advisor in Azerbaijan for the latest insights.

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.