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Discover everything you need to know about Mongolia

Hire in Mongolia at a glance

Here ares some key facts regarding hiring in Mongolia

Mongolian Tugrik
GDP growth
GDP world share
Payroll frequency
Working hours
40 hours/week

Overview in Mongolia

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Mongolia, a landlocked country in East and Central Asia, is bordered by Russia and China. It is the 18th largest country globally, featuring diverse terrains including the Gobi Desert, Mongolian Steppe, and mountain ranges like the Altai and Khangai. The country experiences a harsh continental climate with long winters and short summers.

Historically, Mongolia was founded by Genghis Khan in 1206, leading to the creation of the largest contiguous land empire. After periods under Chinese rule and a socialist state aligned with the Soviet Union, Mongolia transitioned to a democratic system in 1990, introducing multi-party elections and political reforms.

Economically, about 30% of Mongolians maintain a nomadic lifestyle, with significant urbanization in the capital, Ulaanbaatar. The country is rich in mineral resources like copper, gold, and coal, significantly impacting its economy. Mongolia also maintains a "third neighbor" policy to balance its relations with Russia and China while engaging with other global partners.

Culturally, Tibetan Buddhism is predominant, influencing various aspects of life, although ancient shamanic practices persist. The country is known for its traditional arts and has a young workforce with a median age of 27.8 years. However, there are gender disparities in labor force participation.

In terms of education, Mongolia boasts a high literacy rate but faces challenges in aligning educational outcomes with job market demands. The workforce is primarily engaged in agriculture, with a growing service sector and a crucial mining industry. Personal relationships and hierarchical structures significantly influence Mongolian workplaces, emphasizing respect for authority and group harmony.

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Employer of Record in Mongolia

Rivermate is a global Employer of Record company that helps you hire employees in Mongolia without the need to set up a legal entity. We act as the Employer of Record for your employees in Mongolia, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Mongolia through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationshiop with the employee, you allocate them the work and manage their performance.
Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Mongolia, Rivermate is responsible for:

  • Creating and managing the employment contracts
  • Running the monthly payroll
  • Providing local and global benefits
  • Ensuring 100% local compliance
  • Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

  • Day-to-day management of the employee
  • Work assignments
  • Performance management
  • Training and development

Taxes in Mongolia

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In Mongolia, employers are required to make social insurance contributions on behalf of their employees, which range from 12.5% to 14.5% of an employee's gross salary, depending on the industry's risk classification. These contributions fund various social security programs including pension, health insurance, employment benefits, unemployment, and industrial accident insurance. Employees also contribute a total of 11.7% of their gross salary to these funds.

The payment of these contributions is due monthly, with penalties for late payments. Employers also play a role in withholding and assisting with the calculation of personal income tax for their employees. Additionally, Mongolia has a VAT system with a standard rate of 10%, and certain services are either zero-rated or exempt from VAT. Businesses must register for VAT if their turnover exceeds a certain threshold and comply with regular VAT reporting requirements.

Mongolia offers various tax incentives to encourage business investment, particularly in sectors like agriculture, manufacturing, and technology. These incentives include reduced corporate income tax rates, tax credits, and benefits for businesses operating in free trade zones and technology parks. Businesses must meet specific criteria to qualify for these incentives, and it's crucial to stay informed about any changes to tax regulations.

Leave in Mongolia

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  • Basic Vacation Entitlements: In Mongolia, employees are entitled to 15 working days of paid annual leave, which increases to 20 days for those under 18.

  • Seniority Benefits: Additional leave days are granted based on years of service, ranging from 3 extra days for 6-10 years of service to 14 extra days for 32 or more years of service.

  • Annual Vacation Schedule: Employers must annually approve vacation schedules, ensuring at least 10 consecutive days of leave for employees.

  • Part-time and Special Leave: Part-time workers receive prorated leave, and employees continue to accrue vacation days during maternity or temporary disability leave.

  • Public Holidays and Festivals: Mongolia celebrates various national holidays and festivals, including Tsagaan Sar (Lunar New Year), International Women's Day, Mother's and Children's Day, Naadam Festival, Republic Day, Chinggis Khaan's Birthday, and Independence Day.

  • Other Leave Types: The Labor Law also covers sick leave, maternity leave (120 days), paternity leave (5 days), marriage leave (5 days), and provisions for unpaid and other specific types of leave, subject to employer's approval and specific conditions.

Benefits in Mongolia

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In Mongolia, employers are required to provide a range of benefits to their employees, categorized into social security contributions and various types of paid leave and time off.

Social Security Contributions:

  • Employers and employees contribute to Mongolia's social security system, which includes pension, disability, and unemployment insurance. Employer contribution rates vary between 12.5% to 14.5%, while employee rates are at 11.5%.

Paid Leave and Time Off:

  • Annual Leave: Employees get a minimum of 15 days, increasing with service length, up to 29 days.
  • Public Holidays: Paid leave is provided for all national holidays.
  • Sick Leave: Details are typically specified in the employment contract.
  • Maternity Leave: 126 days of paid leave, plus an optional 30 days unpaid.

Additional Benefits:

  • Health and Wellness: Employers may offer supplemental health insurance and wellness programs.
  • Financial Benefits: These include meal and transportation allowances, and possibly profit-sharing schemes.
  • Work-Life Balance: Options like flexible schedules, remote work, and additional leave days are offered.
  • Family-Friendly Benefits: Support for childcare costs or facilities, and extended parental leave are common.
  • Development and Insurance: Training opportunities and life insurance are provided to enhance employee growth and security.

Health Insurance:

  • Mandatory for all working individuals, funded by both employer and employee contributions.

Pension Schemes:

  • Defined Benefit (DB) Scheme: For those born before 1960, benefits are based on salary and contribution years.
  • Notional Defined Contribution (NDC) Scheme: For those born after 1960, benefits depend on accumulated contributions and investment returns.


  • The pension system includes minimum requirements and is subject to ongoing reforms. The official retirement age is 60 for men and 55 for women, with options for early retirement at reduced benefits.

Workers Rights in Mongolia

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The Labor Law of Mongolia (1999) governs employment termination, specifying lawful dismissal grounds, notice requirements, and severance entitlements. Employees can be dismissed by mutual agreement, their own initiative, or the employer's initiative, with the latter including reasons like restructuring, performance issues, or legal troubles like imprisonment. Notice periods are set at 30 days for standard dismissals and 45 days for mass layoffs. Severance pay is provided under certain conditions such as downsizing or company liquidation.

Mongolian law also prohibits discrimination based on various characteristics, offering redress through the National Human Rights Commission of Mongolia or the courts. Employers are tasked with preventing discrimination by implementing relevant policies and training.

The law sets a 40-hour workweek limit, mandates rest periods, and outlines ergonomic and safety standards to ensure a healthy work environment. Employers must provide a safe workplace, conduct safety training, and maintain health records, while employees have rights to safety training and medical insurance for work-related issues. The Ministry of Labor and Social Welfare and the General Agency for Specialized Inspection enforce these regulations, aiming to uphold a safe working environment.

Agreements in Mongolia

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Mongolia's Labor Law, revised in January 2022, outlines various employment agreements, including standard indefinite, fixed-term, and specialized agreements. The standard indefinite agreement is the most common, lacking a predefined end date and covering essential employment aspects like job responsibilities, schedule, and compensation. Fixed-term agreements are used for specific situations such as apprenticeships, temporary projects, or seasonal work, each with a set duration. Specialized agreements cater to unique roles, including part-time, remote work, and executive positions, and must include clauses on identification, remuneration, work schedule, and termination procedures.

The law also allows for a probationary period of up to three months for most jobs and two years for specialized roles, during which performance is evaluated. Additionally, employment agreements can include confidentiality and non-compete clauses to protect business interests, with non-compete clauses limited to one year post-employment and requiring compensation.

These regulations ensure clarity and protection in the employer-employee relationship, adhering to Mongolian labor standards and legal requirements.

Remote Work in Mongolia

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Mongolia's labor landscape has evolved significantly since the introduction of the 1999 Labor Law, which legally recognized remote work and established a framework for flexible work environments. Key aspects of this law include equal rights for remote workers, formalization of remote work agreements, and employer responsibilities for health and safety. Despite improvements in telecommunications infrastructure, disparities in internet connectivity between urban and rural areas persist, affecting the effectiveness of remote work.

Employers have several responsibilities under the new work paradigm, including providing necessary training and support for remote work tools, managing performance effectively, and ensuring open communication and collaboration. They must also be mindful of work-life balance, encouraging proper breaks and respecting offline times.

Flexible work options such as part-time work, flexitime, and job sharing are becoming more common, allowing employees greater control over their schedules and improving work-life balance. However, there are no specific legal regulations concerning equipment and expense reimbursements for these arrangements, leaving room for negotiation within employment contracts.

Data protection is crucial, with employers obligated to comply with the General Law on Information Security of Mongolia. This includes implementing strong data security measures and ensuring employees' rights to access and request erasure of their personal data. Employers must also secure data during storage and transfer, including adherence to regulations on cross-border data transfers and evaluating cloud storage providers to meet local standards.

Working Hours in Mongolia

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Mongolian Labor Law Overview

Mongolia's labor law sets a standard 40-hour workweek, limiting daily work to 8 hours. Exceptions allow for averaging hours over a period due to specific work or production needs, but the average still cannot exceed 8 hours per day. The law caps weekly working hours at 56.

Overtime Regulations

Overtime is defined as work beyond standard hours and is limited to 4 extra hours daily. Compensation for overtime is at least 1.5 times the regular rate on weekdays and weekends, and double on public holidays. Alternatively, time off in lieu can be offered with the employee's consent.

Rest and Breaks

Employees must receive a minimum one-hour lunch break, with the timing set by internal regulations. If work nature prevents a dedicated break, meal times are counted as working hours. Workers are entitled to two consecutive rest days typically on weekends, with exceptions for certain industries.

Special Considerations

Additional breaks are mandated for nursing mothers, varying by the child's age and needs. Night shifts, defined as 10 pm to 6 am, should be minimized but come with protections like reduced hours and mandatory health checks. Night work earns a minimum of 30% extra pay.

Overall, Mongolian labor law emphasizes worker health, well-being, and fair compensation, including specific provisions for overtime, rest, and night work.

Salary in Mongolia

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Understanding market competitive salaries in Mongolia is essential for attracting and retaining skilled employees. Salaries are influenced by factors such as job title, experience, industry, location, and the balance of supply and demand. Employers can research salary levels through resources like the National Statistical Office of Mongolia, salary surveys, and job boards.

The minimum wage in Mongolia, effective from January 1, 2024, is MNT 660,000 per month, applicable to all employees with few exceptions like short-term contract workers and apprentices. Employers also offer various bonuses and allowances, such as performance-based bonuses, service length allowances, and transportation or meal allowances, to enhance compensation packages.

Mongolian employers must adhere to specific legal requirements for payroll, including monthly payments by the 5th of the following month and providing detailed pay stubs. Common payroll practices involve processing salaries towards the end of the month, incorporating deductions for taxes, social security, and health insurance, and considering overtime pay and leave pay in payroll calculations.

Termination in Mongolia

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In Mongolia, the Labour Law of 1999 outlines the notice periods and conditions for employment termination, which vary depending on whether the termination is initiated by the employer or the employee.

Employer-Initiated Termination:

  • Standard Termination: Employers must provide at least one month's notice.
  • Mass Dismissal: A notice of at least 45 days is required for mass dismissals due to reasons like business closure or workforce reduction.
  • Exceptions: Immediate dismissal is allowed in cases of employee misconduct.

Employee-Initiated Termination:

  • Employees can terminate their employment with 30 days' written notice.

Employment Contract Overrides:

  • Employment contracts can stipulate longer notice periods if they are more beneficial to the employee.

Severance Pay:

  • Employees are entitled to severance pay equivalent to one month's average salary in cases like layoffs, mandatory military service, or retirement.
  • Exceptions include employee misconduct or mutual agreement on different terms.

Additional Considerations:

  • Employers must provide a written notice stating the grounds for termination.
  • Both parties can mutually agree to terminate the employment at any time.
  • Disputes may be resolved through labour dispute resolution bodies or courts.

Freelancing in Mongolia

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In Mongolia, the distinction between employees and independent contractors is governed by the Labour Code, which considers factors like control, integration into the business, financial arrangements, and formal agreements.

  • Control: Employees operate under the employer's direction, including work methods and schedules, whereas independent contractors have autonomy over how they complete their work.
  • Integration: Employees are integral to the business and receive benefits, while contractors can work for multiple clients and do not receive employee benefits.
  • Financial Arrangements: Employees are paid a salary or wage with tax withholdings by the employer, while contractors negotiate their fees, handle their own taxes, and cover their own business expenses.
  • Formal Agreements: While not mandatory, written contracts are recommended for clarity in independent contractor engagements, detailing work scope, compensation, and other terms.

Contract negotiation in Mongolia values open communication, transparency, and respect. Key industries for independent contracting include IT, creative sectors, translation, and mining.

Regarding intellectual property (IP), Mongolia follows the Berne Convention, granting automatic copyright protection to creators. Written agreements are crucial for clarifying IP ownership, especially in commissioned works.

Independent contractors, or "individual entrepreneurs," must manage their own tax obligations, choosing between a patent system or general tax regime, and can opt for voluntary social security contributions. They are also responsible for securing their own insurance, such as professional liability and health insurance.

Health & Safety in Mongolia

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Mongolia's primary legislation for health and safety, the Labor Safety and Hygiene Law (2008), sets the framework for employer and employee responsibilities, state policies, and the management of health and safety systems. Employers are mandated to ensure safe working conditions by identifying hazards, providing training, and maintaining safety equipment. Employees have rights to a safe work environment and can refuse unsafe work. The General Authority for Specialized Inspection (GASI) oversees enforcement, with the Ministry of Labor and the Occupational Safety and Health Management Institute of Mongolia supporting policy and training.

The law covers various specific regulations, including the management of hazardous chemicals, noise, and extreme temperatures, and outlines procedures for addressing occupational diseases and emergencies. Despite these comprehensive regulations, challenges remain, particularly in enforcement and implementation in high-risk sectors like mining and construction.

Key aspects of the law include detailed standards for physical, chemical, and occupational health, risk assessments, and the hierarchy of controls for hazard mitigation. Employers are also required to conduct health surveillance, provide ongoing training, and keep detailed records of safety-related incidents. Inspections are crucial for compliance, with GASI inspectors conducting routine and complaint-based checks. Employers must report accidents and are subject to investigations to determine causes and prevent recurrence. The law also ensures a compensation system for workers affected by occupational injuries or diseases.

Dispute Resolution in Mongolia

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Labor relations in Mongolia are governed by the Labor Law of Mongolia, revised in 2021, and involve mechanisms like labor courts and arbitration panels for dispute resolution. Labor courts operate at three levels: District/City Courts, Appellate Courts, and the Supreme Court, handling a variety of disputes such as contract termination and workplace safety violations. Arbitration panels, often mandatory in certain sectors, address issues like collective bargaining disputes and involve a binding decision process.

Compliance with labor laws is ensured through audits and inspections conducted by various state bodies like the General Agency for Specialized Inspection (GASI) and the Labor and Social Welfare Inspection Agency. These inspections can be routine or complaint-based, focusing on areas like employment contracts and workplace conditions, with non-compliance leading to penalties such as fines or suspension of operations.

Whistleblower protections in Mongolia are evolving, with specific laws like the Law on Protection of Persons Who Report on Corruption Offenses providing safeguards against retaliation. However, challenges remain in fully protecting whistleblowers and ensuring awareness of their rights.

Mongolia's labor laws are influenced by its constitution and international standards, including 26 ratified International Labour Organization (ILO) conventions. These conventions have shaped laws against forced labor, discrimination, and child labor, among others. Despite progress in aligning with these standards, issues like enforcement and collective bargaining in practice need further attention. Mongolia continues to engage with the ILO to enhance its labor legislation and practices.

Cultural Considerations in Mongolia

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  • Communication Styles in Mongolia: Mongolian workplace communication is characterized by respectful indirectness to maintain harmony, formal language especially with superiors, and significant use of non-verbal cues like eye contact and slight bows. Building relationships is prioritized before direct business discussions.

  • Cultural and Business Considerations: The concept of "saving face" is important, with public criticism avoided and feedback given indirectly. Hierarchical respect is emphasized, with decisions typically made by superiors.

  • Negotiation Techniques: Mongolian negotiations are relationship-oriented, often indirect, and respect for hierarchy is maintained. Negotiators use softening phrases and focus on long-term relationships and social harmony.

  • Business Structures and Practices: Mongolian businesses often have hierarchical structures with centralized decision-making. Leadership is authoritative yet paternalistic, focusing on loyalty and trust within teams.

  • Statutory Holidays and Observances: Mongolia observes several statutory holidays like Tsagaan Sar and Naadam, during which businesses may close or operate minimally. Planning around these holidays is crucial for smooth business operations.

Understanding these aspects of Mongolian communication, negotiation, business practices, and cultural norms is essential for effective workplace navigation and building strong professional relationships in Mongolia.

Frequently Asked Questions for Employer of Record services in Mongolia

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Mongolia?

When using an Employer of Record (EOR) like Rivermate in Mongolia, the EOR handles the filing and payment of employees' taxes and social insurance contributions. This includes the calculation, withholding, and remittance of income taxes and social insurance contributions to the appropriate Mongolian authorities. The EOR ensures compliance with local tax laws and regulations, thereby relieving the client company of the administrative burden and complexities associated with these obligations. This service is particularly beneficial for companies that do not have a legal entity in Mongolia, as it allows them to manage their workforce efficiently while remaining compliant with local employment laws.

What is HR compliance in Mongolia, and why is it important?

HR compliance in Mongolia refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes ensuring that employment contracts, wages, working hours, health and safety standards, and employee benefits comply with Mongolian legislation. Key aspects of HR compliance in Mongolia include:

  1. Employment Contracts: Employers must provide written employment contracts that outline the terms and conditions of employment, including job duties, salary, working hours, and other relevant details.

  2. Wages and Salaries: Compliance with minimum wage laws and timely payment of salaries is crucial. Employers must also ensure that any overtime work is compensated according to the legal requirements.

  3. Working Hours: The standard working hours in Mongolia are typically 40 hours per week. Employers must adhere to regulations regarding overtime, rest periods, and public holidays.

  4. Health and Safety: Employers are required to provide a safe working environment and comply with occupational health and safety regulations. This includes conducting regular risk assessments and providing necessary training and protective equipment.

  5. Employee Benefits: Compliance with laws regarding social insurance, including health, pension, and unemployment insurance, is mandatory. Employers must make the necessary contributions to these social insurance schemes.

  6. Termination and Severance: Employers must follow legal procedures for terminating employment, including providing notice and severance pay where applicable. Unlawful termination can lead to legal disputes and financial penalties.

Importance of HR Compliance in Mongolia:

  1. Legal Protection: Adhering to HR compliance helps protect the company from legal disputes and potential lawsuits. Non-compliance can result in significant fines, penalties, and damage to the company's reputation.

  2. Employee Satisfaction: Compliance with labor laws ensures fair treatment of employees, which can lead to higher job satisfaction, increased productivity, and lower turnover rates.

  3. Reputation Management: Companies that are known for complying with labor laws and treating their employees well are more likely to attract top talent and maintain a positive reputation in the market.

  4. Operational Efficiency: Proper HR compliance ensures smooth business operations by preventing disruptions caused by legal issues or employee dissatisfaction.

  5. Risk Management: By adhering to compliance requirements, companies can mitigate risks associated with non-compliance, such as financial losses, legal battles, and damage to the company's brand.

Using an Employer of Record (EOR) like Rivermate in Mongolia can significantly simplify the process of achieving and maintaining HR compliance. An EOR takes on the responsibility of ensuring that all employment practices adhere to local laws and regulations, allowing companies to focus on their core business activities. This includes managing payroll, benefits, taxes, and other HR functions in compliance with Mongolian labor laws, thereby reducing the administrative burden and minimizing the risk of non-compliance.

What is the timeline for setting up a company in Mongolia?

Setting up a company in Mongolia involves several steps and can take a considerable amount of time due to the various legal and administrative requirements. Here is a detailed timeline for setting up a company in Mongolia:

  1. Name Reservation (1-2 days):

    • The first step is to reserve a company name with the Legal Entities Registration Office (LERO). This process typically takes 1-2 days.
  2. Preparation of Documents (3-5 days):

    • Prepare the necessary documents, including the Articles of Incorporation, company bylaws, and other required forms. This step can take 3-5 days depending on the complexity of the documents and the efficiency of the preparer.
  3. Notarization of Documents (1-2 days):

    • All documents must be notarized. This process usually takes 1-2 days.
  4. Submission to LERO (1-2 days):

    • Submit the notarized documents to the Legal Entities Registration Office. The submission process itself is quick, taking about 1-2 days.
  5. Company Registration (5-7 days):

    • The LERO will review the submitted documents and, if everything is in order, will register the company. This process typically takes 5-7 days.
  6. Tax Registration (3-5 days):

    • After the company is registered, it must be registered with the General Department of Taxation. This process usually takes 3-5 days.
  7. Social Insurance Registration (2-3 days):

    • Register the company with the Social Insurance General Office. This step typically takes 2-3 days.
  8. Opening a Bank Account (3-5 days):

    • Open a corporate bank account. This process can take 3-5 days, depending on the bank's requirements and procedures.
  9. Obtaining Necessary Licenses and Permits (Variable):

    • Depending on the nature of the business, additional licenses or permits may be required. The time required to obtain these can vary widely, from a few days to several weeks.

In total, the process of setting up a company in Mongolia can take approximately 3-4 weeks, assuming there are no significant delays or complications. However, this timeline can be extended if additional licenses or permits are required or if there are issues with document preparation or submission.

Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process. An EOR can handle many of the administrative and legal requirements on behalf of the company, reducing the time and effort required to set up operations in Mongolia. This allows businesses to focus on their core activities while ensuring compliance with local laws and regulations.

What options are available for hiring a worker in Mongolia?

In Mongolia, employers have several options for hiring workers, each with its own set of legal and administrative requirements. Here are the primary methods:

  1. Direct Employment:

    • Local Hiring: Employers can directly hire Mongolian nationals. This involves creating a local entity, such as a subsidiary or branch office, and complying with Mongolian labor laws, tax regulations, and social security contributions.
    • Foreign Workers: Hiring foreign nationals requires obtaining work permits and visas, which can be a complex and time-consuming process. Employers must demonstrate that the position cannot be filled by a local worker and comply with quotas and other regulations.
  2. Independent Contractors:

    • Employers can engage independent contractors for specific projects or tasks. However, this arrangement must be carefully structured to avoid misclassification issues, as Mongolian labor authorities may reclassify contractors as employees if the relationship resembles traditional employment.
  3. Temporary Staffing Agencies:

    • Employers can use local staffing agencies to hire temporary workers. These agencies handle the administrative aspects of employment, such as payroll and compliance, but the workers are typically employed by the agency rather than the client company.
  4. Employer of Record (EOR) Services:

    • An EOR, like Rivermate, can be an efficient and compliant solution for hiring in Mongolia. The EOR acts as the legal employer on behalf of the client company, handling all employment-related responsibilities, including payroll, tax compliance, benefits administration, and adherence to local labor laws. This allows the client company to focus on its core business activities without the need to establish a legal entity in Mongolia.

Benefits of Using an Employer of Record in Mongolia:

  1. Compliance and Risk Mitigation:

    • An EOR ensures full compliance with Mongolian labor laws, tax regulations, and social security requirements, reducing the risk of legal issues and penalties.
  2. Cost-Effective:

    • Using an EOR can be more cost-effective than setting up a local entity, especially for companies looking to hire a small number of employees or for short-term projects.
  3. Speed and Efficiency:

    • An EOR can expedite the hiring process, allowing companies to onboard employees quickly without navigating the complexities of local employment regulations.
  4. Focus on Core Business:

    • By outsourcing employment administration to an EOR, companies can concentrate on their core business operations and strategic goals, rather than getting bogged down in HR and compliance matters.
  5. Local Expertise:

    • EORs possess in-depth knowledge of the local labor market and regulatory environment, providing valuable insights and guidance to ensure smooth and compliant operations.

In summary, while there are multiple options for hiring workers in Mongolia, using an Employer of Record like Rivermate offers significant advantages in terms of compliance, cost-effectiveness, and operational efficiency. This approach allows companies to seamlessly expand their workforce in Mongolia without the administrative burden and legal complexities associated with direct employment.

Is it possible to hire independent contractors in Mongolia?

Yes, it is possible to hire independent contractors in Mongolia. However, there are several important considerations to keep in mind when doing so:

  1. Legal Framework: Independent contractors in Mongolia are governed by the Civil Code rather than the Labor Law. This means that the relationship between the contractor and the hiring entity is based on a civil contract, which outlines the terms and conditions of the engagement.

  2. Contractual Agreement: It is crucial to have a well-drafted contract that clearly specifies the scope of work, payment terms, duration, and other relevant conditions. This helps in avoiding any potential disputes and ensures that both parties are clear about their obligations.

  3. Taxation: Independent contractors are responsible for their own taxes in Mongolia. They must register with the tax authorities and ensure that they comply with the relevant tax regulations, including income tax and social security contributions. The hiring entity is not responsible for withholding taxes on behalf of the contractor.

  4. Employment Status: It is important to distinguish between an independent contractor and an employee. Misclassification can lead to legal issues, including penalties and back payments of employment benefits. Independent contractors should have the freedom to control how they perform their work and should not be subject to the same level of control and supervision as employees.

  5. Intellectual Property: The contract should address the ownership of any intellectual property created during the engagement. Typically, the hiring entity would want to ensure that it retains ownership of any work product or intellectual property developed by the contractor.

  6. Termination: The contract should also outline the terms under which the agreement can be terminated by either party. This includes notice periods and any conditions that must be met for termination.

Using an Employer of Record (EOR) service like Rivermate can simplify the process of hiring independent contractors in Mongolia. An EOR can help ensure compliance with local laws, manage payroll and tax obligations, and provide a layer of protection against misclassification risks. This allows companies to focus on their core business activities while ensuring that their contractual relationships are legally sound and properly managed.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Mongolia?

When a company uses an Employer of Record (EOR) service like Rivermate in Mongolia, several legal responsibilities are managed by the EOR, simplifying the process for the client company. Here are the key legal responsibilities and how they are handled:

  1. Employment Contracts: The EOR is responsible for drafting and maintaining compliant employment contracts in accordance with Mongolian labor laws. This includes ensuring that contracts include all necessary terms and conditions, such as job description, salary, working hours, and termination clauses.

  2. Payroll and Tax Compliance: The EOR handles payroll processing, ensuring that employees are paid accurately and on time. They also manage the calculation and withholding of income taxes, social insurance contributions, and other mandatory deductions, ensuring compliance with Mongolian tax regulations.

  3. Social Insurance and Benefits: In Mongolia, employers are required to contribute to social insurance schemes, which cover pensions, health insurance, unemployment insurance, and other benefits. The EOR ensures that these contributions are made correctly and on time, and that employees are enrolled in the appropriate programs.

  4. Labor Law Compliance: The EOR ensures that all employment practices comply with Mongolian labor laws, including regulations on working hours, overtime, leave entitlements, and workplace safety. They stay updated on any changes in legislation to ensure ongoing compliance.

  5. Employee Onboarding and Offboarding: The EOR manages the onboarding process for new employees, including obtaining necessary work permits and visas if applicable. They also handle the offboarding process, ensuring that terminations are conducted in compliance with local laws and that all final payments and entitlements are settled.

  6. Dispute Resolution and Legal Support: Should any employment disputes arise, the EOR provides support in resolving these issues in accordance with Mongolian labor laws. This includes handling grievances, disciplinary actions, and, if necessary, representing the company in labor disputes or legal proceedings.

  7. Record Keeping and Reporting: The EOR maintains accurate and up-to-date employment records as required by Mongolian law. They also handle any necessary reporting to government authorities, ensuring that all documentation is complete and submitted on time.

By using an EOR like Rivermate in Mongolia, a company can effectively outsource these complex and time-consuming legal responsibilities, allowing them to focus on their core business activities while ensuring full compliance with local employment laws.

What are the costs associated with employing someone in Mongolia?

Employing someone in Mongolia involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, statutory contributions, and other employment-related expenses. Here’s a detailed breakdown:

  1. Direct Compensation:

    • Salaries and Wages: The primary cost is the employee's salary or wage. The minimum wage in Mongolia is set by the government and is subject to periodic changes. As of the latest update, the minimum monthly wage is MNT 420,000 (approximately USD 147).
    • Bonuses and Incentives: Depending on the industry and company policy, employers may also need to budget for performance bonuses, annual bonuses, and other incentive payments.
  2. Statutory Contributions:

    • Social Insurance Contributions: Employers in Mongolia are required to contribute to the social insurance fund. The contribution rates are as follows:
      • Pension Insurance: 7% of the employee’s gross salary.
      • Health Insurance: 2% of the employee’s gross salary.
      • Unemployment Insurance: 0.2% of the employee’s gross salary.
      • Industrial Accident and Occupational Disease Insurance: 0.8% of the employee’s gross salary.
      • Total Employer Contribution: 10% of the employee’s gross salary.
    • Employee Contributions: Employees also contribute to the social insurance fund, with a total contribution rate of 11.5% of their gross salary.
  3. Other Employment-Related Expenses:

    • Personal Income Tax (PIT): Employers are responsible for withholding and remitting personal income tax from employees' salaries. The standard PIT rate in Mongolia is 10%.
    • Mandatory Health and Safety Measures: Employers must ensure a safe working environment and may incur costs related to health and safety training, equipment, and compliance with occupational health standards.
    • Training and Development: Depending on the industry and specific job roles, employers might need to invest in training and development programs to enhance employee skills and productivity.
    • Recruitment Costs: These include expenses related to advertising job vacancies, recruitment agency fees, and the time spent by HR personnel in the hiring process.
    • Employee Benefits: While not always mandatory, many employers offer additional benefits such as health insurance, transportation allowances, meal allowances, and other perks to attract and retain talent.
  4. Administrative and Compliance Costs:

    • Payroll Management: Managing payroll can be complex and may require investment in payroll software or outsourcing to a payroll service provider.
    • Legal and Accounting Fees: Ensuring compliance with local labor laws and tax regulations may necessitate legal and accounting services.

Using an Employer of Record (EOR) like Rivermate can help manage these costs effectively. An EOR handles all aspects of employment, including payroll, tax compliance, and statutory contributions, ensuring that the employer remains compliant with local laws. This can significantly reduce the administrative burden and potential risks associated with employing staff in Mongolia. Additionally, an EOR can provide insights into local market conditions and help optimize compensation packages to attract and retain top talent.

Do employees receive all their rights and benefits when employed through an Employer of Record in Mongolia?

Yes, employees in Mongolia receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Mongolia where employment laws can be complex and subject to frequent changes. Here are some key points on how an EOR ensures employees receive their rights and benefits:

  1. Compliance with Labor Laws: An EOR in Mongolia ensures that employment contracts are compliant with the Labor Law of Mongolia. This includes adhering to regulations regarding working hours, overtime, rest periods, and holidays.

  2. Social Security and Health Insurance: An EOR manages the mandatory social security and health insurance contributions. In Mongolia, employers are required to contribute to social insurance funds, which cover pensions, health, unemployment, and industrial accidents. An EOR ensures these contributions are made accurately and on time.

  3. Tax Compliance: An EOR handles the calculation and withholding of personal income tax from employees' salaries, ensuring compliance with Mongolian tax laws. This includes filing necessary tax returns and making payments to the tax authorities.

  4. Employee Benefits: An EOR provides statutory benefits such as paid leave, maternity leave, and sick leave as mandated by Mongolian law. They also ensure that employees receive any additional benefits that may be customary or negotiated in their employment contracts.

  5. Employment Contracts: An EOR drafts and manages employment contracts in accordance with Mongolian labor laws. This includes specifying terms of employment, job responsibilities, salary, and termination conditions.

  6. Dispute Resolution: In case of any employment disputes, an EOR provides support and ensures that any issues are resolved in compliance with local labor laws, protecting both the employee and the employer.

  7. Local Expertise: An EOR like Rivermate has local HR experts who understand the nuances of Mongolian employment laws and practices. This local expertise ensures that employees' rights are upheld and that they receive all the benefits they are entitled to.

By using an EOR in Mongolia, companies can ensure that their employees are treated fairly and in accordance with local laws, while also mitigating the risks associated with non-compliance. This provides peace of mind for both the employer and the employees, fostering a positive and legally compliant working environment.

How does Rivermate, as an Employer of Record in Mongolia, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Mongolia, ensures HR compliance through a comprehensive understanding and application of local labor laws and regulations. Here are several ways Rivermate achieves this:

  1. Local Expertise: Rivermate employs local HR professionals who are well-versed in Mongolian labor laws, including the Labor Law of Mongolia, which governs employment contracts, working hours, wages, and termination procedures. This local expertise ensures that all HR practices are compliant with national regulations.

  2. Employment Contracts: Rivermate ensures that employment contracts are drafted in accordance with Mongolian legal requirements. This includes specifying terms of employment, job descriptions, salary details, and other essential clauses that protect both the employer and the employee.

  3. Payroll Management: Rivermate handles payroll processing in compliance with Mongolian tax laws and social security regulations. This includes accurate calculation of salaries, deductions for taxes, social insurance contributions, and timely disbursement of wages.

  4. Tax Compliance: Rivermate ensures that all tax obligations are met, including the filing of necessary tax returns and payment of income taxes on behalf of employees. This helps avoid any legal issues related to tax evasion or non-compliance.

  5. Benefits Administration: Rivermate manages employee benefits in line with Mongolian laws, such as health insurance, pension contributions, and other statutory benefits. This ensures that employees receive all legally mandated benefits, fostering a compliant and motivated workforce.

  6. Labor Dispute Resolution: Rivermate provides support in handling labor disputes and grievances in accordance with Mongolian labor laws. This includes mediation and, if necessary, representation in labor courts to ensure fair and legal resolution of conflicts.

  7. Work Permits and Visas: For foreign employees, Rivermate assists in obtaining the necessary work permits and visas, ensuring compliance with immigration laws and regulations in Mongolia.

  8. Regular Audits and Updates: Rivermate conducts regular audits of HR practices and stays updated with any changes in Mongolian labor laws. This proactive approach ensures ongoing compliance and minimizes the risk of legal issues.

By leveraging these strategies, Rivermate as an Employer of Record in Mongolia provides a robust framework for HR compliance, allowing businesses to focus on their core operations while ensuring that all employment-related legal requirements are met.

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