Kazakhstan: A Guideline to Payroll and Employer of Record

Run your business seamlessly with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Kazakhstan.

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Overview

 

Kazakhstan, officially the Republic of Kazakhstan, is a landlocked country mostly in Central Asia, with a small part in Eastern Europe. It borders Russia to the north and west, China to the east, Kyrgyzstan to the southeast, Uzbekistan to the south, and Turkmenistan to the southwest, with a coastline along the Caspian Sea. Its capital is Astana, known as Nur-Sultan from 2019 to 2022. Almaty, Kazakhstan's largest city, was the country's capital until 1997. Kazakhstan is the world's ninth-largest country by land area and the largest landlocked country in the world.

Kazakhstan is a developing country with a mixed economy. It is the largest economy in Central Asia and the 53rd largest economy in the world by GDP. Kazakhstan's economy is heavily dependent on the oil and gas sector, which accounts for over 35% of GDP and 75% of exports. The country is also a major exporter of minerals, such as copper, uranium, and zinc.

Do your organization's expansion plans require hiring employees in Kazakhstan? If you lack a physical entity in the country – a key requisite to hiring local talent- your solution is the best HR payroll software, Neeyamo – Global Payroll Services. Neeyamo's international payroll system assists in onboarding and managing employees in Mozambique- processing payroll and payroll accounting, managing global payroll compliance requirements, benefits, and more.

Tools And Instances

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Facts And Stats

Capital

Astana (Nur-Sultan)

Currency

Kazakhstani Tenge (KZT)

Official Language

Kazakh, Russian

Fiscal Year

1 January - 31 December

Date Format

DD/MM/YYYY

Country Calling Code

+7

Time Zone

UTC +06:00

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a major challenge for any firm. The added complication of compliance can make things worse and drastically affect the time and efforts that can be used in other equally important aspects of an organization's development.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform, Neeyamo Payroll

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees. Neeyamo aids you in completing all your payroll and tax accounting needs.

Employee Taxes

2.00% - Health Insurance (OMIC) (contributions should not exceed ten times the minimum monthly wage)

10.00% - Pension (OPC) (The gross income subject to OPC is capped at 50 times the minimum monthly wage)

12.0% - Total Employee Cost

Employee Income Tax

10.00% - Flat Rate

Employer Taxes

3.50% - Social Insurance (capped at 3.5% of seven times the minimum monthly wage)

3.00% - Medical Insurance (OMIC) (contributions should not exceed ten times the minimum monthly wage)

9.50% - Social Tax

5.00% - Obligatory Professional Pension (OPPC) (* applicable for employees working in harmful conditions)

16.00% – 21.00% - Total Employment Cost

Payroll Cycle

Overview

Undoubtedly, payroll is a critical aspect of any organization. The Pay cycle is a notable feature that provides a sense of accountability for an employee to be paid consistently for their work.

Frequency

The frequency cycle is Monthly. 

13th Month Cycle

 

There is no statutory requirement for employers in Kazakhstan to pay their employees a Christmas bonus or a 13th month pay. However, some employers may choose to do so as a discretionary benefit.

Global Work

Overview

An Employer of Record service provider helps you get rid of the hassle of handling the complexities that come with setting up a new employee in remote locations. They act as legal employers, facilitate salary payments, and handle everything from health insurance. payroll taxes, and employee benefits to comply with local tax laws and regulations.

This ensures that the client company can focus on the employee’s everyday tasks safely in the knowledge that they have a cost-effective solution as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

The minimum wage in Kazakhstan is KZT 70,000 per month as of January 1, 2023.

Overtime

 

The overtime policy in Kazakhstan is governed by the Labor Code of the Republic of Kazakhstan. The Labor Code defines overtime as any work performed outside of the regular working hours, which are set at 40 hours per week.

Overtime work is only permitted with the employee's consent, except in certain emergency situations. The maximum amount of overtime that an employee can be required to work is 2 hours per day and 12 hours per month.

Employees are compensated for overtime work at a rate of 1.5 times their regular pay. Employees who work overtime on holidays or weekends are compensated at a rate of 2 times their regular pay.

Data Retention Policy

The data retention policy in Kazakhstan is governed by the Law on Personal Data Protection of the Republic of Kazakhstan (the "Personal Data Law"). The Personal Data Law requires businesses to retain personal data for a period of no longer than is necessary for the purposes for which it was collected and processed.

The Personal Data Law also sets out a number of specific requirements for the retention of personal data, including:

  • Personal data relating to financial transactions must be retained for a period of at least 10 years.
  • Personal data relating to employment must be retained for a period of at least 3 years after the termination of employment.
  • Personal data relating to customers must be retained for a period of at least 3 years after the customer's last contact with the business.


Businesses that are subject to the Personal Data Law must also implement a data retention policy that is in line with the requirements of the law.

Hiring and Onboarding Requirements

Hiring

 

The following are the general employee hiring requirements in Kazakhstan:

  • Age: Employees must be at least 16 years old to work in Kazakhstan.
  • Citizenship: Kazakh citizens and non-citizens are both allowed to work in Kazakhstan. However, non-citizens may require a work permit or visa.
  • Education and skills: The education and skills requirements for each job will vary depending on the industry and the specific position. However, most employers will require their employees to have a basic level of education and skills.
  • Criminal background check: Employers in Kazakhstan are required to conduct a criminal background check on all potential employees before hiring them.
  • Medical examination: Employers may require potential employees to undergo a medical examination before hiring them. However, this is not a legal requirement.

Onboarding

The following are some of the most common employee onboarding documents in Kazakhstan:

  • Employment contract: This is a legally binding agreement between the employer and the employee that outlines the terms and conditions of employment. The employment contract must be in writing and signed by both parties.
  • Job description: This document describes the employee's duties and responsibilities, as well as the qualifications and experience required for the position.
  • Company handbook: This document contains information about the company's policies, procedures, and benefits.
  • Non-disclosure agreement (NDA): This document is used to protect the company's confidential information.
  • Conflict of interest agreement: This document is used to prevent employees from engaging in activities that could conflict with their job duties.
  • Tax and insurance forms: Employees are required to complete a number of tax and insurance forms when they are hired.

In addition to these standard documents, employers in Kazakhstan may also require employees to sign other documents, such as a confidentiality agreement or a non-compete agreement.

Probation

 

The probation period in Kazakhstan is the initial period of employment during which the employer assesses the employee's suitability for the position. The probation period is governed by the Labor Code of the Republic of Kazakhstan.

The maximum probation period for most employees is three months. However, the probation period can be extended to six months for CEOs, CFOs, their deputies, and heads of branches or representative offices.

Leave

Public Holidays

The public holidays are observed in Kazakhstan:

  • January 1 - 3: New Year’s Day 
  • January 7: Orthodox Christmas
  • March 8: Women's Day
  • March 21 - 23: Nauryz Holiday 
  • May 1: Kazakhstan People Solidarity Day  
  • May 7 and 8: Defenders' Day 
  • May 9: Victory Day 
  • June 28: Kurban Ait
  • July 6 and 7: Capital City Day 
  • August 30: Consitution Day 
  • October 25: Republic Day 
  • December 16 - 18: Independence Day

Annual Leave

Employees are entitled to at least 24 calendar days of basic paid leave each calendar year, unless otherwise provided. The vacation compensation should be paid at least 3 days before the employee goes on leave.

Sick Leave

Employees are entitled to 3 days paid sick leave entitlement per year, which may increase up to 6 days for severe illness.

Maternity Leave

Mothers are entitled to maternity leave, which is paid by the state social insurance fund. The duration of maternity leave is 126 calendar days, with 70 days before the expected date of delivery and 56 days after the delivery.

Paternity Leave

There are no provisions in the law regarding paternity leave.

Other Leave

Employees are entitled to up to 5 days of unpaid leave for Marriage, Bereavement (of a member of the immediate family), and exceptional circumstances.

Termination

Notice Period

The employee notice period in Kazakhstan is the period of time that an employee must give their employer before terminating their employment contract. The notice period is governed by the Labor Code of the Republic of Kazakhstan.

The minimum notice period for most employees is one month. However, the notice period can be extended to two months for CEOs, CFOs, their deputies, and heads of branches or representative offices.

Severance Pay

The amount of severance pay that an employee is entitled to depends on the reason for termination and the employee's length of service. For example, an employee is entitled to one month's severance pay for termination due to a reduction in staff, but two months' severance pay for termination due to liquidation of the employer.

Employees are entitled to severance pay even if they are terminated during their probation period. However, the amount of severance pay that they are entitled to will be reduced by the length of their probation period.

Visa

Overview

To obtain a work visa in Kazakhstan, foreign nationals must have a work permit or a residence permit.

The M1 visa is the most common Kazakhstan work visa among expats looking into working there.

There are two effective ways to obtain a Kazakhstan work permit: work permit for managers, specialists, and qualified workers, and representative office work visa for chief executives.

  • The employer must submit a work permit application on behalf of the foreign employee to the Ministry of Foreign Affairs.
  • After the work permit is issued, the foreign employee needs to visit the embassy or consulate of Kazakhstan in their country to apply for an entry visa.
  • The foreign employee should provide documents like an employment contract, CV, proof of accommodations in Kazakhstan, etc.

After obtaining a work visa and traveling to Kazakhstan, foreign employees should register with the Migration Police.

Work permits are issued upon payment of a state fee of up to USD 3,750, depending on the category of the relevant work permit.

It's important to note that the visa and work permit regulations in Kazakhstan can be complex, and the regulations can change frequently. Employers and foreign nationals should consult with local experts to ensure compliance with all visa and work permit requirements in Kazakhstan.

Employee Background Checks

Legal and Background Checks 

Employee background checks in Kazakhstan are governed by the Labor Code of the Republic of Kazakhstan. The Labor Code states that employers have the right to conduct background checks on potential employees, but they are required to obtain the employee's consent before doing so.

Employers in Kazakhstan can conduct a variety of background checks, including:

  • Criminal record checks
  • Employment history checks
  • Education verification
  • Reference checks
  • Medical examinations


Employers are not permitted to conduct credit checks or drug tests on potential employees without their consent.

Last updated on October 9, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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