Practice Area Articles


February 05, 2024

By Paul Hastings Professional

Back to International Employment Law




Declaration for CEOs of legal entities

Effective as of 1 January 2024, amendments to the Tax Code of the Republic of Kazakhstan mandated that certain categories of individuals, including, inter alia, CEOs of legal entities along with their spouses must file an initial Declaration of Assets and Liabilities. This declaration should encompass information on the status of assets and liabilities as of 31 December 2023 including assets located abroad. Subsequently, these individuals are obligated to submit an annual Declaration of Income and Property, detailing income received during the calendar year, including income earned outside the Republic of Kazakhstan. Failure to submit the declaration on time may lead to the administrative liability in the form of a fine (approximately €105 in 2023). This imposes an additional responsibility on top managers, compelling them to disclose their income and assets. Furthermore, uncertainties surround the specific categories of affected individuals (e.g., residents versus non-residents), leading to questions about the exact applicability of the declaration requirement. Further clarifications are expected from the State Revenue Committee of the Ministry of Finance, which employers should monitor.

Draft order on mentoring Kazakhstan employees by foreign experts

The Ministry of Labor and Social Protection (the “Ministry”) has developed a draft order outlining the rules governing the practice of mentoring Kazakhstan employees by foreign employees working in Kazakhstan. Mentoring by a foreign employee may be established for a period of 6 to 12 months aiming to transfer experience and enhance the skills of Kazakhstan employees. While such mentorship incurs an additional cost for an employer, it also opens the door for employers to benefit from improved cross-cultural collaboration and development. The draft order was open for public discussions until 17 November 2023. As it has not yet been officially considered by the Ministry, it is necessary to monitor this initiative.

Discussion about a General Agreement for 2024-2026, binding on all employers in Kazakhstan

Discussions are currently underway regarding the conclusion of the General Agreement on social partnership between the Government, republican associations of employees and republican associations of employers for 2024 – 2026, as the previous one expired in 2023. The General Agreement encompasses critical issues such as the creation of new jobs, reduction of unemployment, improvement of the labour remuneration system, labour protection and safety, poverty reduction, and safeguarding the internal market. The ongoing discussions surrounding a General Agreement for 2024 – 2026 relate to mandatory indexation of salaries on an annual basis and an increase of payments for overtime work, night work, holiday work and payments during standby. Employing companies generally are not keen to undertake these commitments as they heavily depend on the financial condition and resources of each company (e.g., for some companies indexation is “undoable”). Employers (through their associations) should actively participate in discussions and working groups to advocate for balanced interests.

With thanks to Dana Ibrayeva and Victoria Simonova of Dentons for their invaluable collaboration on this update.



  1. Limitation of maximum salary

    The Ministry of Labor (“Ministry”) along with the labor unions (“Unions”) propose to establish a limit level of the ratio between the highest and the lowest salary in a company.  The proposal is for establishment of a limit level of the ratio between the maximum and minimum monthly wages in a company, where the maximum monthly wage cannot exceed 10 times the amount of the minimum monthly wage. For instance, if an employee in a company receives a monthly wage of KZT 60,000 (approx. USD 129 in 2022), the maximum wage in a company cannot exceed KZT 600,000 (approx. USD 1,290 in 2022). According to the current draft law, the ratio will not exceed 10, i.e., it would be impossible to establish the highest salary in a company more than 10 times of the lowest salary.

    Although the authorities’ intention is to oblige employers to increase the minimum wage in a company, in practice it appears problematic to comply with this ratio, especially in large companies where remuneration of top management positions may be fairly high, and adjusting salaries of employees of lower qualification to the proposed ratio would be commercially unreasonable and may significantly impact the employer’s financial condition.

  2. Mandatory indexation

    Currently, mainly the decision on salary indexation is at the employer’s discretion depending on its financial condition (e.g., income, etc.). It is proposed to establish the mandatory indexation of salaries based on the official inflation rate.

    Similar to the salary ratio, this initiative may adversely affect the employers’ financial condition since the indexation would not be based on the employers’ actual income, but on the statutory rate determined by the Government.

  3. New pension contribution

    A new mandatory contribution payment at the employers’ expense is being planned – compulsory employer pension contribution. As this new contribution stipulates, in fact, a new “payroll tax” for employers, the business community has repeatedly asked the authorities to reconsider or cancel introduction of it. As of December 2022, the introduction is planning to be postponed until January 2024. The draft proposal stipulates that the new contribution will be paid at the 1.5% rate of the employee’s income, gradually increasing to a 5% rate. For many companies, such an obligation means an additional financial burden, especially considering the current crisis businesses face. As currently employers already pay pension contributions for employees at the rate of 10% of their salary, introduction of a separate additional contribution may significantly increase the expenses of employers.


Action items for employers for (A), (B) and (C)

As the draft laws in question have not officially been taken into consideration by the Parliament (it is still discussed at the level of the Ministry of Labor), employers should monitor these initiatives and the related discussions. Where possible, companies may participate in discussions and working groups in the Ministry and the Parliament through the associations of employers to express their position.

With thanks to Dana Ibrayeva and Victoria Simonova of Dentons for their invaluable collaboration on this update.




Court casts doubt on lawfulness of terminating employment upon reliance of contractual termination/compensation provision

Until May 2020, the labour legislation of Kazakhstan (Article 50.3 of the Labour Code) permitted employers to terminate relations with an employee without complying with the established procedures (e.g. prior notice, etc.). Payment of compensation in the amount agreed between employers and employees in the employment agreement was sufficient for termination of employment. However, this provision was removed from the Labour Code in May 2020.

The competent authority, the Ministry of Labour and Social Protection, issued a number of clarifications (which do not have mandatory force), stating that termination of employment under Article 50.3 of the Labour Code is permitted if labour agreements containing such a termination option were made before May 2020. In April 2021, the Supreme Court ruled that termination of employment under Article 50.3 of the Labour Code worsens the position of employees in comparison with the current legislation, and, therefore, cannot be applied.  Although Kazakhstan does not have a case law system, the Supreme Court’s decisions are frequently deemed to have precedent nature. The state authorities’ clarifications, on the other hand, are not legally binding.  

Employers should consider this risk when terminating labour agreements containing termination of employment under Article 50.3 of the Labour Code. Given the Supreme Court’s position, in the event of any dispute arising from such termination, employers should be alive to the risk that the court determine that the termination of employment in such circumstances is illegal.


Mandatory Covid-19 vaccinations for employees in  service provider companies

The Government has decided to require employers in certain spheres to vaccinate their employees against COVID-19. The mandatory vaccination requirement mainly applies to service-provider entities (e.g. financial, banking, consulting, communication services, etc.). This requirement stipulates that for full access to the place of work, employees must be fully vaccinated or undergo a mandatory PCR-test every week. Failure to comply with the requirement would entail an administrative fine for employers.

Employers, doing business in the areas where mandatory vaccination is required, should:

  • monitor the vaccination status of their employees on a regular basis; and 
  • restrict access of non-vaccinated employees (who do not had a medical certificate confirming that they are exempt from vaccination and who have not recently had COVID-19) to the place of work.


Couriers engaged under civil law contracts deemed to be employees

In December 2021, the Supreme Court ruled that relations under civil law contracts between couriers and large delivery companies must be recognized as labor relations, and that any relevant contractors are considered to be employees of such delivery companies. The Court ruled that civil law contracts are sham deals, aimed at covering up labor relations between delivery companies and their couriers where de facto contractors are hired on a permanent basis.

Although the Supreme Court’s rulings do not create legal precedent, this decision may substantially change the practice of treating couriers as contractors. Now they may be classified as employees, who are entitled to certain benefits stipulated by labor legislation (such as paid holidays, annual leaves, medical insurance, etc.). 

Companies that use services of individuals (couriers) based on civil law contracts should review these working arrangements and consider whether any changes can be made to mitigate the risk of such individuals being deemed employees of the company.




Unified system of labour agreements recording

The Ministry of Labour launched the Unified System of Labour Agreements Recording (the "USLAR") to computerise the recording of the labour agreements, the labour activity and the number of employees. All employers will be required to enter information on the conclusion and termination of employment agreements with the employees, as well as amendments thereto.

Information on newly executed employment agreements must be entered into the USLAR within five business days from the date of signing of the agreements by both parties.

Information on any amendments to the executed employment agreement, in turn, must be entered into the USLAR within 15 calendar days from the date when such amendments are signed.

Information on termination of an employment agreement must be added to the USLAR within three business days from the date of termination.

Information on existing employment agreements must be entered into the USLAR:

  • Until September 17, 2021 by organisations with up to 2,000 employees;
  • Until September 17, 2022 by organisations with more than 2,000 employees.

There is currently no administrative liability for the employer's failure to add the information into the USLAR. However, after 31 December 2020, upon expiration of the established terms for entering the information into the USLAR, the entry can be done only upon specific approval of the Ministry Labour.


Labour Code amendments regarding remote work

In September 2020, draft amendments to the Labour Code were developed on remote work (the "Draft Law"). In addition to the existing conditions of remote work ("RW"), the Draft Law contains the following new provisions:

  • When hiring an employee on the basis of a RW regime, the employer must establish a procedure of employer-employee interaction that allocates a specific time for performance of work duties and a separate time during which the employee can respond to telephone calls, emails, and address the employer's inquiries.
  • The above interaction procedure must be acknowledged by and agreed with the employee. Otherwise, the employer would not be able to hold the employee liable for a delayed response to the employer's inquiries.
  • In order to protect the employer's confidential information in the RW format, an agreement for protection of the confidential information would be signed with the employee.

Temporary remote work

The Draft Law proposes to permanently establish the employer's right to transfer employees to RW by a unilateral decision for the duration of emergencies (temporary RW). At the same time, salaries would be paid in full in exchange for maintenance of a full workload, as agreed in the employment agreement.

Combined remote work

It is also proposed to introduce a concept of "combined remote work." According to the Draft Law, this will require an additional agreement to the employment agreement.

Adoption of the above listed amendments will allow employers for the period of RW to control performance of work and protect confidential information, as well as transfer employees to RW unilaterally based on the internal order for the duration of emergencies.

The above information is subject to change as the Draft Law progresses.


Provision of personnel services

In December 2020, a draft amendment law to the Labour Code was developed on provision of personnel services (the "Amendment Law").

Although provision of personnel is widely used in Kazakhstan, especially by foreign investors, it is not well regulated by Kazakhstan law. The Amendment Law aims at regulation of entities that professionally render services associated with provision of personnel. In particular, it proposes to set out the arrangement, where transferring company "lends" an employee to a receiving company for a fee pursuant to a service agreement between the transferring company and the receiving company. The personnel provided under the service agreement remain an employee of the transferring company during the term of service agreement.




Employers no longer able to terminate the employment agreement upon mutual agreement and payment of compensation 

Under the Kazakhstan Labor Code, it was possible for an employer to terminate an employment agreement with an employee upon mutual agreement of the parties, without having to deliver any written notice to the employee and obtain his/her consent to terminate the employment agreement. The employee was, however, entitled to compensation. This right and the amount of any compensation payable had to be expressly provided for in the employment agreement. However, an amendment has been introduced to the Labor Code which means that employers are no longer permitted to terminate an employment agreement on this ground. As a result, the inclusion of such a provision in an employment agreement executed before 16 May 2020 may be deemed to be unenforceable; however, this is unclear, particularly as the law amending the Kazakhstan Labor Code does not have a retrospective effect. 

The Ministry of Labour has sought to clarify the position, indicating that such provisions in existing employment agreements should survive. However, these communications by the Ministry of Labour do not have mandatory force, and employers should reconsider relying on such provisions to terminate an employment relationship until the position has been formally clarified by way of a further amendment to the Labor Code or otherwise.


Enhanced protection against discrimination

One of the key principles of Kazakhstan labor law is the prohibition of discrimination. Employees who consider that they have being discriminated against at work have the right to bring a discrimination claim in the courts or via the competent state authorities. Recently adopted amendments to the Kazakhstan Labor Code and Administrative Code establish an even stricter regulation of and liability for discrimination. The employee has the right not only to equal pay for equal work, but also to equal working conditions. Working conditions are the conditions necessary for the employee to remain in the workplace, including work on a rotational basis where needed, sanitary facilities and amenities, sufficient breaks for rest and meals, etc.

Therefore, the employer must ensure both equal pay for equal work and equal working conditions without any discrimination. If it is established that one employee enjoys more benefits and has a higher salary when compared to another employee with the same job title who is doing the same work, the employer may be liable to pay an administrative fine for a violation of the employee's right to equal working conditions (of up to $691 USD depending on the size of the business). It is therefore important to ensure that employees who occupy equal positions are entitled to the same salary and benefit from equal working conditions.


Ensuring safety at remote work

Due to the COVID-19 emergency, remote work became extremely popular. Ordinarily, the employee and the employer must agree on the conditions associated with the remote working regime, such as the scope of work, working hours, methods to record working time, etc. These conditions should be implemented by both parties signing a supplemental agreement to the existing employment contract. In addition, recent amendments to the Kazakhstan Labor Code require organisations to put in place an internal policy ensuring the safe performance of labor duties and compliance by employees with other safety and labor protection requirements.

With thanks to Dana Ibrayeva and Victoria Simonova of Dentons for their invaluable collaboration on this update.

For More Information

Image: Suzanne Horne
Suzanne Horne

Partner, Employment Law Department

Image: Aashna Parekh
Aashna Parekh

Associate, Employment Law Department

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