Employment 2020

Last Updated September 08, 2020

Azerbaijan

Law and Practice

Authors



Ekvita LLC is a full-service legal consulting company with circa 70 full-time professionals. Its active clients include several Fortune 500 companies operating globally. For several years in a row, EKVITA has been recognised by leading ranking institutions as one of the leaders in employment practice. The firm's expertise in this practice area includes advising several international recruitment and manpower agencies on the complexities of employing expatriate workforce, advising the UK's major chemical services provider on the re-establishment of its employment practices (over 130 employees) to achieve cost savings and ensure regulatory compliance, advising a major US company in its first introduction of a corporate share buy-back scheme for its local employees in Azerbaijan, developing employment and migration policies and systems for an international energy company and one of the largest employers in Azerbaijan, a proposed series of legislative improvements to the current labour legislation of Azerbaijan via the American Chamber of Commerce and other initiatives.

The main changes in employment law that have been enacted or decided in the last 12 months are the following:

  • the Law on Amendments to the Law on Labour Pensions: as of 1 October 2019, the minimum amount of labour pension has been set at AZN200;
  • the Law on amendments to the Code on Administrative Offences (dated 26 August 2019): in accordance with the changes, a new article has been added entitled “violation of employment law”;
  • the Law on the limit of the criterion of need in the Republic of Azerbaijan for 2020: for the appointment of targeted state social assistance for 2020, the limit of the criterion of need has been set at AZN160 as of 1 January 2020;
  • the Presidential Decree on a number of measures to ensure activities of the Ministry of Labour and Social Protection (dated 30 June 2020): as per the Decree, the charters of the following state bodies have been approved:
    1. the State Social Protection Fund;
    2. the State Employment Agency;
    3. the State Agency for Medical and Social Expertise and Rehabilitation;
    4. the Social Services Agency;
  • the Law on Amendments to the Law on Health Insurance: the amendments have been made relating to the Mandatory Health Insurance to come into force as of 1 January 2021;        
  • the Presidential Decree on approval of “action plan for the implementation of the employment strategy for 2020-2025” (dated 13 February 2020): reform measures are envisaged in the following areas:
    1. improving the regulatory framework and institutional structure in the field of labour market regulation;
    2. developing workforce skills and raising labour standards;
    3. expanding the coverage and increasing the effectiveness of active employment measures, strengthening the integration into the labour market of persons in particular need of social protection and having difficulties in finding a job;
    4. preventing informal labour relations;
    5. development of a system for monitoring and forecasting the labour market;
  • the Law on amendments to the Code on Administrative Offences (dated 10 July 2020): an article has been added establishing liability for breach of legislation on the rights of persons with disabilities.

The Azerbaijani Government has taken certain actions and initiatives to cope with the COVID-19 crisis. The action plan addressed to reduce the impact of the pandemic includes the following:

  • unemployment risk protection and social protection of public/private sector employees;
  • the lump-sum allowance in the amount of the subsistence minimum (AZN190) to persons registered as unemployed in the State Employment Service;
  • employment and social protection of the unemployed and dismissed, etc;

During the quarantine period, the Government imposed some temporary restrictions:

  • application of work permits for movement in the big cities;
  • changing working hours in government bodies;
  • limitation on the number of employees allowed in some activities;
  • the government recommends a moratorium on the termination of employment agreements during the quarantine regime.

In accordance with Azerbaijani law, there are no significant distinctions between blue-collar and white-collar workers. An example of a distinction is the number of minimum annual leave days for blue-collar workers is 21 days and for white-collar workers it is 30 days.

Furthermore, blue-collar workers have higher compulsory insurance ratios against loss of professional work capacity as a result of labour accidents and occupational diseases.

In accordance with the Labour Code of Azerbaijan, employment agreements are definite and indefinite. Employment agreements must be in writing and registered on the Electronical Government Portal (e-gov.az). The Labour Code defines the minimum requirements for the content of an employment contract. For instance, the employee’s workplace, employment date, working conditions (workplace, hours, safety issues, etc), job description, vacation, etc.

Under the Labour Code, working hours may not exceed eight hours in a day and 40 hours per week.

For different categories of employees, considering their age, health, terms of employment, duties, etc, reduced working hours may be set out.

The employer is obliged to arrange underemployment (workday or workweek) in the following circumstances based on the request of the employee:

  • considering the health and physiological state (for example, pregnancy, disability, restricted health condition up to 18 years old) of an employee;
  • considering that an employee has a chronically sick child or any other family member;
  • considering that women have children under the age of 14 or with restricted health condition.

Underemployment for the first two points above requires to be approved on the basis of the respective medical report.

Cumulative working hours may be used if working hours during the period of record do not exceed the standard number of working hours. In this case, the period of record must not exceed one year and the daily work (shift) period must not exceed 12 hours.

An employee is permitted to perform overtime in order to prevent a natural disaster, industrial accident, or other emergency event, or to eliminate their consequences, or to maintain a military regime, as well as to prevent the loss of perishable goods, under the Labour Code.

Employees working under extremely hard and hazardous conditions are not required to work overtime.

Overtime must not exceed two hours per day (per shift) in areas where working conditions are hard and hazardous.

Employee must not be engaged in overtime exceeding four hours during two consecutive working days or be engaged in overtime work exceeding two hours at workplaces where working conditions are hard or hazardous.

The minimum monthly wage is AZN250 as per the Presidential Decree, dated 18 June 2019.

The types, systems and standards of wages, tariff (official) wages, wage supplements, bonuses, and other incentives are specified in collective agreements and/or employment agreements.

The compensation system, and the type and amount of salaries of employees in state-run organisations are determined by the relevant government body.

The amount of an employee's salary is based on the results of his or her work performance, personal efficiency and professional standing and it may not be restricted within any level.

Supplements to wages are paid to increase compensation for jobs with hard and hazardous conditions, and in workplaces where the climate makes work difficult. The minimum amount of such supplements are determined by the Cabinet of Ministers.

The government may verify the payment of wages, compensations in accordance with the requirements of the legislation during complaints and inspections.

Under Azerbaijani law, employees are entitled to use the leaves, regardless of their position (profession), terms of employment or the effective period of their employment contract. Employees must be granted paid annual leave of at least 21 calendar days. However, some employees (white-collars, agricultural employees, scientific personnel without academic degrees, doctors, etc) must be eligible for 30 calendar days.

The payment for annual leave, regardless of the year of employment for which it is paid, must be based on the average salary for the preceding 12 calendar months and must be paid at least three days prior to taking leave.

The Labour Code also provides paid research, educational and pregnancy, maternal, and child-care leaves, partially paid social leave for child-care and unpaid leave.

An employment agreement may include a non-compete clause which implies that a resigned employee must not take up employment with a competing company. However, in accordance with the Constitution of Azerbaijan and the Labour Code, everyone has the right to choose activity, profession, occupation and place of work freely, based on his or her abilities.

Hence, in the case of disputes, the court may rule in favour of the employee.

Azerbaijani law does not address non-solicitation matters in detail. However, in practice, some companies (especially consulting companies or companies providing outsource services) set out non-solicitation clauses in the agreements with their clients/customers. They do the same with their employees and include non-solicitation clauses to the employment agreements.

With respect to the agreement between a company and client, the non-solicitation clauses are generally enforceable as those agreements are commercial in nature. But, the nature of employment agreements are different and non-solicitation clauses may be deemed unenforceable considering the constitutional rights and freedoms of an employee (ie, freely to choose their place of work).

Data privacy is mainly regulated by the Law on Personal Data, dated 11 May 2010. The Law on Personal Data does not envisage specific provisions for employment matters but generally determines the framework of collecting, processing and protecting the personal data.

Under Azerbaijani law, in general, foreign citizens and stateless persons who have entered into engagement agreements have the same rights and obligations as the Azerbaijani citizens. The Labour Code states that it is unacceptable to give priority to the rights of foreign citizens and stateless persons over Azerbaijani citizens or to limit their rights with respect to labour relations.

Every year, work permits are issued within the labour migration quota approved by the Ministry of Labour and Social Protection of the Population.

As per the Migration Code, a work permit is required for foreign citizens and stateless persons to enter into an engagement agreement, except for those cases where a work permit is not required. Foreign citizens and stateless persons are eligible if they are 18 years of age and there is no suitable Azerbaijani candidate to fill the position.

A trade union may be established on a voluntary basis without discrimination among employees or without prior permission from employers. Employees may join the appropriate trade union and engage in trade-union activity, in order to protect their labour and socio-economic rights and legal interests. As per the Law of Azerbaijan "On trade unions", unions may have local, territorial, republican and nationwide status. However, trade unions in Azerbaijan are not currently powerful and active in the private sector.

For the purpose of protecting their interests with respect to their economic, financial, and business activities, as well as to promote social co-operation with employees' representative agencies, employers may voluntarily establish an organisation and unite in this organisation. No superior rights, privileges, or advantages may be granted to employers' representative agency over trade unions.

Collective agreements are entered into between employers and the trade unions. The content of the collective agreement includes improving the productivity and economic performance of the enterprise, employment, training, professional development, etc. A collective agreement may be executed for a period from one to three years.

The Labour Code sets out the grounds for the termination of an employment agreement.

Grounds for termination are the following:

  • an initiative of one of the parties;
  • expiry of the employment contract;
  • a change in terms and conditions of employment;
  • a change in the ownership of an enterprise;
  • cases not depending on the will of the parties;
  • cases established by the parties in the employment agreement.

Initiatives by one of the parties include termination by both the employee (resignation) and by the employer (liquidation of enterprise, redundancy, material breach by an employee etc).

If the employment agreement is terminated by the employer, reasonable justification is required.

As for a change of ownership, the new owner or its employer is prohibited from massive termination of employment agreements, without first assessing the employees' professional qualifications, ability to perform their tasks and any incompetence that may cause damage to the owner's business.

If the employment agreement is terminated due to redundancy, the employee must be officially notified by the employer. The notice period varies in accordance with the employment experience.

If the employment agreement is terminated on the grounds that a) the enterprise is liquidated and b) there are collective redundancies at the enterprise, employees must be paid severance pay.

Under Azerbaijani law, an employment agreement is terminated at the employer’s initiative if an employee:

  • is absent from work for a whole day without good reason, except in the case of his or her personal illness or a close relative's illness or death;
  • comes to work under the influence of alcohol, drugs, narcotics, or other intoxicants or drinks, or takes these substances at work;
  • causes material damage to the owners as a result of his or her activities or lack thereof;
  • intentionally fails to maintain the confidentiality of state, production and commercial secrets or fails to fulfil his or her obligations on the keeping of those secrets confidential, etc.

The employment agreement of an employee who is a member of a trade union is terminated by providing advice or consent by and between the employer and trade union. After the justifying written application is submitted by an employer to the trade union, the trade union must submit its written decision to the employer no later than ten days from the date of receipt of the submission.

The Azerbaijani Labour Code does not specifically define “termination agreement” for employment issues. In practice, if the parties reach an agreement to terminate the employment agreement, they must document it with the procedure set out in the Labour Code (for instance, the employee submits a resignation letter, and so on). The termination of the employment agreement must be registered on the Electronic Government Portal.

The Labour Code prohibits the termination of the employment agreements of some categories of individuals at the employer’s initiative.

Protected employees against dismissal are the following:

  • pregnant women;
  • women with children under the age of three and men who are bringing up children under the age of three alone;
  • employees whose only source of income is the enterprise where they work and who are raising children under school age alone;
  • employees temporarily disabled;
  • employees who are members of a trade union or any political party, etc.

The liquidation of the enterprise and the expiry of the employment agreement are exceptions.

If an employee considers his or her dismissal to be illegal and groundless, he or she may appeal to a court.

In practice, the courts specifically pay attention if the termination procedure is carried out in line with the statutory requirements (for instance, if the dismissal is reasonably justified and all documents confirming that justification are submitted).

If the employment agreement is terminated by breaching the statutory requirements by the employer, the court may decide on the reinstatement of an employee by retaining his or her salary for the whole period of being mandatorily absent from work.

Under Azerbaijani law, during hiring or a change in or termination of employment, no discrimination in relation to employees is permitted on the basis of citizenship, sex, race, nationality, language, place of residence, economic standing, social origin, age, family circumstances, religion, political views, affiliation with trade unions or other public associations, professional standing, beliefs, or other factors unrelated to the professional qualifications, job performance, or professional skills of the employees.

In the event of discrimination, an employee may apply to the court and claim compensation in relation thereto.

In accordance with the Labour Code, there are two types of labour disputes: (i) collective and (ii) individual.

The parties may use the following methods to resolve a collective dispute: reconciliation commission, mediation and labour arbitration.

It should be emphasised that, with effect from 1 January 2021, for labour disputes mediation will be mandatory before bringing a claim to a court.

Currently, there is no arbitration practice in labour relations.

Although the Labour Code does not specifically touch upon issues related to attorney fees, the Civil Procedure Code addresses this matter. Under the Civil Procedure Code, employee may be awarded attorney fees provided, however, that he or she submits evidence confirming that the fees have been incurred. The attorney fees must be reasonable in accordance with the Civil Procedure Code. The judge has discretion on it and may reject excessive amounts to be compensated to the employee on the grounds that those attorney fees were not reasonable. 

Ekvita LLC

Time Business Center 8th Floor
16e Keykab Khanim
Safaraliyeva St., AZ1010
Azerbaijan/Baku

+994 12 310 04 56

+994 12 310 04 56

office@ekvita.com www.ekvita.com
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Law and Practice

Authors



Ekvita LLC is a full-service legal consulting company with circa 70 full-time professionals. Its active clients include several Fortune 500 companies operating globally. For several years in a row, EKVITA has been recognised by leading ranking institutions as one of the leaders in employment practice. The firm's expertise in this practice area includes advising several international recruitment and manpower agencies on the complexities of employing expatriate workforce, advising the UK's major chemical services provider on the re-establishment of its employment practices (over 130 employees) to achieve cost savings and ensure regulatory compliance, advising a major US company in its first introduction of a corporate share buy-back scheme for its local employees in Azerbaijan, developing employment and migration policies and systems for an international energy company and one of the largest employers in Azerbaijan, a proposed series of legislative improvements to the current labour legislation of Azerbaijan via the American Chamber of Commerce and other initiatives.

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