Employer of Record Guide in 

Azerbaijan

Annual Leave

• Minimum Entitlement: 21 calendar days per year
• Enhanced Entitlement: Certain categories of workers receive additional leave (e.g., teachers, healthcare workers)
• Accrual: Leave accrues monthly and can typically be taken after 6 months of employment
• Payout: Unused leave must be compensated upon termination

Sick Leave

• Duration: Up to 6 months for temporary incapacity
• Compensation: Paid through social insurance system
• Medical Certification: Doctor's certificate required for sick leave claims
• Employer Obligation: First 3 days may be paid by employer, remainder by social insurance

Maternity Leave

• Duration: 126 calendar days total
  • 70 days before birth
  • 56 days after birth (70 days for complicated births)
• Compensation: Paid through social insurance at 100% of average earnings
• Job Protection: Position must be held during leave period

Parental Leave

• Childcare Leave: Available until child reaches 3 years of age
• Compensation: Partial payment through social insurance system
• Eligibility: Available to either parent
• Job Protection: Employer must provide equivalent position upon return

Other Statutory Leave

• Marriage Leave: 3 calendar days
• Bereavement Leave: 3 calendar days for immediate family
• Study Leave: For employees pursuing education (conditions apply)

Summary

Termination Types

Termination by Employer:

• With cause (disciplinary dismissal)
• Without cause (economic reasons, redundancy)
• Mutual agreement

Termination by Employee:

• Voluntary resignation with notice
• Immediate resignation (in specific circumstances)

Notice Period Requirements

Writer's Note: Research data appears incomplete for notice periods - please verify current requirements.

Standard notice periods vary based on:

• Length of service
• Type of contract
• Reason for termination
• Employee category

Severance Pay

Severance compensation is required in cases of:

• Redundancy: One month's average salary
• Employer-initiated termination without cause: Varies by circumstances
• Discriminatory dismissal: Enhanced compensation may apply

Probationary Periods

• Standard Duration: Up to 3 months for most positions
• Extended Periods: Up to 6 months for managerial roles
• Termination During Probation: Simplified termination procedures with reduced notice

Final Pay Requirements

Employers must provide final settlement including:

• Outstanding salary
• Accrued vacation pay
• Severance (if applicable)
• Other contractual benefits

Payment must be made on the last working day or within specified timeframes.

National Public Holidays

Religious Holidays

Religious holidays (Eid al-Fitr, Eid al-Adha) are also observed, with dates varying annually based on the lunar calendar.

Holiday Pay Rules

• Eligibility: All employees entitled to holiday pay
• Compensation: Regular daily wage for non-working holidays
• Working on Holidays: Double pay rate applies

Required Documentation

Employment Contract Elements:

• Job description and responsibilities
• Salary and benefits
• Working hours and location
• Probationary period terms
• Termination conditions

Employee Documentation:

• Identity documents (passport/ID card)
• Tax identification number
• Social insurance registration
• Educational certificates (if relevant)
• Work permit (for foreign nationals)

Work Authorization

Foreign Employees:

• Work permit required before employment
• Residence permit for stays exceeding 90 days
• Quota system may apply for certain nationalities
• Employer sponsorship typically required

Legal Compliance

Registration Requirements:

• Employee registration with social insurance
• Tax registration with authorities
• Labour contract registration (in some cases)

Data Protection:

• Personal data handling must comply with local privacy laws
• Employee consent required for data processing
• Secure storage and limited access requirements

Contractual Elements

Mandatory Clauses:

• Intellectual property assignment
• Confidentiality provisions
• Non-compete agreements (if applicable)
• Dispute resolution procedures

Probationary Terms:

• Clear performance expectations
• Evaluation criteria and timeline
• Termination procedures during probation

Worker Classification

Azerbaijan distinguishes between:

• Employees: Subject to Labour Code protections
• Independent Contractors: Governed by civil law contracts
• Consultants: May fall under either category depending on relationship structure

Misclassification can result in penalties and retroactive benefit payments.

Industry-Specific Considerations

Oil & Gas Sector:

• Special regulations apply to petroleum industry workers
• Enhanced safety requirements
• Specific visa and work permit procedures for international staff

Technology Sector:

• Growing IT sector with some regulatory incentives
• High-Tech Park provides certain benefits for qualifying companies

Cultural Workplace Norms

Communication Style:

• Formal business relationships initially
• Respect for hierarchy and seniority
• Azerbaijani and Russian commonly used in business

Work-Life Balance:

• Traditional approach to working hours
• Family obligations highly respected
• Religious observances accommodated

Remote Work Framework

Remote work arrangements are becoming more accepted, particularly post-pandemic. However:

• Clear policies should be established in employment contracts
• Equipment and expense responsibilities must be defined
• Tax implications for cross-border remote work should be considered

What Borderless AI Handles

When you hire through Borderless AI in Azerbaijan, we manage:

• Local employment contract preparation and compliance
• Payroll processing and tax withholding
• Social insurance registration and contributions
• Regulatory compliance monitoring
• Local HR support and employee relations
• Termination procedures and documentation

Our AI-native platform ensures your Azerbaijan operations remain compliant while you focus on growing your team and business.