Employer of Record Guide in Mongolia
Navigating the hiring landscape in Mongolia can be complex, but with the right insights, you can streamline your process. Discover how to compliantly hire top talent and manage your workforce effectively in this emerging market.
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Key stats and facts
Mongolia's economy is driven by mining, construction, and growing tech sectors, with Ulaanbaatar serving as the primary business hub. Understanding the local market dynamics and talent landscape is essential for successful expansion into this resource-rich nation.
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Your EOR guide in Mongolia
From payroll cycles to leave policies, Mongolia's employment regulations have specific requirements that differ from other markets. This comprehensive guide breaks down the essential compliance details you need to hire and manage employees successfully.
Minimum Wage
Mongolia's national minimum wage is 420,000 MNT per month, effective as of 2024. This applies to all employees across the country, with no regional variations.
The minimum wage is typically reviewed annually by the government and adjusted based on economic conditions and cost of living changes.
Payroll Cycle
- Monthly: Most common payment frequency in Mongolia
- Bi-weekly: Allowed but less common
- Payment deadline: Salaries must be paid by the 10th of the following month
Individual Income Tax
Mongolia operates a progressive income tax system:
| Annual Income (MNT) | Tax Rate |
|---|---|
| Up to 3,000,000 | 10% |
| Above 3,000,000 | 25% |
Tax Residency Criteria
Individuals are considered Mongolian tax residents if they:
- Reside in Mongolia for 183 days or more in a calendar year
- Have their centre of vital interests in Mongolia
- Are Mongolian citizens working abroad for Mongolian entities
Tax residents pay income tax on worldwide income, while non-residents pay tax only on Mongolian-source income.
Employer Payroll Contributions
Employers in Mongolia must contribute to social insurance and other mandatory funds:
| Contribution Type | Employer Rate | Employee Rate |
|---|---|---|
| Social Insurance | 11.5% | 10.5% |
| Health Insurance | Included in social insurance | Included in social insurance |
| Unemployment Insurance | Included in social insurance | Included in social insurance |
| Total Employer Cost | ~11.5% | 10.5% |
Note: Social insurance contributions are capped at maximum salary levels set annually by the government.
Working Hours
The standard working schedule in Mongolia is:
- 40 hours per week
- 8 hours per day
- 5 working days (Monday through Friday)
Certain industries and positions may have different arrangements, but these require specific approval and must comply with maximum hour limits.
Overtime Pay
- Overtime rate: 1.5× the regular hourly wage
- Weekend work: 2× the regular hourly wage
- Holiday work: 2× the regular hourly wage
- Maximum overtime: 4 hours per day, 120 hours per year
- Overtime approval: Must be agreed upon in writing
Bonus Payments
Bonuses are not legally mandated but are common practice. When included in employment contracts or company policies, they become legally binding obligations.
Full-Time vs. Part-Time
- Full-time: 40 hours per week
- Part-time: Less than 40 hours per week with proportional benefits and protections
Vacation Leave
Annual leave entitlement increases with tenure:
| Years of Service | Annual Leave Days |
|---|---|
| 0-5 years | 15 working days |
| 5-10 years | 18 working days |
| 10+ years | 21 working days |
- Accrual: Leave accrues monthly
- Payout: Unused leave must be paid out upon termination
- Scheduling: Employees may take leave in portions, with at least 14 consecutive days required annually
Sick Leave
- Duration: Up to 183 days per year
- Payment: Covered by social insurance (typically 60-100% of salary depending on tenure)
- Documentation: Medical certificate required for absences over 3 days
- Employer obligation: No direct payment required (covered by social insurance)
Maternity Leave
- Duration: 120 days total
- 70 days before birth
- 50 days after birth
- Payment: 100% of average salary (paid by social insurance)
- Job protection: Position must be held open
- Additional leave: Up to 3 years unpaid leave available
Paternity Leave
- Duration: 5 working days
- Payment: 100% of salary (paid by social insurance)
- Timing: Must be taken within 60 days of birth
Bereavement Leave
- Duration: 3-7 days depending on relationship to deceased
- Payment: Paid by employer
- Documentation: Death certificate required
Personal & Family Leave
- Family emergency: Up to 5 days unpaid leave
- Study leave: Available for continuing education (terms vary)
- Military service: Mandatory leave for reservist duties
Summary
| Leave Type | Duration | Paid? | Funding Source |
|---|---|---|---|
| Annual Leave | 15-21 days | Yes | Employer |
| Sick Leave | Up to 183 days | Yes | Social Insurance |
| Maternity Leave | 120 days | Yes | Social Insurance |
| Paternity Leave | 5 days | Yes | Social Insurance |
| Bereavement | 3-7 days | Yes | Employer |
| Family Emergency | Up to 5 days | No | N/A |
Termination Types
Termination With Cause:
- Immediate dismissal allowed for serious misconduct
- No notice or severance required
- Examples: theft, fraud, repeated violations of work rules
Termination Without Cause:
- Requires proper notice period
- Severance pay may be required
- Must follow due process
Notice Period Requirements
| Length of Employment | Notice Period |
|---|---|
| Less than 1 year | 30 days |
| 1-5 years | 45 days |
| 5+ years | 60 days |
Employers may provide payment in lieu of notice.
Severance Pay
Severance requirements based on tenure:
| Years of Service | Severance Pay |
|---|---|
| 1-3 years | 1 month's salary |
| 3-5 years | 2 months' salary |
| 5+ years | 3 months' salary |
Probationary Periods
- Maximum duration: 3 months
- Notice during probation: 3 days
- Restrictions: Cannot exceed 3 months for any position
Final Pay Requirements
- Timeline: Final pay must be provided within 3 working days of termination
- Components: Base salary, accrued vacation, overtime, and any contractual bonuses
- Documentation: Detailed breakdown of final payment required
Anti-Discrimination & Retaliation Laws
Termination is prohibited based on:
- Gender, race, religion, or ethnicity
- Pregnancy or family status
- Union membership or activities
- Filing complaints or exercising legal rights
National Holidays
Mongolia observes numerous public holidays throughout the year:
| Holiday | Date | Notes |
|---|---|---|
| New Year | January 1 | |
| Tsagaan Sar | February/March | Lunar New Year (3 days) |
| International Women's Day | March 8 | |
| Mothers' and Children's Day | June 1 | |
| Naadam Festival | July 11-13 | National holiday (3 days) |
| Independence Day | November 26 |
Note: Tsagaan Sar dates vary annually based on the lunar calendar.
Holiday Pay Rules
- Eligibility: All employees entitled to holiday pay
- Rate: Regular daily wage
- Working on holidays: 2× regular pay plus substitute day off
- Substitute days: If holiday falls on weekend, following Monday is observed
Required Documents for Employment
- Employment Contract: Must include job description, salary, working hours, and termination conditions
- Personal Documents:
- National ID card or passport
- Social insurance registration
- Tax registration number
- Educational certificates (if required for position)
- Health Certificate: Required for certain industries
- Bank Account Information: For salary payments
Language Requirements
- Official language: Mongolian (Cyrillic script)
- Employment contracts: Must be in Mongolian
- Workplace communication: Mongolian is standard, though English may be used in international companies
Background Checks & References
- Criminal background checks: Permitted with employee consent
- Employment verification: Standard practice
- Educational verification: Required for professional positions
- Privacy considerations: Must comply with personal data protection laws
Data Protection & Privacy
- Personal data law: Mongolia has data protection regulations requiring consent for data collection
- Cross-border transfers: Restrictions apply for transferring personal data outside Mongolia
- Employee consent: Required for collecting and processing personal information
IP Assignment & Confidentiality
- Work-for-hire: Intellectual property created during employment belongs to employer
- Confidentiality agreements: Commonly used and legally enforceable
- Non-compete clauses: Limited enforceability; must be reasonable in scope and duration
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Document collection | Days 1-3 |
| Contract signing | Days 3-5 |
| Social insurance registration | Days 5-7 |
| Tax registration | Days 5-7 |
| Payroll setup | Days 7-10 |
| First day of work | Days 10-14 |
Worker Classification: Employee vs. Contractor
Mongolia distinguishes between employees and independent contractors:
- Employees: Work under employer control, receive benefits, protected by labour law
- Contractors: Work independently, invoice for services, responsible for own taxes
- Misclassification risks: Can result in penalties, back payments, and legal liability
Unionization & Collective Agreements
- Union rights: Workers have the right to form and join unions
- Collective bargaining: Common in larger enterprises and state-owned companies
- Strike rights: Legal but subject to procedural requirements
- Employer obligations: Must negotiate in good faith with recognised unions
Cultural Norms & Workplace Expectations
Mongolian workplace culture emphasises:
- Respect for hierarchy: Traditional respect for seniority and authority
- Relationship building: Personal relationships important for business success
- Work-life balance: Family obligations highly valued
- Communication style: Generally direct but respectful
- Punctuality: Expected and valued in professional settings
Remote Work Considerations
- Legal framework: Remote work arrangements are permitted
- Equipment provision: Employer typically responsible for necessary tools
- Health and safety: Employer obligations extend to home office environments
- Tax implications: May affect tax residency status for international employees
Anti-Discrimination Laws
Mongolia prohibits discrimination based on:
- Gender, race, ethnicity, or religion
- Age (with some exceptions for retirement)
- Disability (reasonable accommodation required)
- Pregnancy and family status
- Political beliefs or union membership
Note: Given the research discrepancies mentioned, please verify all regulatory details with current Mongolian labour law and consult with local legal experts before implementing any employment practices.
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