Employment of record service Azerbaijan
Azerbaijan is an independent country, formerly part of the Soviet Union, located in the Caucasus region with access to the Caspian Sea. The country has a population of 10.2 million, 2.3 million of whom live in the capital, Baku. Over the past 10 years, the country’s population has increased by 7%. Azerbaijan’s economy has shown steady growth of 3to 5% per year over the past 10 years. The main driver is the oil and gas sector, which accounts for 30% of the country’s total GDP. Economic growth is facilitated by stable government policies on taxation, finance, and business development. In 2024, the average monthly salary in Azerbaijan was USD 600.
The country has a relatively low crime rate. In the global crime rate ranking, Azerbaijan ranks 87th out of 187 countries, on par with nations such as Israel, Slovakia, Norway, and Portugal. The official currency of Azerbaijan is the Azerbaijani Manat (AZN). As of February 2025, the exchange rate was 0.59 US dollars per 1 Manat.
The country has an effective system of governmental service offices, many public services available electronically.
Salary taxes
Employees in Azerbaijan are subject to the following deductions:
Personal Income tax at rates of:
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- 0% – for annual income up to 8,000 Manat (4,720 USD);
- 14% – for annual income exceeding 8,000 Manat (4,720 USD).
Social security contributions at rates of:
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- 3% – for annual income up to 200 Manat (118 USD);
- 10% – for annual income exceeding 200 Manat (118 USD).
Health insurance contributions at rates of:
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- 2% – for annual income up to 8,000 Manat (4,720 USD);
- 5% – for annual income exceeding 8,000 Manat (4,720 USD).
Unemployment Insurance contribution at a rate of 0.5% regardless of the level of annual income. Employers in Azerbaijan pay the following taxes for their employees:
Social Insurance Contributions:
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- 22% – for annual income up to 200 Manat (118 USD);
- 15% – for annual income exceeding 200 Manat (118 USD).
Health Insurance Contributions
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- 2% – for annual income up to 8,000 Manat (4,720 USD);
- 5% – for annual income exceeding 8,000 Manat (4,720 USD).
Unemployment Insurance contributions: 0.5% regardless of the level of annual income.
Labor law and practice
Azerbaijan’s labor legislation is governed by the Labor Code of the Republic of Azerbaijan. Compared to labor laws in many developed countries, Azerbaijani labor law places significantly greater emphasis on employee rights than on employer rights.
Employment contract
Azerbaijan has established an electronic system for state registration of employment contracts. Under this system, contracts are signed electronically by both the employer and the employee using digital signatures. Paper versions of employment contracts are usually not signed. According to the Labor Code, the conclusion, modification and termination of an employment contract become legally effective only after registration in the state employment contract system. A standard employment contract template is provided in Appendix 1 of the Labor Code.
Contract term
Under Azerbaijani law, an employment contract may be either indefinite or for a fixed term. If a fixed-term contract continues beyond five years, it is legally regarded as an indefinite contract. In case of termination of a fixed-term contract upon expiration of its term, the employer is required to provide the employee with written notice at least one week before the end date. In the absence of such notice, the contract is automatically extended for a period equal to the original term.
Contract Termination
An employment contract may be terminated by the employer on the following grounds:
- Staff reduction
- Failure of the employee to fulfill job functions or obligations under the employment contract, or gross violations of labor duties as outlined in the Labor Code
- Unsatisfactory performance during the probationary period
- Other specific circumstances defined by law
In the event of dismissal due to staff reduction, the employer must notify the employee between 2 and 9 weeks in advance, depending on the employee’s length of service. The notice period may be substituted with a compensation payment, the amount of which is stipulated by the Labor Code.
Employees dismissed due to staff reduction are entitled to severance pay in the following amount:
- One average monthly salary for service of up to 1 year
- 1.4 times the average monthly salary for service from 1 to 5 years
- 1.7 times the average monthly salary for service from 5 to 10 years
- Two average monthly salaries for service exceeding 10 years
Payment Day
An employee’s salary must be paid no later than the last day of the month. As a general rule, an advance payment should be made to the employee in the middle of the month. The amount of the advance payment is not regulated by law and is determined by the employment contract or the employer’s internal policies.
Probation Period
The employment contract may include a probationary period of up to three months.
Leave
The basic paid annual leave is 21 calendar days. Certain categories of employees, such as those in the education sector, are entitled to longer leave. In some cases, specified in the Labor Code, employees are granted additional leave. Specifically, additional leave for length of service is granted as follows:
- For five to ten years of service – 2 calendar days
- For ten to fifteen years of service – 4 calendar days
- For more than fifteen years of service – 6 calendar days
Leave may be divided into parts, but one of the parts must be at least two weeks long
Overtime
Overtime work is permitted with the employee’s consent. The number of overtime hours cannot exceed four hours over two consecutive days. Overtime must be paid at double the regular rate. It is not permitted to replace overtime pay with an additional day of rest.
Business expenses
The legislation establishes standards amounts for the business trip per diem. The legally defined per diem are intended to cover the costs of accommodation and meals. Per diem norms range from 65 to 125 manat (38 to 74 US dollars) for trips within Azerbaijan depending on the region of travel and from 90 to 150 US dollars for foreign business trips depending on the destination country. When per diems exceed these standards rates, the excess amount is subject to payroll taxes for the employer and employee (income and other taxes).
Instead of paying daily allowances, the employer may employees for actual food and accommodation expenses based on supporting documents.
The legislation also defines a list of business trip expenses that are eligible for tax deduction, as well as maximum allowable limits. Any reimbursement to employees for expenses exceeding these limits, or for items not included on the approved list, is subject to payroll taxes. Such expenses include, for example, taxi fares.
VISA and Work permit
A foreign citizen can be hired in Azerbaijan only on the basis of a work permit. A work permit is issued for a period of one year. To extend the permit, the employer must contact the Migration Service no later than 30 days before the permit expires.
A work visa is obtained on the basis of a work permit. Based on the work permit and the employment contract, the employee is also issued a temporary residence permit for one year.
The state fee for issuing a work permit and a temporary residence permit is approximately 600 and 120 US dollars, respectively.
The condition for issuing a work permit is the demand for workers in the relevant specialty within the Azerbaijani labor market, along with a shortage of qualified local personnel. Preference is given to specialists in technical fields, IT, engineering, and medical professions. It is more difficult for financial professionals to obtain a work permit.
To apply for a work permit, an employee must provide:
- A valid passport
- A notarized copy of their diploma
- A medical certificate confirming the absence of serious contagious diseases
Citizens of 23 countries can stay in Azerbaijan without a visa for a period ranging from 14 to 180 days. The list of these countries is published on the official website of the Ministry of Foreign Affairs of Azerbaijan: https://mfa.gov.az/en/category/viza/vizasiz-gedis-gelis-rejimi-tetbiq-olunan-olkeler
When staying in Azerbaijan for more than 15 days, a foreign citizen must register their place of residence. Registration is carried out online and can be completed either by the hotel or by the individual providing the accommodation. If this requirement is not met, the foreigner may be fined when leaving the country.
Atlas Implementation has extensive experience in securing visas and work permits for foreign employees. With our assistance, you can obtain the necessary documents in the shortest possible time.
Other Employment Practices
As of 2025, the minimum wage in Azerbaijan is set at 400 manat (approximately 236 US dollars).
According to common business practice, Azerbaijani banks pay employee salaries exclusively into accounts opened at their own institutions. Bank commissions for salary payments typically range from 0.5% to 1%. To receive a salary, an employee must open an account with the same bank used by their employer.
To open a bank account and receive a salary, an employee must have a tax identification number. A foreign employee can obtain this number from the tax office or a public services center based on their temporary residence permit.
VAT on Employer of Record Service (EOR) for Foreign Clients
According to the Tax Code of Azerbaijan, Employer of Record (EOR) services provided to foreign clients are exempt from VAT if the personnel work at the client’s place of business.
However, depending on the nature of the arrangement, EOR services may still be subject to VAT in Azerbaijan.
For more detailed information, please contact our specialists via WhatsApp / Phone: +7 707 727 78 or email: alexo@employment-atlas.com.
EOR Service Fees in Azerbaijan
Atlas Implement has extensive experience providing Employer of Record (EOR) services in Azerbaijan. We offer highly competitive rates along with premium service and full support:
- EUR 200 – Local employee
- EUR 250 – Expat employee
Get in Touch
Have questions? We’re here to help!
Feel free to contact us via:
Phone / WhatsApp: +7 707 727 7874
Email: alexo@employment-atlas.com
