Employer of Record in Azerbaijan

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Azerbaijan if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Azerbaijan below, to avoid any compliance issues.

Employment Contract Requirements

Written contracts are a legal requirement for Azerbaijan employees. While the law does not make it mandatory for contracts to be in the Azerbaijani language, it is common practice.

Onboarding Process

We can help you get a new employee started in Azerbaijan quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Azerbaijan

Standard working hours are set for employees over the age of 18 at no more than 8 hours a day and 40 hours per week, with a working week set at five working days.

Overtime in Azerbaijan

Any overtime is typically compensated with additional pay or time-off in lieu, as determined by the employment contract or collective agreement. The maximum allowable overtime is usually limited to 2 hours per day and 180 hours per year.

Probation Period in Azerbaijan

In Azerbaijan, the standard probation period is up to 3 months.

Growing your team in Azerbaijan is exciting, but it’s not without challenges. Local labor laws are often nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

This gives you the freedom to scale at your own pace, whether you're adding one employee or building out an entire function, without the burden of setting up and managing a local entity. You remain in control of day-to-day responsibilities and performance, while the EOR ensures every hire is legally protected and properly supported. It's a strategic way to expand globally without spreading your internal team too thin or exposing your business to legal liabilities in unfamiliar markets.

Fiscal Year in Azerbaijan

1 January - 31 December is the 12-month accounting period that businesses in Azerbaijan use for financial and tax reporting purposes.

Payroll Cycle in Azerbaijan

The payroll cycle in Azerbaijan is usually bi-monthly, with employees being paid intervals between payouts cannot exceed 16 days.

Minimum Wage in Azerbaijan

As of January 1 2025, Azerbaijan's minimum wage is AZN 400 per month. The minimum wage applies uniformly to all workers regardless of age or experience, as Azerbaijan does not differentiate rates based on these criteria. The government reviews minimum wage levels annually, considering factors such as inflation, economic performance, and social needs. This update aims to support low-income workers and maintain social stability within the country.

Bonus Payments in Azerbaijan

A 13th salary is not a requirement in Azerbaijan. Employers can pay it as a benefit or bonus for their employees.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 17 -24.5% on top of the employee salary in Azerbaijan.

*There is a 7 year grace period running from 1 January 2019 - 1January 2026. From the end of this grace period, private sector social security contributions for employees and employers will be the same as the contributions for the oil and gas industry.

Employee Payroll Tax Contributions

In Azerbaijan, the typical estimation for employee payroll contributions cost is around 5.5 - 11.5%.

Individual Income Tax Contributions

Azerbaijan's individual income tax ranges from 0% to 25% with progressive rates. Initially, there's a distinction in tax rates between private sector and oil/gas sector employees for 7 years, after which they both converge to the same rate as the oil/gas sector.

Pension in Azerbaijan

Some employers provide employees with retirement plans or pension schemes to supplement the mandatory state-provided pensions.

Employees expect to be paid accurately, on time, and in full compliance with local standards. When you're hiring in Azerbaijan, providing a smooth payroll experience is critical to retention and trust. An Employer of Record ensures that employees receive what they’re owed, without errors, delays, or confusion about taxes or benefits.

Key Ways an EOR Supports Payroll in Azerbaijan:

• Reliable Salary Payments: Ensures employees are paid promptly in local currency.
• Clear Payslips & Documentation: Provides employees with compliant, understandable records.
• Correct Benefits & Contributions: Delivers legally mandated contributions and any changes in compensation, like bonuses.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Boosts Employee Confidence: Builds trust with compliant, consistent payroll operations.

In Azerbaijan, work permits and visas are essential for employers hiring foreign workers. The process requires submitting applications, providing supporting documents, and paying applicable fees. Employers must secure either a Temporary Work Visa for short-term employment contracts up to 90 days or a Permanent Work Visa for long-term or indefinite employment. Key requirements include a valid job offer, proof of qualifications, a health certificate, proof of residence, and demonstration that no qualified local candidate is available for the role. Compliance with Azerbaijani immigration and labor laws is crucial, especially when sponsoring foreign employees to ensure legal employment. As of 2025, the Ministry of Labour is now involved in the work permit approval process alongside the State Migration Service.

Mandatory Leave Entitlement in Azerbaijan

The annual leave entitlement in Azerbaijan is 21 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Azerbaijan

There are 13 public holidays in Azerbaijan.

Paid Time Off in Azerbaijan

In Azerbaijan, employees are entitled to a minimum annual leave of 21 days. This entitlement progressively increases based on years of service within a single company:

• 5 -10 years of service: additional 2 extra days
• 0 - 15 years: additional 4 days
• 15 or more years: additional 6 days

Maternity Leave In Azerbaijan

Women are entitled to 126 days of maternity leave, with 70 days before the due date and 56 days after childbirth. In cases of difficult or multiple births, an additional 14 days may be granted. The State Social Protection fund fully covers maternity leave. Employment law also provides special protections for pregnant women and women with young children, including:

• No termination for pregnant women or those with a child under 3 years old.
• Reduced work week (maximum 36 hours) for pregnant women or those with a child under 18 months.
• No night shifts for pregnant women or those with a child under 3 years old.

Paternity Leave In Azerbaijan

Fathers can take 14 days of unpaid Paternity Leave following the birth of a child.

Sick Leave In Azerbaijan

Employees are entitled to 56 days of paid sick leave per year. The employer will fully compensate employees unable to work due to sickness for the initial 14 days. Subsequently, the State Social Protection Fund takes over payments. To avail the sick pay benefit, employees must provide a medical certificate.

Parental Leave In Azerbaijan

Azerbaijan's parental rights encompass several provisions, including additional time off if needed, with the main clauses being:

• A woman with two children under the age of 16 is entitled to 2 additional days of paid leave
• A woman with three or more children under the age of 16 is entitled to 5 days of additional paid leave
• A woman or single father with children under the age of 16 is entitled to 14 days of unpaid leave per year
• Female employees adopting children under two months of age are entitled to 56 calendar days of social leave

In Azerbaijan, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there’s no confusion around what’s offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in Azerbaijan is running as it should.

Termination Process in Azerbaijan

The major grounds of employment termination in Azerbaijan include:

1. Initiation by either one of the parties involved in the contract
2. Change in ownership
3. Mutual consent
4. Change in terms and conditions
5. Employment contract expiration
6. Cases relating to violations of job description
7. Prison sentence for employee
8. Liquidation of the enterprise
9. Staff redundancy
10. Employee's insufficient qualifications or lack of professionalism

Notice Period in Azerbaijan

In Azerbaijan regardless of tenure, employees are required to provide a minimum of one month's notice. However, the contractual notice period can be extended up to six months. The employer's standard notice period is also contingent upon the employee's length of service, as followed:

1. Up to 1 year: 2 weeks calendar notice
2. From 1 to 5 years: 4 calendar weeks notice
3. From 5 to 10 years: 6 calendar weeks notice
4. More than 10 years: 9 calendar weeks notice

When terminating an employment agreement due to downsizing, 2 months' notice is required. During this period, the employee is allowed to take one day of paid time off per week for finding new employment.

Severance in Azerbaijan

Employees terminated due to redundancy are entitled to a minimum of 3 months' severance pay. Severance pay, in general, varies based on the length of the employee's tenure:

1. 1 years service or less: 1 month salary
2. Between 1 to 5 years service: 1.4X the monthly salary
3. Between 5 to 10 years service: 1.7X the monthly salary
4. More than 10 years service: 2X the monthly salary