Pay & Tax in Kyrgyzstan Hiring Guide

Understanding the pay and tax structure in Kyrgyzstan is crucial for employers and employees. This section details the key components, including Minimum Wage, Income Tax, Payroll Cost, and Overtime Pay.

Minimum Wage

As of January 1, 2023, the minimum wage in Kyrgyzstan is set at KGS 2,337.00 per month. This wage applies to all employees and is designed to ensure a basic standard of living. Employers must comply with this regulation to avoid legal penalties.

Minimum Wage	Monthly Amount
Minimum Wage	KGS 2,337.00

Income Tax

Kyrgyzstan has a flat personal income tax rate of 10% on most types of individual income. Employers are responsible for deducting this tax from employee salaries and remitting it to the tax authorities. The tax-free threshold is set at KGS 15,000 per month (approximately $175 USD), meaning that earnings below this amount are not subject to income tax.

Income Tax	Rate
Personal Income Tax	10%

Payroll Cost

In addition to salaries, employers in Kyrgyzstan are required to contribute to social security for their employees. The total employer contribution rate is approximately 17.25% of the gross salary, which includes various components such as pension and medical insurance.

Payroll Cost	Employer Contribution
Social Security	17.25% of gross salary

The breakdown of employer contributions typically includes:

• Pension Contributions: 10% (of gross salary)
• Social Insurance Contributions: 7.25% (of gross salary)

Overtime Pay

Kyrgyz labor law stipulates that any hours worked beyond the standard workweek must be compensated at a higher rate. The standard workweek is typically 40 hours, spread over five days. Overtime pay is calculated as follows:

• For the first two hours of overtime: 1.5 times the employee’s basic hourly rate.
• For any additional hours beyond the first two: 2 times the employee’s basic hourly rate.

Employers must ensure that overtime is properly tracked and compensated to comply with labor regulations.

Overtime Pay	Rate
First Two Hours	1.5 times basic hourly rate
Additional Hours	2 times basic hourly rate

Regular & Maximum Working Hours

In Kyrgyzstan, the standard workweek is set at 40 hours, typically distributed over five days. The maximum daily working hours are 8 hours. However, certain categories of employees may have reduced working hours:

• Workers aged 14 to 16 years: Not more than 24 hours per week.
• Workers aged 16 to 18 years: Not more than 36 hours per week.
• Workers engaged in heavy physical work or harmful conditions: Not more than 36 hours per week.
• Disabled persons with levels I or II disability ratings: Not more than 36 hours per week.

Employers determine weekly days off, which can be either one or two days. In a six-day workweek, daily working hours cannot exceed 7 hours, while in a five-day workweek, the workday cannot exceed 8 hours.

Working Hours	Regular Hours	Maximum Hours
Daily	8 hours	8 hours
Weekly	40 hours	40 hours
Special Categories	Varies	Maximum 36 hours

Leave

Kyrgyz labor laws provide various types of leave to ensure employee well-being. Here are the main types of leave available:

Annual Leave

Employees are entitled to a minimum of 28 calendar days of paid annual leave after completing 11 months of continuous service with the same employer. Employees can take a proportionate amount of leave after just 14 days of employment.

Leave Type	Entitlement
Annual Leave	28 calendar days after 11 months

Sick Leave

The Kyrgyz Labor Code does not specify detailed provisions for sick leave; however, employees are entitled to temporary incapacity allowances. The sickness allowance is typically paid as follows:

• For employees with less than 5 years of service: Up to 10 working days at 60% of their average daily wage.
• For employees with 5 to 7 years of service: Up to 14 working days at 80% of their average daily wage.
• For employees with over 8 years of service: Up to 20 working days at 100% of their average daily wage.

Sick Leave Entitlement	Duration & Compensation
Less than 5 years	Up to 10 days at 60% salary
5 to 7 years	Up to 14 days at 80% salary
Over 8 years	Up to 20 days at 100% salary

Maternity Leave

Female employees are entitled to a total of 126 calendar days of maternity leave, which includes:

• 70 calendar days before childbirth.
• 56 calendar days after childbirth (or up to 70 days for complicated deliveries or multiple births).

During the first ten days of maternity leave, the employer pays the employee’s salary, after which social insurance benefits apply.

Maternity Leave Type	Duration
Total Maternity Leave	126 calendar days

Holidays

Kyrgyzstan recognizes several public holidays during which employees are entitled to paid time off. The following are the statutory public holidays:

• New Year’s Day – January 1
• International Women’s Day – March 8
• Nooruz (Persian New Year) – March 21-22
• Labor Day – May 1
• Victory Day – May 9
• Constitution Day – May 5
• Independence Day – August 31
• Kurman Ait (Eid al-Adha) – Date varies
• Orozo Ait (Eid al-Fitr) – Date varies

Public Holiday	Date
New Year’s Day	January 1
International Women’s Day	March 8
Nooruz	March 21-22
Labor Day	May 1
Victory Day	May 9
Constitution Day	May 5
Independence Day	August 31
Kurman Ait	Varies
Orozo Ait	Varies

Termination in Kyrgyzstan Hiring Guide

Understanding the termination process in Kyrgyzstan is essential for both employers and employees. This section outlines the key aspects of termination requirements, notice periods, severance pay, and probation periods.

Termination Requirements

Termination of employment in Kyrgyzstan is governed by the Labor Code, which outlines several valid reasons for ending an employment contract. These reasons include:

• Mutual Agreement: Both parties agree to terminate the contract.
• Expiry of Contract: The fixed-term contract reaches its end date.
• Employee Initiative: The employee decides to resign.
• Employer Initiative: The employer can terminate the contract for valid reasons such as:
  • Company liquidation
  • Workforce reduction
  • Employee incompetence
  • Repeated disciplinary breaches
  • Absenteeism without valid reason
  • Other serious breaches of the employment contract

Employers must provide a clear reason for termination and follow fair procedures, including allowing the employee an opportunity to respond.

Termination Reason	Details
Mutual Agreement	Both parties agree
Expiry of Contract	Contract ends
Employee Initiative	Employee resigns
Employer Initiative	Valid grounds required

Notice Period

The notice period required for terminating an employment contract varies depending on the circumstances:

• Employer-Initiated Termination: Generally requires at least one month written notice.
• Employee-Initiated Resignation: Requires at least two weeks written notice.
• If termination is due to redundancy or company restructuring, different notice periods apply based on the length of service:
  • Less than 1 year: 1 month
  • 1 to 5 years: 2 months
  • More than 5 years: 3 months

Notice Period	Duration
Employer Initiated	At least 1 month
Employee Resignation	At least 2 weeks
Redundancy (less than 1 year)	1 month
Redundancy (1 to 5 years)	2 months
Redundancy (more than 5 years)	3 months

Severance Pay

Severance pay is required under certain circumstances, particularly in cases of redundancy or employer-initiated termination without cause. The amount of severance pay depends on the employee’s length of service:

• Employees made redundant are entitled to at least one month’s average salary.
• In cases of company liquidation or other specific conditions, severance pay may be outlined in the employment contract or collective bargaining agreement.

Severance Pay	Conditions
General Redundancy	At least one month’s salary
Liquidation	As per contract or agreement

Probation Periods

Probation periods in Kyrgyzstan can last up to three months for general employees and up to six months for managerial positions. During this period, either party can terminate the contract with shorter notice than typically required.

• For general employees, a written notice of at least three days is required.
• For managerial positions, the notice period may vary but should be reasonable.

Probation Period Details	Maximum Duration	Notice Requirement
General Employees	Up to 3 months	At least 3 days
Managerial Positions	Up to 6 months	Reasonable notice

Understanding these aspects of termination—requirements, notice periods, severance pay, and probation periods—is essential for employers operating in Kyrgyzstan. Adhering to these regulations ensures compliance with local labor laws and promotes fair treatment of employees during their employment journey.

Contractors in Kyrgyzstan Hiring Guide

When hiring contractors in Kyrgyzstan, it is essential to understand the legal framework surrounding independent contracting. This section covers the issue of misclassification and other necessary considerations for engaging contractors.

Misclassification

Misclassification occurs when an employer incorrectly categorizes a worker as an independent contractor instead of an employee. This distinction is crucial because employees have specific rights and benefits under Kyrgyz labor law, while independent contractors do not.

Key Differences Between Employees and Contractors

Criteria	Employees	Independent Contractors
Control	Subject to employer’s control	Operate independently
Work Schedule	Set by employer	Determined by contractor
Benefits	Entitled to benefits (e.g., paid leave, sick leave)	No entitlement to employee benefits
Tax Obligations	Employer withholds taxes	Responsible for own taxes
Work Location	Typically on-site	Can work from any location

In Kyrgyzstan, the Labor Code provides the primary legal framework for employment relationships. However, there is no single definitive test for distinguishing between employees and independent contractors. Courts may consider various factors, such as the level of control exerted by the employer and the nature of the work relationship.

Contractual Agreements

A well-defined written contract is vital for establishing a successful independent contractor relationship in Kyrgyzstan. While a written agreement is not legally mandatory, it is highly advisable to protect the interests of both parties. Key elements that should be included in the contract are:

• Scope of Work: Clearly define the tasks and responsibilities.
• Payment Terms: Outline compensation structure (hourly rate, project fee, etc.).
• Duration of Contract: Specify the contract length or completion date.
• Confidentiality Clauses: Protect sensitive information shared during the engagement.
• Termination Conditions: Detail how either party can terminate the agreement.

Contract Element	Description
Scope of Work	Define tasks and responsibilities
Payment Terms	Outline compensation structure
Duration of Contract	Specify length or completion date
Confidentiality Clauses	Protect sensitive information
Termination Conditions	Detail termination procedures

Compliance with Labor Laws

Employers must ensure compliance with Kyrgyz labor laws when hiring contractors. This includes understanding tax obligations and social security contributions. Independent contractors are responsible for their own tax filings and social security contributions, which include pension and medical insurance.

• Tax Rate for Independent Contractors: Individual entrepreneurs pay a flat income tax rate of 10% on their net income.
• Social Security Contributions: Contractors must contribute approximately 27.25% of the minimum monthly salary to social security.