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Mercans offers complete payroll, PEO and HR services in Azerbaijan

On restoration of independence in 1991, Azerbaijan focused on transitioning to a market economy and global integration, with trade relations in place with over 170 countries. AZPROMO (the Azerbaijan Export and Investment Promotion Foundation) was established in 2003 to boost the country’s export potential and attract foreign investment. Aside from the country’s vast oil reserves which have driven large foreign investments, Azerbaijan has seen increased political and economic stability, a favorable business and investment environment as well as strong protection policies and legislation.


Doing Business in Azerbaijan

Enjoying favorable trade status under an EU Partnership and Cooperation Agreement, Azerbaijan continues to improve its infrastructure (concentrating on legal, tax and banking frameworks) and build an educated, skilled workforce. The country’s average annual economic growth rate has been hovering at 10% over the last few years.

Entity Registration & Incorporation Requirements

Setting up a new business or expanding an existing one in Azerbaijan is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.


Banking Hours: 9:30 am to 5:30 pm from Monday to Friday

Working Week

The standard working week is from Monday to Friday from 9:00 am - 6:00 pm

Labor Law

Employment relationships are regulated by the Labor Code which applies to all entities operating in the country. Companies who operate a multi-country payroll should take note that the Labor Code does not apply to Azerbaijani nationals working abroad (except for those who are seconded to work abroad). The Code does not apply to expatriate employees who sign employment contracts with a foreign legal entity in a foreign country but who perform their work in an Azerbaijan branch office.

Main Industries

Petroleum and natural gas, petroleum products, oilfield equipment, steel, iron ore, cement, chemicals, petrochemicals, textiles, machinery, cotton, foodstuffs

GDP Growth


Dates & Numbers


Official State Name

Azerbaijani Republic


10.11 million



Major Languages



Azerbaijani manat

Internet Domain


International Dialing Code


Baku, AZ
4:09 pm, April 25, 2024
temperature icon 22°C
clear sky
Humidity 49 %
Wind Gust: 0 mph


The minimum wage is a statutory amount equal to a monthly salary paid to a non-skilled employee. Further, where the employee is engaged by public institutions, there is a specific uniform tariff applicable to salaries paid.

It is acceptable to provide employees with online payslips


Payroll reports must be kept for 7 years


21 days of paid annual leave

Annual Leave

14 days of paid sick leave

Sick Leave

126 days of paid maternity leave and 14 days of unpaid paternity leave

Maternity & Paternity Leave

6 weeks notice is required

Employee Termination

A 13th month salary is not mandated by law

13th Salary

250 AZN per month

Minimum Wage

The overtime payment for exceeding four additional hours of its salary-based time is 200% of the regular salary


For one year’s service or less, one month’s salary is paid as the severance payment.

Severance Pay


Tax and Social Security

A general rate of taxation applies to employment income (which applies to employees who are not working in the oil and gas industry). Social insurance taxes sectors other than the oil and gas sector.


Individuals who are tax resident in Azerbaijan are subject to income tax in Azerbaijan. When Azerbaijan citizens work abroad but are still considered residents of Azerbaijan, they can claim tax credits on income tax paid in Azerbaijan. The test for determining tax residency is physical presence in the country. Both resident and non resident individuals are required to pay Azerbaijan income tax. Residents pay income tax on their worldwide income while non-residents pay Azerbaijani income tax tax only for income received from sources of income within Azerbaijan.


Corporate Income Tax


Personal Income Tax


Sales Tax



Social Security

Social security contribution rates for employment income vary depending on whether the employee works in the oil and gas sector or not. All foreign employees are subject to social security contributions. From January 2018, UIC (unemployment insurance contributions) are payable. Unemployment insurance payment amounts vary depending on the length of insurance record and the average monthly salary. From January 2021, mandatory medical insurance was introduced.


Social Security Rate


Social Security Rate for Employers


Social Security Rate for Employees


Employment Law

Labor laws pay special attention to employee rights. These laws focus on the employment contract and what is mutually agreed upon by both employer and employee.

Employment Agreement

The Labor Code defines an employment contract as a written one between an employer and employee which outlines the terms of employment as well as rights and responsibilities. Contracts can be executed with an indefinite term or for a fixed period (up to five years).

Working condition

Working hours cannot exceed eight hours per day and 40 hours per week. However, reduced hours may apply to certain types of employees including those aged 16 - 24, disabled employees, pregnant women, women with a child under the age of one and a half. Further, part-time work, shorter working hours, working days or weeks can also be established by agreement between the parties. The general provisions of the Labor Code also apply to shift workers.


Employees are entitled to take paid holiday leave regardless of their position, effective period of their employment contract and the terms of their employment. There are special rules which apply to teachers, researchers, other educational employees, disabled employees and minors, war veterans and artistes. Further, employees who are engaged in hazardous or arduous occupations or where there is increased mental and physical stress are eligible for additional leave.

Employment termination

The dismissal notice period depends on the employee’s years of service. Where the employee is made redundant, the employer must provide official notification within the relevant period before terminating the employment contract. An employee can terminate their employment without giving a month’s notice for specific reasons. This includes being of retirement age, disability, admission to an educational institution and moving to a new place of residence.


6 weeks

Six weeks’ notice for employees who have worked two years or less


14 days

Total number of public holidays



Working hours per week


5 days

Total number of days for Compassionate & Bereavement Leave



Foreign nationals require both a residency permit and a work permit to live and work in Azerbaijan. Exceptions to this rule are foreign employees who are exempt from the work permit requirement.


Residency permits

Where a labor contract is concluded for a period less than a year, the work permit will be issued for that period. The work permit can also be extended, and each time, for not more than a year.

Work Permit validity

One year

Required Documents

Completed application form

Notarized copies of any documents in support of the prospective employee’s professional qualifications

An identity document for the prospective employee

The individual’s work history for the previous five years

Health certificate for the individual confirming that they are not suffering HIV, Hepatitis B or Hepatitis C

Copy of the individual’s passport which must be valid for at least six months after the planned arrival in Azerbaijan

Copy of a document that certifies the individual’s right to stay in Azerbaijan

A reference confirming the necessity for a specialized worker.

Compliant, reliable, error-free and touchless payroll in Azerbaijan

Build the best team and hire top talent compliantly in Azerbaijan. Get in touch with Azerbaijan payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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