Employer of Record (EOR) Armenia

An Employer of Record (EOR) in Armenia acts as the official employer for workers, often referred to as a Global Professional Employer Organization (Global PEO). This role encompasses a broad range of employment functions, ensuring full compliance with local labor laws and regulations, managing payroll, administering taxes, providing legally required benefits, and handling employment contracts.

With our Employer of Record (EOR) services, expanding your business into Armenia becomes easier and more efficient. Our solution eliminates the need for setting up a local entity, providing a seamless path to establish a legal presence in Armenia. We ensure full legal compliance, manage payroll, protect your intellectual property, and handle work permits, so you can focus on growing your business and building your workforce in the Caucasus region.

Things you need to know before hiring in Armenia

Employment Contracts in Armenia

Armenian labor relations are governed by the Labour Code of the Republic of Armenia. An indefinite-term contract is the default and standard form of employment, while a fixed-term contract is treated as the exception.

Working Hours

The standard legal working week in Armenia is 40 hours, structured as 8 hours per day. The absolute maximum, including overtime, is capped at 12 hours per day and 48 hours per week.

Notice of Termination

Required notice periods vary by the ground for termination: 2 months for liquidation or workforce reduction; 14 to 60 days (scaled by length of service) for non-compliance or incapacity; 10 days before expiry for a fixed-term contract; 3 days for an invalid residence permit or the end of a seasonal contract; 3 days during probation; and 7 days for termination by mutual agreement. Employers may also pay in lieu of notice.

Severance Pay

Employees dismissed due to workforce or staff reduction are generally entitled to one month’s average salary as severance. Where an employee is dismissed for refusing to continue after a change to essential contract terms, severance ranges from 10 to 44 times the average daily wage, scaled by length of service.

Mass Dismissals

Terminating more than 10% of the workforce (minimum 10 employees) within a 2-month period requires 2 months’ advance notice to the state employment authority and employee representatives.

Forced Downtime Compensation Cap (2024 Reform)

Under Law HO-364-N, effective 24 November 2024, compensation owed to an employee for a wrongful-dismissal court case is now capped at a maximum of 9 months’ salary if the employee found alternative employment during the case, rather than the previously uncapped back-pay for the full duration of proceedings.

Employees vs Independent Contractors

Employees in Armenia are governed by the Labour Code, while independent contractors and self-employed individuals operate under Civil Code service or works-execution contracts. Authorities apply a substance-over-form test, examining the employer’s actual control over methods and schedule, the worker’s integration into the company, and exclusivity, rather than the label used in the contract.

Reclassifying a civil-law contractor relationship as employment can trigger retroactive application of labor-law guarantees, additional tax and social contribution liabilities, and administrative sanctions, so genuine contractor relationships should be structured and documented carefully.

Comparison Table: Employee vs Independent Contractor

Understanding these differences is essential for ensuring compliance and correctly determining entitlements such as pension contributions, leave, and income tax withholding.

Social Security and Payroll Contributions in Armenia

Armenia’s structure is distinctive: there is no separate employer-paid social security tax. Pension, health insurance, and the military stamp duty are all funded through withholdings from the employee’s salary, with the employer acting as the withholding and remittance agent to the State Revenue Committee.

The mandatory funded pension applies to Armenian and foreign citizens born after 1 January 1974. Employees hired before 1 July 2014, and public-sector employees, cannot opt out of the pension scheme.

Payroll in Armenia

Minimum Wages

Armenia’s national minimum wage is AMD 75,000 per month, in effect since 1 January 2023. The government has publicly discussed a further increase to AMD 85,000 per month, but this has not yet been enacted.

Payroll Cycle

Salaries in Armenia are typically paid monthly, in Armenian Dram (AMD), by bank transfer. Employers must provide employees with a payslip itemizing gross pay, pension and health insurance withholdings, military stamp duty, income tax withheld, and net pay.

Overtime rules can vary depending on the applicable employment contract or collective agreement.

Mercans’ payroll capabilities

Personal Income Tax in Armenia

Armenia applies a flat personal income tax rate of 20% on employment income, including salary, bonuses, commissions, and fees. This follows a gradual step-down from 23% that completed in 2023, and no further reduction has been reported since. Other categories of income are taxed differently — dividends at 5%, royalties at 10%, and rental income at 10%.

Armenia Employee Hiring Cost

Because Armenia places pension, health insurance, and the military stamp duty entirely on the employee side rather than as an employer-paid social tax, the direct statutory add-on cost for employers is comparatively lower than in many other jurisdictions. Employers should still budget for standard costs such as paid leave accrual alongside gross salary.

Employee Benefits in Armenia

Armenian employees are entitled to a combination of mandatory statutory benefits and, increasingly, supplementary benefits offered at the employer’s discretion.

Work Permit in Armenia

Work permit requirements for foreign nationals in Armenia depend heavily on nationality, with a significant simplification for citizens of Eurasian Economic Union (EAEU) member states.

EAEU Nationals

Citizens of Russia, Belarus, Kazakhstan, and Kyrgyzstan are exempt from Armenian work permit requirements and can work freely. Long-term stays generally only require registering the employment relationship online to obtain a Certificate of Lawful Residence — no labor-market test or employer sponsorship is required.

Non-EAEU Nationals

The process for other foreign nationals is managed by the Migration and Citizenship Service via the official workpermit.am platform, and generally involves:

• The employer notifying Armenia’s Ministry of Labor and Social Affairs of the vacancy (a labor-market test).
• The employer registering on workpermit.am and submitting company documents alongside the employee’s personal documents (passport, CV, qualifications, police clearance, medical certificate).
• Review by the Migration Service, including a labor-market assessment and security check.
• On approval, issuance of a combined work-and-residence document valid for up to 1 year.

Upcoming Reform

A new Law on Foreigners is scheduled to take effect on 1 November 2026, revising work-permit categories and narrowing some current exemptions, while explicitly preserving the treaty-protected EAEU exemption. Employers planning to bring in foreign talent around this date should confirm the latest requirements with Mercans.

Important Considerations for Employers

Employer Sponsorship

For non-EAEU nationals, a registered legal entity in Armenia is generally required to sponsor a foreign employee’s work authorization — an EOR partner such as Mercans allows companies without a local entity to still hire and sponsor talent compliantly.

Regional Mobility

Businesses hiring across the Eurasian Economic Union can take advantage of Armenia’s simplified pathway for EAEU nationals.
Understanding these pathways can streamline the hiring process, allowing employers to bring skilled talent into their Armenia-based operations effectively.

EOR Solutions in Armenia

Best Employer of Record Armenia