Bakı Hüquq Mərkəzinin  (BHM) hüquq məsləhətçisi Elnur Əliyevin bu məqaləsi Amerika-Azərbaycan Ticarət Palatasının mətbu orqanı olan "Impact"da ingilis dilində işıq üzü görmüşdür.

Once they have established a presence in Azerbaijan, foreign companies need to hire local staff to begin operating, and for this reason, they require local legal consultancy, as hiring, working and dismissal of employees etc are all governed by Azerbaijani labor legislation. The cornerstone of this legislative framework is the Labor Code (effective as of July 1st, 1999). I’d like to give our readers a brief overview of key aspects of labor law, such as employment agreements, work permits, working time and overtime, and termination of employment agreements.

EMPLOYMENT AGREEMENT

According to the Labor Code (hereinafter the Code), conclusion of an employment agreement between an employer and an employee is mandatory. The parties are free to agree upon the content and structure of an employment agreement; however there are certain provisions which must be included. These include: the position and job duties of the employee, term of the employment agreement, working and resting time, salaries and additional payments, duration of leave, safety, social and other types of insurance, mutual responsibilities of the parties, etc. There is another mandatory provision that warrants special focus, specifically the employer’s obligation to create conditions for employees to engage in physical training and sports, including rehabilitation and professional-practical exercises during working time and after work. Some employers are amazed when they see such a provision in the drafted employment agreement, but that is the legal requirement, regardless of what they think. Employment agreements can be concluded for an indefinite term or for a fixed term up to 5 years on stipulated grounds. One of those grounds is mutual consent of the parties, which is the most common. An employment agreement may include a probationary period of up to 3 months. During theprobationary period, the employment agreement may be terminated with 3 days prior written notice of either party if the employer considers that the employee’s performance is unsatisfactory, or if the employee does not find the job to be suitable. An employment agreement with an employee who has failed the probationary period should be terminated by the employer, who should cite the relevant reasons for termination.

WORK PERMIT

As a rule, to work in Azerbaijan foreigners need a work permit. However, there is a list of people for whom a work permit is not required, including foreign employees who are on secondment for up to 90 days, diplomatic and consular staff, foreigners who are permanent residents of Azerbaijan, foreigners who are engaged in entrepreneurial activities, chief employees of organizations established on the basis of international treaties, staff of international organizations, accredited staff of mass media, seamen, athletes and artists, foreigners engaged in registered religious activities, professors invited to give lectures at higher education institutes, scientific research specialists, and foreigners hired by certain state bodies. Heads and deputy heads of branches and representative offices of foreign entities in Azerbaijan are also exempt from this requirement.

Given the importance of this issue, I would like to provide some information about work permit applications. The application is submitted to State Migration Service by the potential employer. In addition to the application form, the following documents are required:

· Notarized copy of the document confirming possession of the required educational or professional qualification (diploma, etc);

· Statement of the Employer confirming the need to hire the foreigner for the intended position;

· Copy of the relevant document allowing the foreigner to stay on the territory of the Republic of Azerbaijan (visa, etc);

· Foreigner’s health certificate as well as the medical certificate certifying that he/she is free from any of contagious diseases indicated in the list approved by the Cabinet of Ministers;

· Notarized copies of the documents confirming Employer’s identity;

· Notarized copy of foreigner’s passport or any other identification document.

The statement of the Employer explaining the necessity of hiring the foreigner rather than an Azerbaijani national is very important, since during the review of the application the State Migration Service asks the Ministry of Labor and Social Protection of People whether the vacancy can be filled by the local labor force. If the answer is affirmative, then the SMS refuses to issue the work permit. It should also be noted that the work permit does not automatically allow the person to reside in Azerbaijan. For this purpose, an application for a temporary residence permit should be submitted together with the work permit application.

In addition to the documents listed above, the following documents are required for obtaining a residence permit:

· Notarized or otherwise certified document confirming the existence of the grounds for granting a temporary residence permit (for instance, work permit);

· 2 photos (3x4cm, red background);

· Notarized consent of children aged 14-17;

· Notarized copy of the document confirming the place of residence (deed, rent or tenancy agreement or other document specified by the legislation of the Republic of Azerbaijan);

· Notarized consent of the person who provides the citizen with the place of residence;

· Notarized copy of the ID of the person who provides the citizen with the place of residence;

The State Migration Service gives its decision on whether to issue the work/residence permit within 20 working days from the filing date of documents. The work permit is issued for one year and may be extended up to 4 times.

WORKING TIME AND OVERTIME

The workday is limited to 8 hours, and the weekly limit for working hours is 40 hours. Depending on the nature of the industry, work, service, and terms of employment, the Employer or the Cabinet of Ministers of the Republic of Azerbaijan may establish a 6-day working week with one day off, provided that the total working hours per week does not exceed 40 hours. In the 6-day working week, the regular working hours must not exceed 7 hours per working day. For part-time work, the daily limit is 4 hours and the weekly limit is 20 hours. Reduced hours may be applied to certain categories of Employees, taking into account their age, health, labor conditions, features of job functions and other circumstances in accordance with the Code and relevant laws, employment agreement or collective agreement. The weekly limit for reduced working time is 36 hours. The weekly limit for reduced working time is 24 hours for Employees under 16.

The Code strictly regulates overtime, which is only possible based on the Employer’s order (decision) and consent of the Employee. Overtime is allowed only in the following circumstances: (i) it is necessary for national defense or to prevent or to eliminate the results of a natural disaster or industrial accident; (ii) it is necessary to eliminate the results of unforeseen events which negatively affect the operations or services of enterprises dealing with supply of water, gas, electricity, heating, sewage, communication and other utilities; (iii) it is necessary to complete work which has already started and cannot be completed within normal working hours due to technical conditions and if failure to complete such work may lead to damage to or loss of equipment or goods; (iv) it is necessary to repair and restore mechanisms or equipment, failure of which cause suspension of works by a large number of employees; (v) when a break at work is impossible due to the absence of a substituting employee. No employee may work overtime in excess of 4 hours during two consecutive working days or be engaged in overtime work exceeding 2 hours at workplaces where working conditions are difficult or hazardous. It should also be noted that the employer is obliged to carry out all necessary measures to eliminate the circumstances giving rise to overtime work. Salaries for overtime working hours have to be paid at double rate.

In general, employees cannot be scheduled to work on days off or holidays. Work on such days is only permitted if: (i) it is necessary for national defense or to prevent or to eliminate the results of a natural disaster or industrial accident; (ii) it is necessary to eliminate the results of unforeseen events which negatively affect the works or services at enterprises dealing with supply of water, gas, electricity, heating, sewage, communication and other utilities; (iii) at uninterrupted production, trade, public catering, communication, transportation and other service enterprises.

There are 11 statutory holidays and one National Day of Mourning (20^th January) in Azerbaijan, all of which are non-working days. When statutory holidays coincide with days off, then the next working day is replaced with a day off, so that the employees may enjoy both their holiday and days off. In order to provide consecutive working or non-working days, either can be replaced the other, under orders from the Cabinet of Ministers.

Compensation for overtime and for working on holidays or days off should not be confused. Overtime cannot be replaced with additional vacation hours. However, this can be done with respect to working on holidays or days off, in which cases the employee has right to choose an additional day off instead of payment.

TERMINATION OF EMPLOYMENT

Termination of an employment agreement is one of the main issues strictly regulated by the Code. An employment contract may be terminated only on the grounds and in the manner stipulated in the Code. The grounds for termination are as follows:

(i) at the initiative of the employer or employee

Termination by employee: An employee may at any time terminate an employment contract by notifying the employer in writing one calendar month in advance. At the end of one calendar month, the employee shall have the right to stop working and to demand final payments. The one month period of notice serves two purposes. It gives the employer time to look for a replacement, and it gives the employee time to change his or her mind and to rescind the notice. However, notice cannot be rescinded if the employer has already officially informed the employee about hiring a new employee. It should also be noted that in certain circumstances, such as the employee’s retirement due to age or disability, admission to an educational institution, moving to a new place of residence, entering into an employment contract with another employer, being a victim of sexual harassment or other circumstances stipulated by the law, the employment contract may be terminated on the date indicated by the employee. In fact, there are different views regarding interpretation of this provision. According to one view, this provision gives discretionary powers to the employer, who may choose either to terminate the agreement on that date or not. According to another view, which I personally support, this provision should be interpreted in favor of the employee, so that the employer is obliged to terminate the employment agreement on the indicated date.

Termination by employer:There are only six grounds on which an employer can terminate an employment agreement and dismiss an employee: (i) when the enterprise is liquidated; (ii) in the event of redundancy; (iii) a competent body (association commission) decides that the employee is not sufficiently qualified or professionally competent and thus is not fit for the position they hold; (iv) the employee does not perform their job duties or obligations under the employment agreement, or in the event of gross violation of the job duties as listed in the Code; (v) the employee cannot meet the expectations during the probation period; (vi) The employee reaches the mandatory retirement age set for state-funded enterprises (currently 65). When dismissing the employees on any of the above-mentioned grounds, the employer must to prove the necessity of the dismissal. The substantive reasons for termination should be indicated in the order of the employer on the termination of the employment agreement. Without the order, the dismissal is invalid.

(ii) the term of the employment agreement ends

Employment agreements concluded for a definite term are terminated when their term ends. If neither the employer nor the employee demands the termination of the employment agreement within one week after the specified end date, the agreement is automatically prolonged for the same term. It should be noted that if the employee is absent from work for certain reasons (sickness, vacation, etc.) the agreement can only be terminated within one week after the employee returns to work.

(iii) changes in terms of employment

An employer is required to officially inform an employee in writing or by an order at least one month before the change in terms of employment (certain terms listed in the Code which are favorable for an employee are exempt from this requirement). If the employee does not wish to continue working under the new terms, it must be transferred to another job within the same organization. If this is not possible, the employment contract may be terminated. If the changes in terms of employment negatively affect the working conditions of at least ten percent of the employees of an entity with a workforce of at least 50 persons, the employer must officially inform the relevant state body, which will investigate the validity and lawfulness of such steps, and take measures within its competence.

(iv) in connection with a change in ownership of the entity

Only certain categories of employees such as directors, deputy directors, chief accountants and heads of other managing structural units can be dismissed on this ground.

(v) Circumstances beyond the control of the parties

These circumstances are the following: the Employee joins military or alternative service; an employee who was previously dismissed is restored to his or her position based on a court decision; the employee cannot perform his job for more than six months because of full and permanent disability; a court sentence is issued revoking the employee’s right to drive vehicles, to hold certain positions or to carry out certain activities, imprisonment for a definite term or life imprisonment becomes effective; the employee’s disability is confirmed by an effective court decision; death of the Employee; an employee who has previously worked at the company exercises his right to return to his job after completing statutory military service; and other cases as stipulated by law.

(vi) in cases determined by the parties in the employment agreement

The parties may agree upon the following as additional grounds for termination of employment agreement: mutual consent of the parties; according to a recommendation provided by a medical institution about health risks due to health condition of the Employee preventing him/her from working in certain positions (professions); in case there is a high probability of contacting a disease while performing hazardous jobs as part of the employee’s professional duties; in cases where an employer undertakes mandatory written obligations to enter into a new employment contract with the employee after time has passed due to a reduction in the scope of work or services rendered; other circumstances determined by the parties.

It should also be noted that the employment agreements with the following categories of employees cannot be terminated by the employer: (i) Pregnant women, women with children aged three or less under their custody, men raising children aged three or less on their own; (ii) employees raising children under school age on their own, and whose only source of income is the current job; (iii) temporarily disabled Employees; (iv) employees, in whose custody there is a family member under 18 with limited capabilities due to health reasons or disability (1^st category). The employer is also prevented from dismissing the employees solely for the following reasons: (i) they have diabetes, multiple sclerosis or are infected with human immunodeficiency virus; (ii) they are members of trade unions or any political parties. The employees also cannot be dismissed when they are on vacation, secondment (business trip) or during their participation in collective negotiations. These restrictions do not apply to termination of employment agreements due to end of term or due to liquidation of the enterprise.

Conclusion

Given that the list of labor issues is very comprehensive; my appraisal is limited to those which I found to be the most common. To sum up the above-mentioned points, the following can be said: Employers have to conclude an employment agreement with employees. Besides the provisions that parties may agree upon, the employment agreement must include certain mandatory provisions. In order to hire foreign employees the employer has to apply to the State Migration Service for work permits. There are statutory limits for working time, and employees may be asked to work overtime only in limited number of circumstances. Overtime work must be compensated in accordance with the Code. Termination of an employment agreement, which in practice seems to be the most important and most problematic issue for employers, must to be carried out in accordance with the Code. As seen from all these examples, labor issues are strictly regulated by labor legislation, the overall aim of which is to provide for the balance of interests between employers and employees, while also protecting employees at all stages of labor relations, starting from the conclusion of the employment agreement up until the dismissal. Thus it can be concluded that our labor laws in general tend to be employee friendly. However, having good legislation in place is not enough. It is very important that all these laws are applied and complied with in practice.

Elnur Aliyev

Associate at BHM Baku Law Centre LLC

Baku, Azerbaijan

Elnur Aliyev joined BHM Baku Law Centre LLC in 2009. He specializes in international law. His main practice areas are contracts and corporate law. Elnur graduated with Honors from Baku State University with an LLB in International Law. He also holds an LLM in International Business Law from Central European University in Hungary.