Overview of The Armenian Employment Law for International And Local Employers

Conforming with employment law is one of the crucial issues for any business or entity, as non-compliance may lead to negative consequences, which may often be burdensome or even embarrassing in the eyes of the staff and other stakeholders. During our daily advice, we guide our clients on numerous employment law issues and help them understand the various intricacies and requirements. As our first client note for 2024, we have prepared this general overview of the Armenian legal framework of employment law in an effort to raise awareness and understanding.
  1. Introduction and applicable laws

 

Armenia, being a former Soviet Union member state and a country with aspirations to align itself with European values, generally tends to protect employees. The main legal instrument governing labor relations is the Armenian Labor Code, which borrows heavily from its former Soviet version. While the past about 30 years of independence and the emergence of a fairly liberal market economy have brought some liberalization of labor regulations, lawmakers still show a preference for sheltering the rights of the employees, often to the disadvantage of compliant employers (in many instances, we observe widespread non-compliance by many businesses across almost all sectors of the economy). The Labor Code is further detailed with multiple government regulations that supplement the code on a host of employment issues. When asked, normally, we opine that the Armenian judiciary is generally aligned with its colleagues at the parliament and tends to side with employees. In this note, we have tried to give a general overview of the Armenian employment legislation.

 

  1. Employment relationship overview: commencement of employment

 

Armenian legislation provides two ways to commence an employment relationship. 

 

Notably, an employment relationship between an employee and an employer may be formed through a (i) bilateral written employment contract, which is formed in adherence to the procedures outlined in labor legislation, as provided below, or (ii) through the unilateral decree of the employer appointing the employer in the particular employment position.

 

The employment relationship can be either a fixed-term or an indefinite-term commitment.

 

Upon the commencement of the employment relationship by either of the above-specified forms, the employer has the obligation to register the employee with the Republic of Armenia's tax authority by becoming the employee’s tax agent. Non-registration is generally deemed to be tax avoidance.  

 

  1. Overview of the employment agreement requirements

 

Per the provisions outlined in the Labor Code, the employment contract must delineate the following key details:

 

  • the specific date, month, and year, as well as the place where the employment contract was formalized;
  • the complete name of the employee, including their first name, last name, and patronymic;
  • the complete legal name of the employer; if the employer is an individual, it should specify the first name, last name, and patronymic (if applicable) of that individual;
  • the designated place of employment;
  • the organizational unit, office, or institution within the employer's structure, where the employee will carry out their duties;
  • the commencement date of hire, specifying the year and month;
  • the official job title, a description of job responsibilities, or a reference to a document outlining the functions associated with the position;
  • the salary amount, inclusive of taxes, and the methodology employed to ascertain it (whether hourly, daily, or monthly);
  • any allowances, bonuses, or supplementary payments accorded to employees in adherence to established regulations;
  • the stipulated duration of the employment contract (if applicable);
  • in instances involving a probationary period, the time and terms governing this trial period;
  • the standard working hours, whether full-time, part-time, reduced, or calculated on a cumulative basis, along with the weekly duration (excluding cumulative hour accounting);
  • the type of annual leave (whether minimum, additional, or extended) and its specified period;
  • the name, surname, and position of the individual endorsing the employment contract;
  • the agreed-upon means of communication for notifying the employer and the employee concerning matters related to their employment relationship.

 

  1. Minimal wage and working hour limits

 

In Armenia, a minimum monthly net salary of AMD 75,000 (approximately USD 200) is stipulated. For the employees who are compensated hourly, the minimum hourly rate varies based on the duration of working hours. In the case of a standard 40-hour workweek, the minimum hourly rate stands at AMD 450 (approximately USD 1.1). For reduced working hours, the rates differ further: 

 

a. For up to a 24-hour workweek, the minimum is set at AMD 750 (approximately USD 1.9); 

b. A 36-hour workweek entails a minimum rate of AMD 500 (approximately USD 1.25).

 

The outlined minimums do not encompass taxes or other mandatory payments, legally designated bonuses, and other supplementary payments. 

 

Regarding the working hour limits, the standard workweek is 40 hours, with daily working hours limited to eight, except in cases specified by the Labor Code. Daily working time, including overtime and breaks, can be at most 12 hours; the weekly limit is 48 hours.

 

Specific sectors like healthcare, utility, or emergency services may ask employees to work 24-hour shifts. However, weekly working hours for these employees must be at most 48, and they should have a minimum 24-hour rest period between working days. The types of jobs falling under this category are outlined by specific Government regulations.

 

Employees with multiple contracts, whether with different or the same employer, are bound by a 12-hour daily working limit, including breaks. Responsibility for adhering to this limit lies with the employee unless written notice has been given to the employer about concurrent employment.

 

  1. Leaves and targeted vacations

 

In the context of the Labor Code, "leave" encompasses two distinct categories: annual leave and targeted leave. 

 

Annual leave constitutes a calculated period in working days, facilitating employee rest and capacity recovery, with job preservation and payment of average salary. The minimum duration of annual leave is 20 working days in case of a five-day working week and 24 working days in case of a six-day working week. For specific categories of employees, the annual leave may be extended by additional days. 

 

The targeted leaves encompass pregnancy and maternity leave, leave for childcare up to three years old, study leave, leave for state or public duties, unpaid leave, and paternity leave. During these periods, the employees are entitled to job preservation as well.

 

  1. Employment termination: grounds and restrictions

 

The Labor Code specifies several grounds for terminating employment relations:

 

  • Mutual Agreement: Termination can occur through a written agreement between both parties.
  • Employer's Initiative: The employer may initiate termination based on grounds established by labor law, either by notifying the employee or without notification, as expressly provided by law.
  • Employee's Initiative: The employee can initiate termination by notifying the employer.
  • Expiration of Contract: Termination occurs when the employment contract expires.
  • Military Service: Termination is allowed if the employee is conscripted for compulsory military service.
  • Legal Verdict: Termination may result from a court verdict that renders the employee incapable of continuing work.
  • Deprivation of Rights: Termination can happen if the employee is deprived of the right to perform specific work according to legal procedures.
  • On the demand of Guardians:  Termination of the employment contract concluded with an individual under sixteen can happen upon the request of parents, foster parents, or adoptive parents; a guardian or trustee (or the relevant guardianship authority in the absence of an appointed guardian or trustee); a doctor overseeing the employee's health. 
  • Changes in Working Conditions: Termination may occur in case of significant changes in essential working conditions.
  • Death of Employee: The employment relationship ends after the employee's death.
  • False Information: Termination is permitted if the employee has provided incorrect information during hiring or has concealed that s/he is legally deprived of the right to perform a specific job.
  • Probation Period Results: Termination can occur with negative results during the agreed probation period.
  • Failure to Notify or Report: Termination is possible if the employee fails to notify the employer of the end of a fixed-term contract and does not report to work on the next working day.
  • Employer's Non-Notification: Termination may occur if the employer fails to notify the employee of the end of a fixed-term contract, does not issue a respective legal decree, and the employment relationship does not continue.
  • Death of Employer: Termination is applicable in the event of the employer's death.

 

In the context of terminating an employment contract at the employer's initiative, certain factors must not be considered legitimate reasons for such termination. These factors include:

 

  • membership in a trade union or engagement in trade union activities, both during non-working hours and, with the employer's consent, during working hours;
  • past or current status as an employee representative;
  • making legitimate demands to the employer regarding the violation of laws, other regulatory legal acts, or a collective agreement;
  • Factors include gender, race, skin color, nationality, language, origin, citizenship, social status, religion, marital status, beliefs or views, and membership in parties or public organizations.

 

Termination of an employment contract at the initiative of the employer is generally prohibited under specific circumstances, and exceptions may apply to the reasons mentioned:

 

  • Temporary Disability: Termination is generally prohibited during the period of temporary disability.
  • Vacation Period: Termination is generally prohibited during an employee's vacation period.
  • Pregnancy: For pregnant women, termination is prohibited from the date of submitting the pregnancy certificate until one month after the termination of maternity leave.
  • Childcare: For the person caring for a child under one year, termination is prohibited during the entire caregiving period.
  • Strike Participation: Termination is prohibited after the decision to declare a strike and during a strike, provided the employee participates in the strike following the procedure established by the relevant legal code.
  • Government-Assigned Duties: Termination is prohibited while performing duties assigned to the employee by state or municipal authorities.
  • Emergency Situations: Termination is prohibited during the prevention or immediate elimination of natural disasters, technological accidents, epidemics, accidents, fires, and other emergencies if the employee did not report to work due to these circumstances.
  • Unplanned Postponement or Vacation for Childcare: Termination is prohibited during unplanned postponement or unplanned provision of vacations for educational institutions if the employee did not report to work to organize care for a child under twelve.

 

It's important to note that each case may have exceptions, and the prohibitions may not apply in specific situations as outlined by the Labor Code.

 

  1. Disability and pregnancy benefits

 

Individuals engaged in employment relationships with employers are entitled to temporary disability and maternity allowances. These benefits are granted if the temporary disability occurs during the employment period. As outlined in the Labor Code, the allowance is provided for the certified duration of temporary incapacity and during pregnancy and maternity leave. 

 

In cases of multiple employers, each of the employers shall independently calculate, assign, and pay the temporary disability allowance, irrespective of the others involved. For joint work, the maternity allowance is determined and paid by one employer chosen by the employee.

 

During the initial five working days of temporary incapacity, the employer bears the cost of the hired worker's temporary incapacity benefit, which is non-reimbursable. Subsequent allowances are funded from the state budget. As the law prescribes, maternity benefits are computed based on the average monthly salary or income.

 

Employers shall handle the calculation, appointment, and payment of the employee's allowance, contingent on submitting necessary documents, within the legally specified timeframe. Additionally, the employer shall pay any amount payable from the state budget and reclaimed from the government by decreasing the monthly income tax. 

 

  1. Internships

 

At the commencement of the employment relationship, an internship period may be initiated either upon the employer's request to assess the employee's alignment with the assigned duties or at the request of the prospective hire to evaluate their suitability for the offered role.

 

Typically, the internship period should be at most three months.

 

Should the employer determine that the employee has failed to meet the specified requirements, the employer has the right to terminate the employment before the conclusion of the internship period. In such a scenario, the employer must provide a three-day written notification to the employee.

An employee is deemed to have successfully passed the internship if, upon the termination of the internship period, s/he continues to work, continuing the existing employment contract. 

 

  1. Discrimination and harassment

 

The Labor Code explicitly prohibits discrimination and harassment, extending its scope to job advertisements, competitions, and employment interactions. Job advertisements cannot specify conditions that could lead to discrimination apart from practical characteristics, professional training, and qualifications. Discrimination is broadly defined as any direct or indirect differentiation, exclusion, or limitation based on various factors such as gender, race, ethnicity, religion, disability, age, or other personal and social circumstances. Such discrimination is deemed impermissible when it results in a less favorable treatment during the initiation, modification, or termination of collective or individual labor relations, including the refusal to recognize or exercise any rights established by labor legislation on an equal basis. However, the Code acknowledges that distinctions may be justified if they serve a legitimate aim and the measures applied are proportionate and necessary.

 

The Labor Code also delineates three forms of harassment within labor relations: violence, sexual violence, and forced laborForced labor is described as work or service extracted through coercion or threat without voluntary consent, excluding situations like legally mandated work for convicted individuals, military or alternative service, and emergency-related work necessary for the public’s well-being. Violence is characterized as a singular or repeated act of harm or threat against an employee or third party in the workplace or during work-related activities, leading to physical, mental, sexual, or economic damage or creating a hostile environment. Sexual violence is outlined as unwarranted acts of a sexual nature in the workplace or other work-related settings, with physical, verbal, or non-verbal manifestations influencing a person's decision-making or fostering a degrading work environment.

 

  1. Retention of documents

 

The employer must meticulously document and archive all employment-related matters, adhering to the protocols stipulated by Armenian legislation. The archival process shall align with the specifications outlined in the Armenian law "On Archiving". Specifically, employment contracts are to be securely maintained for 50 years. The storage of these contracts can be either facilitated within the company's archival system or outsourced to a designated external entity. 

 

NOTE: This material is for general information only and is not intended to provide legal advice. While it is correct at the time of its publication, we do not assume any responsibility to update it should laws, regulations, or judicial precedents change. 

 

 

About the authors

 

Varoujan Avedikian, Managing Partner

[email protected]  

varoujan-avedikian

Throughout his career, Varoujan has advised various entities on employment law matters, such as financial institutions, telecom, and tech companies. In Armenia, he is an authority on Employee Share Ownership Plans.

 

Gohar Tovmasyan, Senior Associate

[email protected]

gohar-tovmasyan

Gohar has worked with several professional services firms on employment law matters. On multiple occasions, she has advised on compliant staff reductions and restructuring issues. 

 

Mary Hambardzumyan, Associate

[email protected]  

mary

 

Mary has solid experience in drafting various employment law related instruments, such as employment contracts and human resource management policies and procedures.

 

Milena Tashchyan, Associate

[email protected]

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Milena has collaborated with multinational top-tier law firms on advising global clients on labor relations and has drafted numerous instruments to safeguard employer intellectual property.