The Labor Code of Azerbaijan amended

The Azerbaijani Labor Code (hereinafter: the Code) has been amended by the Law of the Republic of Azerbaijan No. 286-VIQD of 2 April 2021, effective from 7 May 2021 ("Amendment"). 

The changes are aimed at preventing the substitution of an employment contract with a civil-law contract (service agreement), where in fact,  the person is not an independent contractor and works as an actual employee of the entity.  According to the Amendment, "the prohibition on the documentation of labor relations by civil-law contracts" is introduced into the legislation as one of the main principles of the Azerbaijani Labor Code.  The Amendment defines the concept of "labor relations", listing the cases where the relations between the parties are not allowed to be formalized by civil law contracts. Prior to the Amendment, although the term “labor relations” was mentioned in the Labor Code, the meaning of this term has not been defined. 

Under the Amendment, the following cases are considered to be the basis for the existence of labor relations, and in these cases, it is inadmissible to conclude a civil law contract:

• if the contract concluded between the parties contains provisions specific to the content of the employment contract or is concluded in the form of an employment contract;

• if a work-book is required for the formalization of relations;

• if the relationship arises in connection with the admission (appointment) to the relevant profession or position, including election or appointment (on paid basis), as well as holding a position on a competitive basis, employment on a quota basis, restituted to the position by a court decision;

• if the relationship arises in connection with the performance of work (services) related to the main area of activity of the employer;

• if the relationship arises in connection with the performance of work (services) on a temporary replacement basis;

• if the rules of the Code on “termination of a fixed-term employment contract” are applied to the extension of a contract where the relationship is temporary;

• if the service fee paid under the contract consists of a monthly salary, allowance, and bonus;

• when the contract regulates the issues specified in the articles of the Labor Code on obligations of the employee, guarantees of employees upon termination of the employment contract, leave, retention of the employee's place of work and average salary, disciplinary liability for violation of labor and executive discipline.

A written employment contract must be concluded from the date any of the above circumstances is determined. The Amendment, aiming to combat informal employment, provides better protection for the persons who are deprived of labor rights due to the form of an agreement concluded, including social security, minimum salary, and paid leaves. The employers are suggested to consider the above amendments in due course.  

The above information shall not be considered as a legal opinion. For assistance and further clarification on the above labor law questions, please contact us.