2025 Guide to Employer of Record Services in Armenia

The Armenian Labor Code encompasses a number of protections and assurances for employees. These safeguards span from the rules related to employment termination, including reasons and advance notifications, to the expanse of leaves such as annual, sick, and maternity leaves. Employees also enjoy the shield of limited liability, among other guarantees. However, independent contractors lack specific legal protection, enabling parties to stipulate diverse clauses in service agreements based on the tenets of contractual freedom. Thus, from an employer's perspective, engaging workers as contractors instead of employees generally offers distinct advantages. As for the contractors themselves, they could potentially benefit from lower business tax rates (ranging from 0% to 5%) by having a services agreement, in contrast to the personal income tax rate of 21% in Armenia.

The distinction between an employee and a contractor is not always very clear and there is a risk of misclassification. Similar to the laws of many other countries, a number of considerations can be taken into account to assess the independence level of the worker, including the following:

•  Achieve a certain result v. work in a certain position
•  Free work schedule v. specific work hours
•  Work independently v. following the orders of the employer
•  Work with other clients v. work exclusively for the employer
•  Payment for results of work v. periodic payment of salary
•  Using one's own tools v. using tools provided by the employer
•  Ability to delegate duties to others v. work in person

Misclassification risks should not be underestimated. Though fines might not exceed approximately $130 per violation, disputes could lead to more substantial implications. Legal battles may span years, potentially culminating in an employer's obligation to reinstate a former worker and provide backdated average salaries during the dispute. This lingering liability can lead to significant financial burdens.

Employers initiate the process by requesting the employee's identification document, such as a passport or national ID, along with their Social Security Number (SSN). These preliminary documents lay the foundation for accurate record-keeping.

For foreign nationals planning to work within Armenia's borders, a work permit might be necessary. However, specific exemptions apply, particularly for nationals from certain countries, such as the EAEU member states. Additionally, specialized professionals in fields like natural sciences, information technologies, finance, and management also enjoy work permit exemptions.

The employment agreement (or the employer's decision to hire the employee) shall contain information on the duties of the worker, the place of work, the term of the agreement (for a fixed or indefinite term, etc.), start date, probation period (if any), salary, bonuses and other compensation, working hours, annual leave, etc. If the worker is a foreigner the agreement shall also clarify who will bear the costs related to transportation to/from Armenia, accommodation, insurance, address registration, etc.

Electronic signatures hold legal validity in Armenia.

Armenian tax laws require employers to electronically notify the tax office of any new hires of employees or individual service providers. 

Work Week Duration in Armenia

In Armenia, the regular work week consists of five working days, typically from Monday to Friday. However, employers have the option to implement a six-day work week, which usually spans from Monday to Saturday. If business operations necessitate work during weekends, employees are entitled to an alternative day off in exchange. Regardless of whether the employer chooses a five-day or six-day work week, the duration of work per week should not exceed 40 hours.

There are circumstances where a shorter work week may be mandated by law, such as for minors or in conditions deemed hazardous. Alternatively, a shorter work week can be agreed upon by both the employer and the employee, often seen in part-time work arrangements.

In cases of concurrent employment with two different employers or holding two positions under the same employer, the maximum daily work duration should not exceed 12 hours. However, some exceptions apply, especially for employees in educational and medical institutions, as well as energy suppliers, where extended shifts (up to 24 hours) are permitted, subject to specific regulations.

Overtime and On-Call Work

Overtime work in Armenia is only allowed under specific circumstances. These circumstances include emergencies, natural disasters, or situations where discontinuing work could result in significant financial losses for the employer or a breach of contractual obligations. Furthermore, overtime must be carried out with the written consent of the employee.

Overtime hours should not exceed 4 hours within a two-day period or 180 hours annually. When considering both regular and overtime hours, the total daily work duration should not exceed 12 hours, and the weekly limit should not surpass 48 hours. Notably, managerial roles are exempt from these overtime restrictions.

Special provisions exist for overtime and night shifts concerning minors and pregnant women to safeguard their well-being.

Employees may be required to work on their designated days off or outside standard working hours, a practice known as on-call work. However, such on-call work should not occur more than once a week and should be limited to 8 hours daily. In cases where on-call work exceeds these limits, employees have the right to request compensatory time-off during the following month, additional annual leave, or appropriate financial compensation.

Internal Rules and Record-Keeping

Employers are responsible for establishing internal rules that outline work and rest schedules, rules for overtime and on-call work, lunch breaks, and other relevant policies. Additionally, they must maintain detailed records of employee attendance to ensure compliance with labor regulations. 

Annual Leave in Armenia

Employees in Armenia are entitled to an annual leave lasting for 20 working days. If the employer implements a six-day working week, this entitlement extends to 24 working days. Certain categories of workers, such as those engaged in hazardous or stressful roles, may be eligible for extended or additional holidays.

The annual leave can be taken in parts, but at least one portion of it should consist of a minimum of 10 working days. Typically, employees become eligible for annual leave after completing six months of employment. Some workers may have the flexibility to choose the timing of their annual leave. Any unused annual leave can be carried over to the following years but must be used within 18 months. Generally, it is not allowed to receive monetary compensation in lieu of taking the annual leave. An exception exists when the employment relationship is terminated, at which point compensation for any unused leave must be provided.

Maternity Leave

Maternity leave in Armenia spans 140 days, with 70 days allocated before the child's birth and the remaining 70 days following delivery. Mothers have the option to take unpaid maternity leave for up to three years after their child's birth while retaining their position in the workplace.

Lunch Break and Rest Between Shifts

Employees are entitled to a lunch break after completing half of their daily working hours but no later than after 4 hours of work. The duration of the lunch break is determined by the employer but should not be less than 30 minutes or exceed 2 hours. Specific legal requirements mandate additional breaks for various groups, including minors, nursing mothers, workers exposed to extreme temperatures, and those engaged in hazardous or stressful work.

There should be a minimum of 11 hours of rest between two working days (shifts). Additionally, the standard weekend rest, covering Saturday and Sunday, should generally be no less than 35 hours.

Special Leaves

Apart from annual and maternity leave, the Labor Code of Armenia provides for several other types of leave:

• Special leave for students to prepare for exams.
• Special leave for disabled employees or those caring for disabled individuals, not exceeding 30 days per year.
• Unpaid leave of up to two months for the spouse of a parent on maternity leave.
• Leave related to marriage, consisting of three working days.
• Bereavement leave in the event of the death of a family member, which should be at least three days.

Public Holidays

Armenia observes several public holidays when employees are not required to work. These public holidays include:

• January 1-2 (New Year's Day)
• January 6 (Christmas Day)
• January 28 (Army Day)
• March 8 (International Women's Day)
• April 24 (Armenian Genocide Remembrance Day)
• May 1 (International Workers' Day)
• May 9 (Victory and Peace Day)
• May 28 (Republic Day)
• July 5 (Constitution Day)
• September 21 (Independence Day)
• December 31 (New Year's Day)

Armenian employment regulations mandate that monthly salaries be processed through bank transfers, ensuring employees receive their wages not later than the 15th day of the following month. Payments in Armenia predominantly occur in the local currency, Armenian drams.

As of 2023, the average monthly salary in Armenia stands at approximately $690. However, the dynamic IT industry bucks this trend, offering more competitive compensation. Junior positions commence at around $800, while mid-level and senior roles command salaries ranging from $1,500 to $3,500.

As of 2023, the minimum monthly salary in Armenia, established at AMD 75,000 (equivalent to $195), serves as a fundamental benchmark ensuring fair remuneration. Furthermore, the minimum hourly wages are as follows:
AMD 406 ($1,06) for a 40-hour work week
AMD 454 ($1,19) for a 36-hour work week
AMD 680 ($1.78) for a 24-hour work week

Overtime work is allowed in certain situations where, for example, the discontinuation of the work will result in material damages to the employer or a breach of its contractual obligations. The maximum allowable overtime duration is limited to four hours every two days and 180 hours annually. This extra effort, whether regular or overtime, should not exceed 12 hours daily or 48 hours weekly. However, it's important to note that these overtime limitations don't apply to managerial positions detailed in the employer's internal guidelines.

Employees might be requested to work during non-working hours or on non-working days, commonly known as on-call work. However, this practice should not occur more than once weekly and is capped at eight hours per day. If on-call work extends beyond these limits, employees have the right to either request compensatory time off in the following month or to have the extra time added to their annual vacation allowance. Monetary compensation is also an option.

Certain circumstances warrant increased compensation rates:
Overtime Work: Requires a 50% premium on the regular wage.
Night Work (10 PM to 6 AM): Entails a 30% premium.
Work on Public Holidays and Non-working Days: Mandates a 100% premium (or the alternative of an extra day off).

In Armenia, employees are required to provide a medical certificate, usually obtained from a local polyclinic or other recognized medical facility, as evidence of their sickness. For the initial five business days of illness, employers are responsible for compensation, covering 80% of the regular wage. Following this initial period, the government steps in to provide financial support in the form of tax credits.

Maternity leave extends for a standard duration of 140 days, thoughtfully divided into 70 days before childbirth and 70 days post-delivery. The payment of maternity benefits follows a distinctive arrangement. Employers are entrusted with disbursing these benefits, with the government intervening by providing financial assistance. This assistance takes the form of an income tax credit granted to the employer, equivalent to the sum of the benefits due.

Armenia offers a paid paternity leave of five business days. This period can be utilized within a 30-day window following the child's birth.

Armenian employment law generally doesn't mandate employers to provide benefits, including medical insurance, to their employees. However, many companies extend medical insurance to their workforce on an optional basis. This provision allows employees to access health insurance benefits based on their personal preferences.

Health insurance coverage is available through all licensed insurance companies in Armenia, which currently number six. These companies provide diverse health insurance packages catering to different needs and preferences. The associated costs typically range between $300 to $600 per annum for each employee.

Health Insurance Providers:
SIL Insurance
Armenia Insurance
Ingo Armenia
Nairi Insurance
RESO Insurance
Liga Insurance (formerly ROSGOSSTRAKH Armenia)

Employers' contributions towards health insurance come with specific tax implications. Payments of up to approximately $300 (AMD 10,000 per month) per employee annually are deemed non-taxable income for employees. However, any payments surpassing this threshold will attract taxation at the standard rate.

When an employee is under probation, the employer reserves the right to terminate the agreement by providing a notice period of three days. The designated probation period is established within the employment agreement, and typically spans no more than three months.

Armenia's labor framework accommodates fixed-term agreements under specific circumstances. These agreements serve as alternatives when indefinite-term arrangements are impractical due to work nature or conditions. Fixed-term agreements find relevance in the following scenarios:
1. Seasonal Work.
2. Temporary Assignments: Appropriate for tasks lasting up to two months.
3. Temporary Replacement: Suits instances where an absent employee is temporarily replaced.
4. Foreign Worker Hiring: Suitable for the duration of a foreign worker's residence permit.
5. Retiree Employment: Pertinent when hiring individuals past retirement age.

It's important to note that a presumption exists in Armenia that a fixed-term agreement transforms into an indefinite agreement if it's extended or renewed within one month following the previous agreement's expiration. However, this presumption doesn't apply if the work's nature or conditions render indefinite agreements unfeasible.

In Armenia, employers have the authority to apply specific disciplinary measures when employees fail to meet expected standards of behavior or performance. These measures are designed to maintain order and discipline in the workplace. Here are the key disciplinary measures and procedures related to employment in Armenia:

1. Warning: An employer can issue a written warning to an employee who has violated workplace rules or standards. This warning serves as an official notice of the issue and informs the employee that further violations may result in more severe disciplinary actions. Understanding employment laws in Armenia is crucial to ensure that such actions are carried out legally.
2. Strict Warning: In cases of more serious or repeated violations, an employer can issue a strict warning. This is a stronger form of disciplinary action and signals the employer's concern about the employee's behavior or performance. Adhering to employment laws in Armenia ensures that the process is fair and just.
3. Termination of Employment: In the most severe cases, where an employee's actions or conduct seriously undermine the employment relationship or company interests, the employer may terminate the employee's employment contract. Termination should be considered a last resort and should be supported by valid reasons. Those who work in Armenia must be aware of these regulations, especially work in Armenia for foreigners, to ensure they understand their rights and obligations. For those requiring a work permit in Armenia, compliance with these disciplinary procedures is essential to maintain their legal status.

Before imposing any disciplinary measure, the employer is required to follow specific procedures:

1. Offer for Explanations: The employer must offer the employee the opportunity to submit written explanations regarding the incident or violation. This step allows the employee to provide their perspective on the matter.

2. Consideration of Explanations: The employer is obligated to thoroughly consider the employee's written explanations, along with all other relevant circumstances related to the incident or violation.

3. Written Decision: If, after considering the explanations and circumstances, the employer determines that disciplinary action is warranted, they must issue a written decision. This decision should clearly outline the reasons for the disciplinary measure and specify whether it is a warning, strict warning, or termination of employment.

4. Timing: The written decision regarding disciplinary action should be made within one month from the detection of the action or inaction that led to the incident. In general, this decision should not be delayed beyond six months after the initial incident or violation.

Terminating employment in Armenia involves specific procedures and conditions based on the type of employment agreement and the party initiating the termination.

Termination by Mutual Agreement: Employment can be terminated by mutual agreement between the employer and the employee. The party receiving the termination offer has seven days to accept or reject it. Inaction within this period is considered a rejection. Termination must be documented in a formal agreement specifying the terms and conditions, including the end date and compensation.

Termination of Fixed-Term Employment: Fixed-term employment agreements end on the specified date. Either party must provide at least a 10-day advance notice to terminate the agreement. If the employee fails to report to work on the day following the end date, employment is considered terminated. If employment continues beyond the end date without a new agreement, it automatically converts into an indefinite-term agreement.

Employee's Unilateral Termination: An employee can unilaterally terminate their employment agreement (fixed-term or indefinite-term) by giving a 30-day notice. A five-day notice is sufficient in cases of the employee's illness or disability that makes employment impossible or if the employer violates laws or agreement terms. The Labor Code includes a "cooling-off" period of three business days during which the employee can withdraw the termination notice.

Termination by the Employer for Indefinite-Term Employment: Employers can initiate termination for indefinite-term employment if legal grounds for termination exist (see table below).

In Armenia, a baseline rule entails a 20% personal income tax deduction from salaries, multiple factors come into play to determine an individual's tax liabilities.

Employer's Tax Regime:
Certain employers, enjoying special tax privileges, extend the benefit of reduced tax rates to their workforce. An exemplary instance lies with IT companies certified by the Ministry of High Tech. Such companies, employing up to 30 individuals, relish a distinct tax regime where employee salaries are taxed at an advantageous 10%, rather than the conventional 21%. Further, tax incentives extend to IT entities generating over 10 job opportunities in a single month.

Employees of "microbusinesses," denoting enterprises with yearly sales under approximately $60,000, adhere to a simplified flat income tax. This amounts to AMD 5,000 (around $13) per month, providing a straightforward tax approach for qualifying individuals.

Employee vs. Independent Contractor Taxation:
In the realm of employee and independent contractor taxation, differences emerge. Employees typically encounter automatic tax withholding, exempting them from filing or paying taxes directly. Conversely, independent contractors possess the option to register as taxpayers, often classified as "private entrepreneurs." This avenue empowers independent contractors to significantly lower their tax burden. Those with annual incomes not exceeding around $290,000 can potentially reduce taxes to 5%. In specific scenarios, annual incomes not surpassing $60,000 might even lead to a tax rate of 0%.

Employer Liability in Armenia

Employers in Armenia generally bear liability for work-related injuries, including occupational illnesses, sustained by their employees. Compensation for such injuries is determined following the standard rules outlined in the Civil Code. Typically, this compensation covers lost earnings and expenses related to medical treatment, which may include medication, prosthetics, nursing care, supplemental nutrition, and other related costs. In cases where the injury results in the death of the employee, the employer is responsible for funeral expenses and providing compensation to the deceased employee's family members, particularly those who were dependent on the deceased. However, it's important to note that punitive damages and moral damages are not typically awarded in Armenia. Furthermore, Armenia does not mandate worker's compensation or similar insurance schemes.

Employers are also generally held responsible for any damages caused by their employees (and sometimes even individual contractors) when such damage occurs during the performance of the employee's work duties, a concept known as vicarious liability. Employers who compensate for damages typically have the right to pursue a recourse claim against the responsible employee.

Employee Liability

Employees in Armenia may be held liable for any damage, including lost profits, resulting from the destruction, neglect, mishandling, or other forms of damage to their employer's property. They may also be held liable for intentionally committed offenses. However, there are certain limitations to employee liability:

1. Limitation of Liability: As a general rule, an employee's liability is limited to triple the amount of their average monthly salary. This limitation does not apply in cases of damages caused intentionally, as a result of a criminal offense, or due to the loss of tools, materials, or equipment, or if the damage was caused under the influence of alcohol or drugs.

2. Agreement on Full Material Liability: An employee may be held fully liable if they voluntarily sign an agreement on full material liability. Such an agreement should be in compliance with the Labor Code.

3. Withholding from Salary: If the employer decides to withhold amounts owed by the employee due to damages, they must notify the employee of this decision within one month after the damages are detected. The withholding should not exceed 50% of the employee's monthly salary, and the remaining amount should not fall below the minimum salary mandated by law.

Armenia upholds a strong commitment to equal pay and anti-discrimination laws. The following key principles and regulations are in place to ensure equal treatment and non-discrimination in the workplace:

1. Equal Pay for Men and Women: Men and women are entitled to equal pay for the same type of work. It is strictly prohibited to compensate men and women differently when they perform the same job.
2. Prohibition of Discrimination: Armenian law prohibits discrimination based on various factors, including sex, age, disability, race, color, ethnic or social origin, genetic features, language, religion, worldview, political or other views, nationality, financial status, birth, or other personal and social circumstances. This prohibition extends to situations such as pregnancy.
3. Legitimate Justification: Any less favorable treatment of employees must be justified by a legitimate goal. Moreover, the means employed to achieve that goal must be deemed necessary and proportional.
4. Employment of Workers with Disabilities: Employers with more than 100 employees are required to allocate at least 1% of their positions to workers with disabilities. Alternatively, they must make annual contributions of AMD 300,000 (approximately $776) for each such position to a special government fund.

In Armenia, labor disputes are typically handled through legal processes and can be brought before the courts of general competence. Here are key aspects of resolving labor disputes in Armenia:

1. Court Proceedings: Labor disputes are usually addressed in the general courts. For cases involving employment agreement termination, amendments, or disciplinary measures, expedited proceedings lasting up to three months may apply.

2. Arbitration: An arbitration clause can be included in the employment agreement, allowing disputes to be resolved through arbitration. However, the employee still has the option to choose the court for dispute resolution unless they agreed to arbitration after the dispute arose.

3. Mediation: Mediation of labor disputes can also be provided with the assistance of a certified mediator. In some cases, the court may mandate mediation sessions to attempt to reach a resolution.

4. Statute of Limitations: There is a general three-year statute of limitations for labor dispute claims. However, certain exceptions apply:

   • The statute of limitations does not apply to claims for unpaid wages, protection of employee's honor and dignity, as well as compensation for wrongful death or personal injury.
   • Claims challenging termination of employment have a shorter two-month statute of limitations.
   • A one-year statute of limitations exists for individuals to claim that their work relationship qualifies as "employment."

In Armenia, the enforcement of labor law regulations is overseen by the Health and Labor Inspection Service. This government agency plays a crucial role in ensuring compliance with labor laws and regulations. Here are some key points regarding the enforcement of labor law regulations in Armenia:

1. Administrative Offenses: Failure to comply with labor regulations is considered an administrative offense. The consequences of such offenses typically include warnings or fines. For example, fines of AMD 50,000 ($129) may be imposed for various violations, such as hiring employees without checking their passport/ID card or military records, employing undocumented workers, involving minors, pregnant women, or nursing mothers in unauthorized work, failing to conduct required medical checks, violating work safety rules, interfering with workers' representatives' activities, or engaging in discrimination or retaliation against employees participating in a strike.
2. Criminal Penalties: In certain serious cases, criminal penalties, including fines and imprisonment, may be applied. For instance:
   • Dismissing an employee who is pregnant or has a child under three years of age without a valid reason can lead to criminal penalties.
   • Individuals responsible for violating work safety rules that result in serious injury, occupational disease, or death may also face criminal penalties.

Armenia is a member country of the Berne Convention, TRIPS (WTO), WIPO Copyright Treaty, the Paris Convention, and Patent Cooperation Treaty (“PCT”).

Contractual requirements for obtaining ownership of intellectual property differ for contractors and employees.

Nationals of EAEU countries (Russia, Belarus, Kazakhstan, and Kyrgyzstan) are exempt from work permit requirements and are eligible to receive a certificate of legality of stay. Other foreign nationals must obtain a work permit and a 1-year temporary residence permit card.

Unless exempt, employers must apply for a work and a residence permit on behalf of foreign employees. They are required to complete the process through the Migration Service's online platform, workpermit.am. The process involves assessing the Armenian job market to determine if qualified Armenian workers are available. The employer may be required to interview Armenian candidates referred by the Migration Service. If no suitable candidates are found, the employer can apply for a work permit for a specific foreign worker, allowing them to commence work in Armenia.

The issuance of a work and temporary residence permit typically takes approximately 2 months. Government fee for obtaining a work and a temporary residence permit is AMD 105,000 (approximately USD 271).

The following documents must be submitted by the employer to the Migration Service's online platform:

• Employee's passport
• One passport-sized photograph (3x4 cm)
• A letter of commitment signed by the employer to sign an employment contract with the employee in the future
• Proof of payment for government fees
• Education or qualification documents with consular legalization or Apostille (if available)

Detailed information regarding visa regulations for citizens of various countries is available on our website.

Yes, the Armenian Labor Code encompasses a number of protections and assurances for employees. These safeguards span from the rules related to employment termination, including reasons and advance notifications, to the expanse of leaves such as annual, sick, and maternity leaves. Employees also enjoy the shield of limited liability, among other guarantees. However, independent contractors lack specific legal protection, enabling parties to stipulate diverse clauses in service agreements based on the tenets of contractual freedom. Thus, from an employer's perspective, engaging workers as contractors instead of employees generally offers distinct advantages. As for the contractors themselves, they could potentially benefit from lower business tax rates (ranging from 0% to 5%) by having a services agreement, in contrast to the personal income tax rate of 21% in Armenia.

The distinction between an employee and a contractor is not always very clear and there is a risk of misclassification. Similar to the laws of many other countries, a number of considerations can be taken into account to assess the independence level of the worker, including the following:

•  Achieve a certain result v. work in a certain position
•  Free work schedule v. specific work hours
•  Work independently v. following the orders of the employer
•  Work with other clients v. work exclusively for the employer
•  Payment for results of work v. periodic payment of salary
•  Using one's own tools v. using tools provided by the employer
•  Ability to delegate duties to others v. work in person

Misclassification risks should not be underestimated. Though fines might not exceed approximately $130 per violation, disputes could lead to more substantial implications. Legal battles may span years, potentially culminating in an employer's obligation to reinstate a former worker and provide backdated average salaries during the dispute. This lingering liability can lead to significant financial burdens.

In Armenia, a baseline rule entails a 20% personal income tax deduction from salaries, multiple factors come into play to determine an individual's tax liabilities.

Employer's Tax Regime:
Certain employers, enjoying special tax privileges, extend the benefit of reduced tax rates to their workforce. An exemplary instance lies with IT companies certified by the Ministry of High Tech. Such companies, employing up to 30 individuals, relish a distinct tax regime where employee salaries are taxed at an advantageous 10%, rather than the conventional 21%. Further, tax incentives extend to IT entities generating over 10 job opportunities in a single month.

Employees of "microbusinesses," denoting enterprises with yearly sales under approximately $60,000, adhere to a simplified flat income tax. This amounts to AMD 5,000 (around $13) per month, providing a straightforward tax approach for qualifying individuals.

Employee vs. Independent Contractor Taxation:
In the realm of employee and independent contractor taxation, differences emerge. Employees typically encounter automatic tax withholding, exempting them from filing or paying taxes directly. Conversely, independent contractors possess the option to register as taxpayers, often classified as "private entrepreneurs." This avenue empowers independent contractors to significantly lower their tax burden. Those with annual incomes not exceeding around $290,000 can potentially reduce taxes to 5%. In specific scenarios, annual incomes not surpassing $60,000 might even lead to a tax rate of 0%.

Employers initiate the process by requesting the employee's identification document, such as a passport or national ID, along with their Social Security Number (SSN). These preliminary documents lay the foundation for accurate record-keeping.

For foreign nationals planning to work within Armenia's borders, a work permit might be necessary. However, specific exemptions apply, particularly for nationals from certain countries, such as the EAEU member states. Additionally, specialized professionals in fields like natural sciences, information technologies, finance, and management also enjoy work permit exemptions.

The employment agreement (or the employer's decision to hire the employee) shall contain information on the duties of the worker, the place of work, the term of the agreement (for a fixed or indefinite term, etc.), start date, probation period (if any), salary, bonuses and other compensation, working hours, annual leave, etc. If the worker is a foreigner the agreement shall also clarify who will bear the costs related to transportation to/from Armenia, accommodation, insurance, address registration, etc.

Electronic signatures hold legal validity in Armenia.

Armenian tax laws require employers to electronically notify the tax office of any new hires of employees or individual service providers. 

In the Armenian employment landscape, early termination of an employment agreement is generally reserved for specific causes. However, this constraint does not extend to services agreements, which can be concluded according to their designated terms.

Employees can terminate their employment agreement through written notification, provided at least 30 days in advance. Employer can terminate the agreement for cause, such as
1. A two-month notice is required in cases of employer dissolution or layoffs prompted by shifts in production necessity, economic conditions, technological factors, or labor organization.
2. For non-compliance with position requirements or job duties due to health issues or incompetence, the notice period ranges from 14 to 60 days, contingent on the employee's length of service. Termination notice is applicable if an employee experiences long-term disability (120 consecutive days or 140 days within a year) or reaches the age of retirement.
3. Without notice, in case of regular failure by employee to perform his/her duties without a valid reason; loss of confidence in employee; employee reporting to work under influence of alcohol or drugs; employee's absence from work for a whole working day (shift), without a valid reason.

Certain circumstances necessitate severance payments, ranging from 10 to 44 days' wages. This compensation is due when agreements terminate due to employer dissolution or layoffs, as well as performance-related issues.

In Armenia, a collection of 12 public holidays punctuates the calendar, each holding significance in the country's cultural fabric. These holidays are as follows:

January 1-2: New Year Days
January 6: Christmas Day
January 28: Army Day
March 8: International Women's Day
April 24: Armenian Genocide Remembrance Day
May 1: International Workers' Day
May 9: Victory and Peace Day
May 28: Republic Day
July 5: Constitution Day
September 21: Independence Day
December 31: New Year Day

Employment regulations in Armenia mandate an annual leave entitlement of 20 business days for employees. Notably, any unused portion of this leave can be carried forward to subsequent years. However, it's essential to utilize these accrued days within 18 months.

According to Armenian labor laws employees must be afforded a minimum 30-minute lunch break. This break is to be provided after the completion of half of the day's working hours, ensuring a fair distribution within the workday. Importantly, this lunch break must be allocated within the first 4 hours of work.

In Armenia, employees are required to provide a medical certificate, usually obtained from a local polyclinic or other recognized medical facility, as evidence of their sickness. For the initial five business days of illness, employers are responsible for compensation, covering 80% of the regular wage. Following this initial period, the government steps in to provide financial support in the form of tax credits.

Maternity leave extends for a standard duration of 140 days, thoughtfully divided into 70 days before childbirth and 70 days post-delivery. The payment of maternity benefits follows a distinctive arrangement. Employers are entrusted with disbursing these benefits, with the government intervening by providing financial assistance. This assistance takes the form of an income tax credit granted to the employer, equivalent to the sum of the benefits due.

Armenia offers a paid paternity leave of five business days. This period can be utilized within a 30-day window following the child's birth.

Overtime work is allowed in certain situations where, for example, the discontinuation of the work will result in material damages to the employer or a breach of its contractual obligations. The maximum allowable overtime duration is limited to four hours every two days and 180 hours annually. This extra effort, whether regular or overtime, should not exceed 12 hours daily or 48 hours weekly. However, it's important to note that these overtime limitations don't apply to managerial positions detailed in the employer's internal guidelines.

Employees might be requested to work during non-working hours or on non-working days, commonly known as on-call work. However, this practice should not occur more than once weekly and is capped at eight hours per day. If on-call work extends beyond these limits, employees have the right to either request compensatory time off in the following month or to have the extra time added to their annual vacation allowance. Monetary compensation is also an option.

Certain circumstances warrant increased compensation rates:
Overtime Work: Requires a 50% premium on the regular wage.
Night Work (10 PM to 6 AM): Entails a 30% premium.
Work on Public Holidays and Non-working Days: Mandates a 100% premium (or the alternative of an extra day off).

Armenian employment law generally doesn't mandate employers to provide benefits, including medical insurance, to their employees. However, many companies extend medical insurance to their workforce on an optional basis. This provision allows employees to access health insurance benefits based on their personal preferences.

Health insurance coverage is available through all licensed insurance companies in Armenia, which currently number six. These companies provide diverse health insurance packages catering to different needs and preferences. The associated costs typically range between $300 to $600 per annum for each employee.

Health Insurance Providers:
SIL Insurance
Armenia Insurance
Ingo Armenia
Nairi Insurance
RESO Insurance
Liga Insurance (formerly ROSGOSSTRAKH Armenia)

Employers' contributions towards health insurance come with specific tax implications. Payments of up to approximately $300 (AMD 10,000 per month) per employee annually are deemed non-taxable income for employees. However, any payments surpassing this threshold will attract taxation at the standard rate.

Armenian employment regulations mandate that monthly salaries be processed through bank transfers, ensuring employees receive their wages not later than the 15th day of the following month. Payments in Armenia predominantly occur in the local currency, Armenian drams.

As of 2023, the average monthly salary in Armenia stands at approximately $690. However, the dynamic IT industry bucks this trend, offering more competitive compensation. Junior positions commence at around $800, while mid-level and senior roles command salaries ranging from $1,500 to $3,500.

As of 2023, the minimum monthly salary in Armenia, established at AMD 75,000 (equivalent to $195), serves as a fundamental benchmark ensuring fair remuneration. Furthermore, the minimum hourly wages are as follows:
AMD 406 ($1,06) for a 40-hour work week
AMD 454 ($1,19) for a 36-hour work week
AMD 680 ($1.78) for a 24-hour work week

When an employee is under probation, the employer reserves the right to terminate the agreement by providing a notice period of three days. The designated probation period is established within the employment agreement, and typically spans no more than three months.

Armenia's labor framework accommodates fixed-term agreements under specific circumstances. These agreements serve as alternatives when indefinite-term arrangements are impractical due to work nature or conditions. Fixed-term agreements find relevance in the following scenarios:
1. Seasonal Work.
2. Temporary Assignments: Appropriate for tasks lasting up to two months.
3. Temporary Replacement: Suits instances where an absent employee is temporarily replaced.
4. Foreign Worker Hiring: Suitable for the duration of a foreign worker's residence permit.
5. Retiree Employment: Pertinent when hiring individuals past retirement age.

It's important to note that a presumption exists in Armenia that a fixed-term agreement transforms into an indefinite agreement if it's extended or renewed within one month following the previous agreement's expiration. However, this presumption doesn't apply if the work's nature or conditions render indefinite agreements unfeasible.

Foreign workers seeking employment in Armenia must adhere to several key immigration requirements. The following guidelines are broadly applicable to foreign workers:

Visa Procurement: Many nationals from European, post-Soviet, US, China, Iran, Korea, and numerous other countries enjoy visa exemptions. For others, obtaining an e-visa through an online application is a straightforward process. However, nationals from select African and Asian nations still require embassy-issued sticker visas. More detailed visa information can be accessed here.

Work Permit: Before engaging in any work for an Armenian employer, a work permit is usually mandatory. Notably, nationals of EAEU countries (Russia, Belarus, Kazakhstan, Kyrgyzstan) are exempt from work permit requirements. Exemptions also extend to specialists educated in various fields such as information technology, management, finance, and agriculture. Further insights on work permits can be found here.

Residence Permit: As of 2022, employment-based residence permits and work permits are issued as a single document – the residence card. Foreign workers who are exempt from work permit requirements may still require a residence permit if their stay in Armenia surpasses 180 days. Additional details on residence permits are accessible here.

Address Registration: Upon obtaining an Armenian residence permit, foreign individuals must register their local address with the nearest police office within 15 days. An exception exists for Russian nationals due to an international agreement, that the address registration grants them indefinite stay rights even without a residence permit.

Social Security Numbers: Typically issued with the employment-based residence permit, a social security number is a standard requirement. For those who don't need a residence permit, obtaining a social security number from a local police office is essential. EAEU nationals must secure an SSN before commencing work in Armenia for an Armenian employer.

Family Members' Residence Permits: For foreign employees accompanied by family members, the need for residence permits is extended. Such applications are often made after the main applicant secures their residence permit. Notably, EAEU nationals and their family members enjoy the exception of applying for residence.

There are various options for registering an entity in Armenia:
•  Subsidiary under Foreign Ownership
•  Branch Office of a Foreign Company
•  Individually-Owned Companies: This includes options like Limited Liability Companies (LLCs) and Joint-Stock Companies (JSCs)

There are generally no restrictions on foreign ownership. The incorporation process is straightforward and normally takes from a few days to a few weeks. We recommend checking the incorporation page for more details.

Armenia is a member country of the Berne Convention, TRIPS (WTO), WIPO Copyright Treaty, the Paris Convention, and Patent Cooperation Treaty (“PCT”).

Contractual requirements for obtaining ownership of intellectual property differ for contractors and employees.

Data protection is regulated by Personal Data Protection Act. It contains the procedural and substantive data protection obligations concerning the processing of personal data, i.e. information that can lead to identification of a natural person. Processing is a broad term encompassing the collection, input, systematization, organization, storage, use, alternation, restoration, transfer, rectification, blocking, and deletion of personal data. Certain categories of personal data are subject to specialized legal provisions, including those linked to state secrets, banking, notarial, and insurance confidentiality, legal professional privilege, anti-money laundering, and more. These sectors adhere to distinct laws for data protection. Compliance with Personal Data Protection Act is overseen by the Personal Data Protection Agency of the Ministry of Justice. Non-compliance may result in administrative penalties (fines of up to $1,000) or criminal penalties in the form of monetary fines or imprisonment. Contracts related to employment or outsourcing often encompass clauses that address data-centric considerations. These may involve data ownership, transfer, confidentiality, processing protocols, technological and information security methodologies, and provisions for compensating breaches.