Employer of Record (EOR)

Employer of Record (EOR) services provide a range of benefits, offering a comprehensive solution for businesses. These services play a crucial role in mitigating liabilities and compliance risks, ensuring that international ventures are streamlined and operate with increased efficiency. By simplifying global operations, EOR services contribute to cost-effectiveness, allowing businesses to allocate resources more strategically.

Moreover, EOR services help in securing talent and intellectual property, ensuring that companies can navigate immigration logistics seamlessly. The transition of contractors into employees is facilitated smoothly, providing a structured approach to workforce management.

One of the significant advantages of EOR services is the optimization of operational taxes and employment costs, benefiting both local workers and expatriates. This integrated approach to employment and compliance offers businesses a holistic solution for their global operations.

Reach Out to Us

Address

4/3 Pirumyanner, Suite 12, Yerevan, 0054, Armenia

Phone

+37499001167

Overview of Employer of Record Services in Armenia

1

Employees v. Contractors

Discover the differences between employees and contractors to find the more suitable option.




2

Procedure for Hiring 

Explore details on the hiring process, encompassing the hiring requirements, laws on leaves as well as overtime work compensation.



3

Immigration Requirements for Foreign Employees

Delve into our dedicated section for requirements when hiring foreign employees.

Our Services

Visa & Residency

  • Visa application
  • Visa extension
  • Invitation letter
  • Residence permit
  • Work permit
  • Citizenship

Legal & Compliance

  • Address registration
  • Social security number
  • Tax ID number
  • Tax residency certificate
  • Tax compliance services
  • Health insurance

 Investment

  • Personal bank account
  • Corporate bank account
  • Company registration
  • Real estate
  • Stocks and bonds
  • Bank deposits

Contact Us for Assistance

Whether you have a specific concern or just need some preliminary advice, our team is here to help. Fill out the form below, and one of our experts will reach out to you shortly. No strings attached, and absolutely free.

2022.05.23 EOR
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Our Achievements

Customers served!

1500 +

Years of experience

Cases Handled

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1500

Years of experience

Nationalities Assisted

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1500

Years of experience

Years of Expertise

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1500 %

Years of experience

Success Rate

Customers served!

1500

Years of experience

Rating on Google

Customers served!

1500 +

Years of experience

Lawyers on Staff

Frequently Asked Questions

An Employer of Record (EOR) is a third-party organization that extends its services to hire and manage employees on behalf of other companies, alleviating the burden of formal employment responsibilities. By undertaking comprehensive roles, an EOR ensures seamless operations and compliance, encompassing key aspects such as:

•  Providing a registered entity for running a local, compliant payroll.
•  Ensuring immigration compliance by arranging for visas, work permits, residence permits, etc.
•  Making sure that the labor laws pertaining to local and expat workers are complied with
•  Advising the client of required notice periods, termination rules, severance pay, etc.

ARE EMPLOYEES AND CONTRACTORS TREATED DIFFERENTLY?

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.

WHAT ARE THE TAXES INVOLVED?

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%.

Header

Regular Employee

Employee of an IT Company

Independent Contractor

Gross Salary

$40,000

$40,000

$40,000

Personal Income Tax

$8,000 (20%)

$4,000 (10%)

$157 + $2,000 turnover tax (5%)

Social (Pension) Payment

$1,902

$1,902

$157

Military Stamp Duty

$383

$383

$255

Net Salary

$29,715

$33,715

$37,431

Resident vs. Non-Resident Workers:
The immigration status of a worker may have an impact on tax liabilities. In addition to the standard 21% personal income tax, employers are obliged to deduct social (pension) contributions, typically ranging from 5% to 10% of the salary, with an upper cap around $160 per month. Additionally, military contributions, approximately $3 to $30 per month, are applicable. It's crucial to note that these contributions exclusively apply to Armenian residents, specifically individuals holding residence permits or equivalent immigration documents.

Double Tax Treaties:
Double tax treaties emerge as pivotal tools that can alleviate tax obligations. These treaties hold the potential to exempt employers from the requirement to withhold the 21% personal income tax, contingent on the worker being a tax resident of a nation with which Armenia holds a treaty. To avail this exemption, the worker must furnish the employer with a tax residence certificate from their country of residence. Armenia has established double tax treaties with an array of nations, extending benefits to employers and workers alike. Presently, these treaties encompass a diverse range of countries, including Austria, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Italy, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Malta, Moldova, Netherlands, Poland, Qatar, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Turkmenistan, UAE, Ukraine, and the United Kingdom.

WHAT IS REQUIRED TO HIRE AN EMPLOYEE?

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. 

WHAT IS REQUIRED TO FIRE AN EMPLOYEE?

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.

WHAT ARE THE TIME-OFF BENEFITS?

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.

WHAT ARE THE LAWS ON SICK LEAVE AND MATERNITY LEAVE?

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.

HOW IS OVERTIME WORK COMPENSATED?

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).

IS MEDICAL INSURANCE REQUIRED BY LAW?

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 AND HOW SALARIES ARE PAID? WHAT IS THE AVERAGE SALARY? IS THERE A MINIMUM WAGE?

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

WHAT ARE THE RULES ON PROBATION AND FIXED-TERM AGREEMENTS?

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.

WHAT ARE THE IMMIGRATION REQUIREMENTS FOR FOREIGN WORKERS?

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

WHAT IS THE INCORPORATION PROCESS?

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.

HOW IS INTELLECTUAL PROPERTY (IP) PROTECTED IN ARMENIA?

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.

Header

Employee

Contractor

Agreement after Completion of Work

Geographical Scope

Obligation to Exercise the Rights Assigned

Duration of Assignment

Copyright

Yes

Not Required

Worldwide

Not required

Perpetual

Patent

No unless assigned in writing

Not Required

Worldwide

Not required

Perpetual

WHAT ARE THE DATA PROTECTION LAWS IN ARMENIA?

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.

What Clients Say

Why Choose Us

Decade of Excellence

Over 10 years of specialized experience in immigration and business setup.

Tailored Solutions

Our team of locally licensed, English-speaking attorneys specializes in immigration, incorporation, and compliance matters, providing bespoke legal strategies for each client.

Fast & Fluent Communication

We prioritize your concerns with a 24-hour response policy and communicate effectively in both English and Russian.

Client-Centered Approach

At Vardanyan & Partners, client care is paramount. Our emphasis on honesty and transparency ensures that you are always informed and confident in your legal journey.

Secure Transactions

Benefit from our secure online payment system without the worry of hidden charges.

Reputable & Reliable

Established in 2012, Vardanyan & Partners has built a reputation for excellence and reliability. With our team, you are not just hiring attorneys; you are partnering with insured legal experts committed to your success.

What Makes Armenia a Good Choice for Residency

No Stay or Visit

Maintaining residency in Armenia does not require physical presence; remote application is possible.

Fast and Easy

The residency application usually takes about 80 days and only a valid passport is required. 


Family Covered

Residents can sponsor extended family for residency (parents, siblings, grandchildren, etc.)

 

Citizenship Path

After living in Armenia for three years, citizenship can be obtained. Dual citizenship is allowed.

Nerses Isajanyan

Managing Attorney

LL.M., Georgetown University

Licensed Attorney, Armenia: License no. 903

Licensed Attorney, New York: License no. 5148945

Our firm's reputation rests on more than just legal expertise. We pride ourselves on the values of honesty, transparency, and an unwavering commitment to client care. We recognize the unique opportunities and challenges Armenia presents, and we are here to guide you through them.

For inquiries or to schedule a consultation, you may contact us at [email protected] or +374.99.00.11.67. I look forward to collaborating with you on your journey in Armenia.

Where to find us

Nestled in the heart of the Davtashen district in Yerevan, our office is a stone's throw away from the Migration Service building, ensuring seamless coordination on immigration matters. If you refer to the map above, you will pinpoint our exact location. For those journeying from the city center, anticipate a brief 20-30 minute taxi ride to reach us. We look forward to welcoming you and addressing your legal needs.

Address

4/3 Pirumyanner, Suite 12, Yerevan, 0054, Armenia

Phone

+37499001167

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