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 21% (20% starting from 2023) 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.

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 cards simultaneously.

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.