- Sign a written employment contract in two copies and give the employee their signed copy within 3 days; lack of a contract can be penalized as illegal employment under the Labour Code and other enforcement rules.
- Register each new hire in the SRC e-system at least one day before the employee starts work (the "day-before" rule).
- Withhold 20% personal income tax and the applicable funded pension contribution (generally 5–10%) from wages.
- Deduct the monthly military stamp duty (AMD 1,500–15,000, by salary bracket) and include it in your e-filing.
- E-file and pay all withholdings by the 20th of the following month; late payments accrue 0.075% interest per day.
Hiring your first team member in Armenia is straightforward if you align your contract, SRC e-registration, and payroll withholding from day one. This practical guide walks startups and small businesses through the essentials—what to sign, what to submit online, what to deduct, and when to pay—so you can hire with confidence and avoid penalties.
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- Why written employment contracts are mandatory in Armenia (legal basis and penalties)
- What to include in an Armenian employment contract: mandatory terms
- SRC e-registration for new hires: how to register
- Payroll withholdings: flat 20% personal income tax and funded pension contributions (5–10%)
- Military stamp duty: monthly deduction amounts (AMD 1,500–15,000)
- How to apply: first-hire checklist
- Common pitfalls for startups
- FAQ
Why Written Employment Contracts Are Mandatory in Armenia (Legal Basis and Penalties)
Every employer must conclude a written employment contract with a hire. Armenian law requires a written agreement in two copies, signed by both parties, and the employer must deliver the employee's copy within three days of signing.
Failing to formalize employment can be treated as illegal employment and lead to significant penalties, including fines described in practice as up to 50 times the minimum wage in certain circumstances. Audits have also targeted unregistered employment: in a single quarter, authorities identified 136 unregistered employees across firms and levied fines totaling AMD 34 million.
What to Include in an Armenian Employment Contract: Mandatory Terms
At a minimum, ensure your Armenian employment contract is in writing, signed in two copies, and the employee receives their signed copy within three days. In practice, your contract should clearly set out the job role, place of work, remuneration, working time regimen, start date and term (if fixed), leave entitlements, and grounds and procedure for termination in line with the Labour Code framework.
Practical tips for founders:
- Attach an internal policy or job description to define duties and performance expectations.
- Define probation (if any) and overtime rules consistent with the Labour Code.
- State the employer as the employee's tax agent for payroll withholdings and e-filing duties.
Need help drafting? Our team can deliver bilingual, Labour Code–compliant contracts and onboarding packs.
SRC E-registration for New Hires: How to Register
Each new hire must be registered electronically with the State Revenue Committee (SRC) before they start. The rule is to submit the hiring notice at least one calendar day prior to the employee's first working day.
Timing (the "Day-Before" Rule) and Practical Steps
- Collect employee data: full name, ID/SSN details, start date, position, and workplace.
- Log in to SRC e-systems and submit the employment registration through the official "Register a New Employee" online service.
- Submit no later than the day before the start date; keep electronic confirmation in your HR file.
Why it matters: timely registration activates payroll tax agency obligations and protects you against "unregistered employment" findings that can trigger fines.
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Get Professional AssistancePayroll Withholdings: Flat 20% Personal Income Tax and Funded Pension Contributions (5–10%)
Employers act as tax agents. From each payroll, withhold and remit:
- Personal income tax: flat 20% of taxable salary.
- Funded pension contribution: generally 5–10% of salary on a sliding scale for eligible employees.
Monthly E-filing and Payment
File the monthly payroll report and pay all withholdings to the SRC by the 20th day of the month following payment of wages. Late payments accrue interest at 0.075% per day starting the day after the due date.
Military Stamp Duty: Monthly Deduction Amounts (AMD 1,500–15,000)
In addition to income tax and pension, Armenian payroll requires a fixed monthly "military stamp duty" deducted by salary bracket. The deduction ranges from AMD 1,500 to AMD 15,000 per month and must be reported and paid with your payroll submissions.
Payroll Compliance at a Glance
| Item | Rate / Rule | Key Deadline |
|---|---|---|
| Hire registration (SRC) | Register at least 1 day before start | Day before employment begins |
| Personal income tax | Flat 20% | By the 20th of following month |
| Funded pension | 5–10% (sliding scale) | By the 20th of following month |
| Military stamp duty | AMD 1,500–15,000 monthly | By the 20th of following month |
| Late payment interest | 0.075% per day | Applies from the day after due date |
How to Apply: First-Hire Checklist
Step-by-Step Process
- Draft and sign the written employment contract (two copies); ensure the employee receives their signed copy within three days.
- Register the hire online via the SRC service no later than the day before start.
- Configure payroll: 20% PIT, applicable 5–10% funded pension, and military stamp duty (AMD 1,500–15,000).
- Run payroll and remit withholdings; e-file the monthly report and pay by the 20th of the following month.
- Maintain records: contract, SRC confirmation, payroll registers, and payment proofs—retain for audit defense.
Related resources: learn more about taxes in Armenia, set up your business registration, and manage Armenia visas for foreign hires.
Common Pitfalls for Startups
Common Pitfalls for Startups
- Starting work before SRC registration (violates the day-before rule).
- Using unsigned or single-copy contracts (non-compliant; deliver employee copy within 3 days).
- Missing the 20th-day e-filing and payment deadline (interest of 0.075%/day applies).
Conclusion
To hire your first employee in Armenia correctly, anchor the process on three pillars: a compliant written contract, SRC "day-before" e-registration, and accurate payroll tax withholding and e-filing. With a 20% income tax, 5–10% pension, and the military stamp duty due monthly, disciplined workflows will keep you compliant and audit-ready. If you need help drafting an Armenia employment contract, configuring payroll tax in Armenia, or navigating SRC e-tax Armenia filings, contact our team for end-to-end support.
Talk to a Lawyer — Get Compliant Before You Hire
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Contact Our Legal TeamFAQ
Do I Need a Written Employment Contract in Armenia?
Yes. The Labour Code requires a written contract in two copies, with the employee's signed copy delivered within three days.
When Must I Register a New Employee with the SRC?
At least one day before the employee's start date via the SRC online service.
What Payroll Taxes Do I Withhold in Armenia?
Withhold 20% personal income tax and the applicable funded pension contribution (generally 5–10%), plus the fixed military stamp duty (AMD 1,500–15,000).
What Are the E-filing Deadlines and Penalties?
File and pay by the 20th day of the following month. Late payments accrue 0.075% interest per day starting the day after the due date.
What Happens If I Employ Someone Without Registering?
Authorities treat unregistered/illegal employment as a serious violation that can attract substantial fines; recent audits have imposed multi-million AMD penalties on firms with unregistered staff.
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