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Labor contract conditions re-defined with new amendments to the law

June 29, 2022by admin0

In practice, many companies and entrepreneurs prefer to conclude a civil (commercial) contract with an employee instead of an employment agreement for certain reasons, taxation issues etc. But when studied carefully, it becomes evident that such contracts are designed to create a labor relation between the respective parties. New amendment to the Labor Code of the Republic of Azerbaijan entered into force as of 7 May 2021, and it prohibits signing civil (commercial) contracts for the purpose of labor relations between an employer and employee. New section 4-1 was introduced to the definitions clause (Clause 3) of the Labor Code which redefines the term “Labor relations” as the following:

“4-1. Labor relations – the performance of a paid job function by the employee in a workplace where he / she is hired (appointed), selected, reinstated, in accordance with the obligations provided for in labor legislation, collective agreements and contracts, based on mutual agreement with an employer, internal disciplinary rules, provision by the employer of working conditions, guarantees and labor protection of the employee, as well as the principles of this Code.”

According to the new amendments, a contract shall be considered an employment contract in the following cases:

  • if the content of the contract complies with Part 2 of Article 43 of the Labor Code, and the form in accordance with the form established by Part 2 of Article 44 of the Labor Code;
  • when a labor book is submitted for the registration of relations between the parties and making relevant notes in accordance with Article 48 of the Labor Code;
  • if the relationship between the parties arises in connection with the admission (appointment) to the relevant profession or position, including paid election or appointment, as well as holding a position on a competitive basis, employment on a quota basis, reinstatement by a court decision;
  • if the relationship between the parties arises in connection with the performance of work (services) related to the main field of activity of the employer;
  • if the relations between the parties arise in connection with the performance of works (services) on basis of a substitute or temporary replacement;
  • if the extension of the contract is regulated in accordance with Article 73 of the Labor Code;
  • if the work (service) is of a temporary nature due to the conditions of its performance;
  • if the composition of the remuneration paid for the work (service) performed consists of a monthly tariff (position) salary, supplement and bonus specified in part 3 of Article 157 of the Labor Code;
  • if the contract provides for the regulation of issues provided for in Articles 10, 77, 112, 179 and 186 of the Labor Code.

Documentation of the above-mentioned relations between employer and employee with civil contract is prohibited. Failure to comply with the new requirements may result in strict administrative and monetary sanctions.

This article was published as a general information by Baku Attorneys & Consultants (BAC), Azerbaijani law firm. BAC is a full-service law firm based in Baku, Azerbaijan and it has a strong team of highly experienced attorneys and consultants, specialized in various expert services to foreign and local clients in Azerbaijan. Please, feel free to reach us via the contact page.

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