Certain Aspects of an Employer’s Criminal Liability. Labour issues.

In the pursuit of profit and the timely fulfilment of obligations to creditors and shareholders, a company director may sometimes find himself in a situation where his actions are at the limits of what is permitted by law. For some company directors and executives, a decision made in the course of their business operations may ultimately lead to an investigation, court proceedings, and ultimately imprisonment, creating an unbroken chain of consequences arising from a single wrong decision.

This article examines the actions of company directors in employing foreign workers that, in certain cases, ultimately lead to criminal proceedings against the individuals involved. The examples below illustrate the serious and, in some circumstances, unavoidable consequences that may result from such conduct.

Pursuant to Article 395 of the Criminal Code of the Republic of Kazakhstan, an employer who repeatedly employs foreign nationals or stateless persons residing in the Republic of Kazakhstan without the required permission from the competent authority, or who repeatedly violates the rules for the employment of foreign labour in the Republic of Kazakhstan, may be subject to a fine of up to 200 monthly calculation indices (MCI), corrective labour in the same amount, community service for up to 200 hours, or arrest for up to 50 days. As of the date of publication, one MCI is KZT 4,325; accordingly, the maximum penalty is KZT 865,000. If the fine is not paid, it may, during the enforcement proceedings, be replaced by community service at the rate of one hour of community service for each unpaid MCI, or by arrest at the rate of one day of arrest for every four unpaid MCIs.

In addition, information concerning the conviction of a director would be recorded in the database of the General Prosecutor’s Office of the Republic of Kazakhstan. Such information cannot be described as publicly available, but the consequences of a criminal conviction do not simply disappear.

When examining the elements of the offence described in this provision, particular attention should be paid to the fact that it covers two types of illegal actions, both of which must be committed repeatedly, meaning that they must occur more than once. Accordingly, the investigating authority must establish that the employer committed the relevant unlawful acts repeatedly. The first form of conduct involves employing foreign nationals or stateless persons without the required permission. The second involves the unlawful use of foreign labour. 

In one case, a citizen of the Republic of Kazakhstan, S., served as the general director of a limited liability partnership (hereinafter “LLP”). Between September 2021 and August 2022, without the required authorisation from the competent authority, he repeatedly employed foreign nationals who had entered the Republic of Kazakhstan. The workers were hired under oral agreements at an agreed salary, to perform construction work on a residential complex.

In particular, on 13 September 2021, two of these foreign workers were held administratively liable under Article 517.5 of the Code of the Republic of Kazakhstan on Administrative Offences (the “Administrative Offences Code”). In connection with the same circumstances, S. was held administratively liable under Article 519.1 of the Administrative Offences Code for employing foreign labour in violation of the legislation of the Republic of Kazakhstan.

On 22 December 2021, two other foreign nationals were held administratively liable under Article 517.5 of the Administrative Offences Code, while S. was again held liable under the same provision.

On 22 August 2022, two foreign nationals employed by the defendant and working on the construction of the residential complex were found guilty under Article 517.7 of the Administrative Offences Code, which concerns a repeated violation, within one year, of an offence under Article 517.5.

For context, Article 517.5 of the Administrative Offences Code provides for liability where a foreign national or stateless person violates Kazakhstan’s migration legislation, including by engaging in activities that do not correspond to the purpose stated in the visa, or by engaging in employment without obtaining a certificate confirming the person’s qualifications for independent employment, issued by the local executive authority, or without obtaining a work permit where such a certificate or permit is required for the employment.

Thus, S., acting as an employer, repeatedly violated the rules governing the employment of foreign labour in the Republic of Kazakhstan. The court therefore sentenced him to a fine of 100 MCI, amounting to KZT 432,500.

In another case, a Turkish citizen was convicted under the same provision and sentenced to a fine of 25 MCI, which, at the current rate, amounts to KZT 108,125. According to the circumstances of that case, G. together with the defendant, G., established an LLP whose principal activity was construction. In June 2016, he entered into a contract with a customer for the construction of a nine-storey building and engaged foreign nationals to perform the work without the required work permits. As a result, both the foreign workers and the employer were held administratively liable under the relevant provisions for engaging in employment without the necessary permits and for the unlawful employment of foreign labour. In April 2017, similar violations were committed again by the director of the LLP. The foreign workers were deported, while the Turkish citizen was held liable for the repeated violation. The chain of events ultimately resulted in criminal proceedings, and the employer, the director of the LLP, was brought before the criminal court.

It is also important to note that if the director of an LLP is a foreign national, he may face an additional and serious consequence: the risk of deportation from the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan on Migration and the Civil Procedure Code.

Chapter 49 of the Civil Procedure Code of the Republic of Kazakhstan regulates the procedure for expulsion in civil proceedings. It should also be noted that certain provisions of the Criminal Code and the Administrative Offences Code provide for deportation from the Republic of Kazakhstan as either a primary or an additional sanction. In such cases, the applicant, represented by the police authorities responsible for keeping records of foreign nationals, submits evidence of the foreign national’s violation of Kazakhstan’s legislation to the court hearing the civil case. On a literal interpretation of this provision, a single violation may be sufficient. The existence of a criminal conviction, in particular, may constitute a compelling argument in favour of the immediate expulsion of the offender.

The court examines the circumstances of the particular case as a whole while making its decision, including the circumstances concerning the foreign national, since such a judgment affects not only the individual concerned but also his or her family members. It also raises broader questions concerning public awareness of legal requirements and the principle that illegal conduct has consequences. At the same time, the court must balance these considerations against the principle of the inevitability of punishment and the policy of zero tolerance towards criminal conduct, which applies equally to citizens of Kazakhstan and foreign nationals.

Authors: 

Assel Gainedinova, L.L.M., Council, GRATA Internation Kazakhstan

Zaira Sarsenova, Partner, Atyrau, Aktau and Aktobe Branch Director, GRATA Internation Kazakhstan