Termination of Employment in Azerbaijan

1) What types of employment termination are there?

According to Article 68 of the Labour Code of the Azerbaijan Republic, an employment contract may be terminated on the following grounds:

a. Termination at the initiative of one of the parties (either employer or employee);

b. Expiry of the employment contract;

c. Alteration of working conditions;

d. Change in the ownership of an enterprise (applicable only to directors, deputy directors, chief accountants, and other senior managerial staff);

e. Circumstances beyond the control of the parties;

f. Other cases as established by mutual agreement in the employment contract.

2) What are the legal grounds for termination initiated by the employer?

Article 70 of the Labour Code outlines the legal grounds available to an employer for terminating an employment contract, which include:

a. Liquidation of the enterprise;

b. Staff redundancy;

c. A decision by the authorized body that the employee does not meet the requirements of the position due to insufficient qualifications or lack of professionalism;

d. Failure by the employee to perform their job duties or fulfill obligations under the employment contract, or engagement in gross misconduct as defined in Article 72 of the Labour Code (which provides an exhaustive list of actions constituting gross misconduct and justifying immediate dismissal);

e. Failure to meet performance expectations during the probationary period;

f. Reaching the statutory retirement age for employees working in state-funded institutions.

3) What are the legal procedures required for terminating an employee?

Under the Labour Code of Azerbaijan, termination must be based on legally established grounds (e.g.,redundancy, expiry of the employment contract, or change of working conditions). The employer is required to provide notice or severance pay where applicable, issue a justified termination order, complete the termination via the EMAS electronic system, and ensure the employee’s final dues are paid on their last working day.

4) What are the mandatory notice periods for termination?

The Labour Code of the Azerbaijan Republic primarily stipulates the notice period for termination resulting from redundancy, changes to employment conditions, terminations at the end of a probationary period, and expiry of the employment contract as follows:

1. Redundancy:  According to Article 77 of the Labour Code, when an employee is dismissed due to redundancy, the employer must provide advance notice based on the employee’s length of service:

• Up to 1 year: at least two calendar weeks
• 1 to 5 years: at least four calendar weeks
• 5 to 10 years: at least six calendar weeks
• Over 10 years: at least nine calendar weeks

During the notice period, the employee is entitled to one working day off to search for new employment, with salary retained.

1. Changes to Employment Conditions: The employer must notify the employee in writing at least one month in advance. If the employee does not wish to continue under the new conditions, they must be transferred to another position. If no transfer is possible, dismissal may occur under Article 68.2 (c) of the Labour Code.

2. Probationary Period: Either party may terminate the contract by notifying the other party in writing at least three days prior to the end of the probationary period.

3. Expiry of the Employment Contract: In the event of expiry, either the employer or the employee must provide at least one week’s notice.

5) What severance pay and compensation are employees entitled to?

According to Article 77 of the Labour Code, in cases of termination on the grounds of enterprise liquidation or staff redundancy, the employer is obliged to pay severance based on the employee’s length of service:

• Up to 1 year – equal to the average monthly salary;
• 1 to 5 years – at least 1.4 times the average monthly salary;
• 5 to 10 years – at least 1.7 times the average monthly salary;
• More than 10 years – at least 2 times the average monthly salary.

With the employee’s consent, the employer may replace the mandatory notice period with a severance payment, calculated as follows:

• Two-week notice – 0.5 of the average monthly salary;
• Four-week notice – 0.9 of the average monthly salary;
• Six-week notice – 1.4 of the average monthly salary;
• Nine-week notice – 2 times the average monthly salary.

Additional severance payments are also applicable in the following circumstances:

• Change in working conditions – at least 2 times the average monthly salary;
• Commencement of military or alternative service – at least 2 times the average monthly salary;
• Permanent incapacity (inability to perform work for more than six months) – at least 2 times the average monthly salary;
• Death of the employee – heirs are entitled to 3 times the average monthly salary;
• Change of enterprise ownership – at least 3 times the average monthly salary.

6) How should employers handle termination due to poor performance or misconduct?

The employer must have valid grounds for dismissal, such as poor performance or misconduct, in accordance with the Labour Code. Termination for these reasons must be supported by clear evidence, including performance evaluations, written warnings, or documented instances of misconduct.

In accordance with the Labour Code, an employment contract may include a probation period to assess the employee’s qualifications and ability to perform the job. If the employee fails to meet expectations during this period, the employer may terminate the contract with a justified order, providing the employee with at least three days' prior written notice (in hard copy or through an electronic system). Furthermore, an attestation process can be conducted to evaluate an employee's professional competence and suitability for their position, excluding those specified in the Labour Code. If the attestation commission deems the employee unsuitable, the employment contract will be terminated under Article 70(c) of the Labour Code. Article 72 of the Labour Code specifically lists the cases that qualify as gross misconduct and justify immediate termination of the employment contract.

7) What legal recourse is available to employees in case of unlawful termination?

In the case of unlawful termination, employees in Azerbaijan have several legal resources available to them under the Labour Code of the Azerbaijan Republic, including reinstatement to their position, compensation for losses, and claims for moral damages, which can be resolved through the courts, pre-trial review bodies under the trade union (if stipulated in the collective agreement), or in practice by filing a claim with the State Labour Inspection Service, a specialized institution that monitors compliance with labor laws.

8) What is the procedure for terminating an employment contract with foreign nationals?

Employment contracts with foreign nationals are typically aligned with the duration of their work permits. The process of terminating an employment contract with foreign nationals generally follows the same procedures as with local employees. However, in the case of early termination, employers are obligated to notify the State Migration Service within five business days. Failure to comply with this requirement may result in administrative penalties as outlined by law.

Author: Gunel Huseynova