Hire in Mongolia
Here’s where you get started with human resources best practices and hiring in Mongolia.
Mongolian Tugrik (MNT)
Key Country Facts
The judiciary of Mongolia is made of a three-tiered court system: first instance courts in each provincial district and each Ulaanbaatar district; appellate courts for each province and the Capital Ulaanbaatar; and the court of last resort (for non-constitutional matters) at the Supreme Court of Mongolia. For questions of constitutional law, there is a separate constitutional court.
A Judicial General Council (JGC) nominates judges which must then be confirmed by the parliament and appointed by the President.
Arbitration centers provide alternative dispute resolution options for commercial and other disputes.
Mongolia is a land of extremes. With over 260 sunny days a year, Mongolia is justifiably known as the ‘Land of Blue Sky’. In Ulaanbaatar, the winter (December to March) is long and cold, with temperatures often dropping down to minus 30C in January and February. You can expect some intense dust storms during the short spring (March to June). The summer (June to September) is pleasant without being too hot.
Among the topics that are mentioned from the oldest works of Mongolian literature to modern soft pop songs are love for parents and homesickness, a longing for the place where one grew up. Horses have always played an important role in daily life as well as in the arts. Mongols have a lot of epic heroes from the ancient time. Hospitality is so important in the steppes that it is traditionally taken for granted. The Mongolian word for hero, baatar, appears frequently in personal names, and even in the name of Mongolia’s capital, Ulaanbaatar (Mongolian: Улаанбаатар, Ulan Bator). The word was introduced in the Middle Ages to many non-Mongolic languages by conquering Mongol-speaking nomads and now exists in different forms such as the Bulgarian language, Russian, Polish, Hungarian, Persian, North Indian and Georgian. Traditional words such as temul signified a way to describe creativity and passion; temul was used in several Mongol words and had the meaning to: “rush headlong, to be inspired or to have a sense of creative thought, and even to take a flight of fancy. It can be seen from Mongolian perspective as “the look in the eye of a horse that is racing where it wants to go, no matter what the rider wants.“
The official language of Mongolia is Mongolian and is spoken by 95% of the population. A variety of dialects of Oirat and Buryat are spoken across the country, and there are also some speakers of Mongolic Khamnigan. In the west of the country, Kazakh and Tuvan, both Turkic languages, are also spoken. Mongolian Sign Language is the principal language of the deaf community.
Country Name HR at a Glance
Law on Labor of Mongolia (1999) (“Labor Law”) governs the rights and duties between employers and workers. Also referred to as labor law, these rules are primarily designed to keep workers safe and make sure they are treated fairly, although laws are in place to protect employers’ interests as well. Employment laws are based on federal and state constitutions, legislation, administrative rules, and court opinions. An employment relationship may also be governed by contract of employment, collective agreement or collective bargaining.
According to the Labor Law, an employer is obliged to conclude an employment agreement with an employee in writing and must provide this within 10 days of the employment commencing.
The new Labour Law that took effect in January 2022 distinguishes between the different types of employment agreements: apprenticeship, trainees, probationary, part-time, working from home, remote and special conditions (e.g. for executives).
The following basic matters shall be provided for in a contract of employment:
- name or title of the position of employment;
- duties and work to be performed;
- amount of compensation;
- conditions in which work is to be performed.
Employment agreements are for indefinite term except for the below cases:
- apprenticeship and probationary work
- seasonal work (one-time)
- temporary employment e.g. replacing an employee who is on maternity/paternity leave
- contract of special conditions
If a fixed-term contract lasts for more than two years, it will be considered to be an indefinite employment agreement.
Apprenticeship employment agreements are for three months, and are extendable once for a further three months. Professional apprenticeship employment agreements can be up to two years with the option to extend once for no more than one year.
Traineeship agreements are for up to three years.
Unless otherwise provided in the law or an employment agreement, an employee shall have the right to leave his or her workplace upon the expiration of 30 days after submitting his or her request of resignation to the employer, in which case the employment agreement shall be considered as terminated. An employment agreement may be terminated prior to the above-mentioned time limit due to a valid reason or by an agreement with respect to the time of resignation with the employer. (more details below)
- The hours of work per week shall not exceed 40 hours.
- The length of a normal working day shall not exceed 8 hours.
- The period of uninterrupted rest between two consecutive working days shall not be less than 12 hours.
Probation Period/Trial Period
The maximum probation period is three months, with the possibility of extending once more for no more than a further three months.
For termination due to the below reasons, severance payout depends on the employee’s length of service.
- Termination of employment agreement due to ownership transfer of business
- The organization or its business unit has been downsized
- The employee cannot meet the requirements of the job, either professionally or due to a medical condition
The severance payout is as follows:
- 6 months – 2 years: 1 month
- 2 – 5 years: 2 months
- 5 – 10 years: 3 months
- >10 years: 4 months
This severance pay shall also be payable to an employee whose employment agreement is terminated because he or she has been called to active military service or has attained 60 years of age and has become eligible to receive a pension. In the case of a mass redundancy of employees, an employer shall agree the amount of the severance pay to be paid through negotiations with the representatives of employees.
The basic annual leave entitlement is 15 days, or 20 days if the employee is under 18 years of age. There may be additional leave days awarded based on the tenure of employment ranging from 3 days to 14 days, depending on the length of employment. (more details below)
If the employer’s business entity or organization, or a branch or unit thereof, has been dissolved, or the job or position within it has been abolished, or the number of employees has been reduced; if it has been determined that the employee cannot meet the requirements of the job or position because of lack of professional qualifications or skill, or because of health reasons; employer shall notify the employee at least one month prior to termination.
Notice of termination of all employees because of the dissolution of a business entity or organization shall be given to the relevant representatives of the employees at least 45 days prior to such dissolution, and the employer and such representatives of the employees shall thereafter enter appropriate negotiations as provided in this law.
If ownership of the employer’s organization or entity has been transferred to another owner, the employer shall notify the employee at least 2 months prior to such termination and pay the employee an amount equal to not less than his average compensation for a three months period.
Non-compete restrictive covenants can be signed as a separate agreement to the employment contract, and must specify the reasons for prohibiting competition, type of activities covered, the geographical coverage, length of time and compensation amount. The compensation amount has to be at least 50% of the employee’s last drawn monthly salary.
The non-compete restrictive covenant applies only to employees who are executives (i.e. not applicable for entry-level or mid-level employees), and may not apply for overseas employment.
SHI (Social Health Insurance) contribution is 12.5%% – 14.5% from the employer and 11.5% from the employee. Employees’ contribution is capped at MNT 420,000.
An employer must provide social and health insurance for employees employed under a contract of employment and must withhold premium payments each month as required by law. The employer shall open social and health insurance record books for each employee when the contract of employment is established and maintain records of monthly social, health insurance withholding and related fees in accordance with applicable regulations.
Participation is mandatory for all Mongolian citizens, foreigners and stateless persons employed within the territory of Mongolia.
- Additional pay for working overtime or on weekly rest days: If an employee works on a public holiday and is not given another day off from work for each such day, he or she shall receive compensation for such work at double rate of his or her average compensation.
- If an employee works overtime or on weekly rest days and has not been given another rest day for each such day, he or she shall receive compensation for such work in an amount equal to at least one and one-half times his or her average compensation.
- If an employee works during night hours and is not given equivalent periods of rest during normal business hours, he or she shall receive extra compensation in accordance with the provisions of applicable collective and contract of employments.
Idle Time Compensation
- If an employee, through no fault of his or her own, cannot be transferred to another job during a period of idle time with respect to the employer’s business, he or she shall receive compensation in an amount specified in the applicable collective agreement.
- The idle time compensation determined by the collective agreement shall be equal to at least 60% of the employee’s basic compensation and shall not be less than the minimum compensation payable for the job description.
- If the idle time is caused by actions of the employee, he or she shall not be entitled to receive any idle time compensation.
- If, during idle time, the employee performs other work for the employer, he or she shall be paid according to the work performed, but in no event shall such payment be less than his or her previous average compensation.
Tax and Social Security
Personal Income Tax
The PIT rate on employment income for resident taxpayers (i.e., those who stay more than 183 days in Mongolia in the tax year) will revert back to a flat 10% rate, reversing the previously-approved marginal tax rates of 15%, 20%, and 25%, which represented an effort to make the tax system more progressive and boost yields to the country’s treasury.
The tax rate on Mongolian-sourced income (including fringe benefits, property income, dividends, business income, and interest income) for nonresidents will remain at the newly-introduced flat 20% tax rate.
If the income is above MNT 36 million per annum (approx. USD 14,000), there will no longer be a PIT credit available.
|Monthly Taxable Employment Income (MNT)||2019 Credit||2020 Credit||2021 Credit
|Up to 500,000||20,000||20,000||20,000|
Mongolian income tax is charged at a flat rate of 10% for all salaries – with a personal tax allowance of MNT 84,000.
INCOME TAX: EMPLOYER REQUIREMENTS
Employers shall deduct insurance from an employee’s monthly earnings and remit it to social insurance authority on employee’s behalf. The employer shall prepare a monthly report (ND-7, 8) and submit it to the social insurance authority by the 5th of the following month.
- Report of withholding Tax Return for Wage, Salary other Comparable Income (TT-11);
- Information of Withholding Tax Return for Wage, Salary Other Comparable Income (TT-11(1))
Employers shall prepare and file withholding tax return (TT-11, 11(1)) to the tax authority on a quarterly and annual basis. The 20th of April, July and October are dates for the submission of the Quarterly Report and 10th of February of next year for Annual Report.
All reports and returns can be submitted by both parties, either client or payroll provider. It could be signed by the employer or a representative of the payroll provider based on previous authorization provided by client.
In Mongolia, the Social Security Rate is a tax related with labor income charged to both employers and employees. Revenues from the Social Security Rate are an important source of income for the government of Mongolia because they help to pay for many social programs including welfare, health care and many other benefits.
Social security contributions cover Mongolia’s statutory pension scheme, medical insurance, benefit insurance, and unemployment insurance. Contributions to social security are made by both employers and employees.
Retirement: the retirement age will remain the same as it was before the April 2017 changes.
|Contribution||Rates from 2020|
|Employee||12.5% (capped – current cap of MNT 525,000 per month)|
|Employer||13.5%-15.5% (depends on industry)|
*The above rates serve as a broad guideline. Actual rates charged will differ.
|Retirement age||Prior to April 2017||April 2017 – February 2018||15 February 2018 onwards|
|Men||60||60 in 2017, 61 in 2019, 62 in 2021, 63 in 2023, 64 in 2025, 65 in 2027||Full retirement age is 60. However beginning with people born in 1957 or later, retirement age gradually increases until it reaches 65 for people born after 1977.|
|Women||55||55 in 2017, 56 in 2019, 57 in 2021, 58 in 2023, 59 in 2025, 60 in 2027, 65 in 2037||Full retirement age is 55 beginning with people born in 1962 or later. Retirement age gradually increases until it reaches 65 for people born after 2002.|
|Employers Contributions (%)||Employees Contributions (Capped at MNT 420,000) (%)|
|Industrial Accident Insurance||1.0-3.0||0.0|
*The above rates serve as a broad guideline. Actual rates charged will differ.
Wages shall be paid at least 2 days a month and the dates of the payment should be stated in the employment agreement. It is common to pay between the 25th – 31st of the month or by the 5th of the following month.
Monthly available on website, pdf, or paper.
Payroll reports must be kept for a minimum of 5 years for payroll purposes and a minimum of 10 years for accounting purposes.
The hours of work per week shall not exceed 40 hours.
The length of a normal workday shall not exceed 8 hours.
The length of the uninterrupted rest period between two consecutive working days shall not be less than 12 hours.
Mongolia has 15 public holidays. Generally, the employees will be paid for public holidays.
Some of the holidays are fixed dates, and some are based on the lunar calendar. See list of public holidays below.
An employee is entitled to 15 days paid annual leave per year, and new employees are entitled to pro-rated annual leave from the 7th month of their employment. There are no restrictions on the number of days of partial leave, but one part shall be taken in a continuous stretch of 10 working days.
If employees are unable to take the annual leave due to urgent business, they should be paid a bonus of 1.5 times their base pay.
The length of the regular holiday for an employee under 18 years of age shall be 20 working days.
An employee due to his/her own request may enjoy their regular holiday in parts during the year concerned.
In addition to the basic period, employees working under normal working conditions shall be awarded additional leave days considering the length of their record of service and their working conditions as follows:
- 6 – 10 years of work, 3 working days
- 11 – 15 years of work, 5 working days
- 16 – 20 years of work, 7 working days
- 21 – 25 years of work, 9 working days
- 26 – 31 years of work, 11 working days
- 32+ years of work, 14 working days
In addition to the basic period, employees working under abnormal working conditions in accordance with the collective contract shall be awarded additional leave days considering the length of their record of service and their working conditions as follows:
- 6 – 10 years of work, 5 working days and more
- 11 – 15 years of work, 7 working days and more
- 16 – 20 years of work, 9 working days and more
- 21 – 25 years of work, 12 working days and more
- 26 – 31 years of work, 15 working days and more
- 32+ years of work, 18 working days and more
The additional regular holiday term for civil servants may be established by the appropriate law.
If an employee contracts a normal disease or domestic injury and therefore rendered unable to perform their duties, as determined by a competent medical authority, then they are entitled to paid sick leave for the duration of such temporary inability.
Maternity & Parental Leave
- Maternity leave of 120 days shall be provided to the mother, and 140 days for mothers who have given birth to twins.
- If a woman has a stillborn child or has interrupted a pregnancy with hospital methodology before the 196th day of pregnancy, the general regulation on granting sick leave shall be applied, and such leave shall be granted.
- An adopting mother shall be entitled to equal leave as a mother who gives birth to a child, until the child reaches 60 days old.
- All the above shall apply equally to single fathers with a new-born child.
An employee whose wife has given birth is entitled to 5 working days of paid leave.
Other Leaves - Baby Care Leave
- An employer shall grant baby care leave to a mother with a child under three years of age, who had maternity leave or annual leave, if she so wishes.
- The employer shall be obligated to allow a mother to take up her previous job or post upon the expiry of her baby care leave or before the expiry, if the mother so wishes, and shall provide another job or post, if the previous one has been eliminated because of reduction in staff or the number of jobs.
- All the above shall apply equally to single fathers with a child under three years of age or a single person who adopted a child of such age.
Termination - End of Service Payment There is no specified resignation or end of service payment.
There is no specified resignation or end of service payment.
Termination of Employment
A labor contract can be terminated upon initiation by either the employee or the employer. Unless otherwise stated in the contract, employees can leave their position after 30 days of giving notice. Employers may terminate the contract with valid grounds.
Grounds for terminating employment include:
- Mutual agreement by the parties to do so
- If the employer or employee has died
- If the labor contract has expired and both parties have decided not to extend the contract
- If a legal authority has so demanded
- If an unjustifiably dismissed employee has been reinstated to their previous position
- If an employee has been enlisted for army service
- If a court decision prevents an employee from performing their work duties as a result of a criminal offence
Employers who terminate a labor contract with an employee must establish a time for the transfer of duties to the new employee and provide this information when dismissing the original employee. Employers are obliged to provide the dismissed employee with the decision on the dismissal, any legally required dismissal allowances, as well as a letter of reference about the occupation, profession, specialization, position and remuneration at the request of the employee.
Visas and Foreign Workers
Ulaanbaatar has a good choice of accommodation, ranging from cheap guest house to expensive hotels of international standard. Elsewhere in the country there aren’t many hotels, but in the most important places visited by tourists, there are ger camps which are the traditional homes of Central Asian nomads.
Getting a Tax Number
Conditions on the vast, cold Mongolian steppe has always made food a necessity, rather than an art. Nomads make do with what they can, and this means a lot of meat and dairy, supplemented with flour-based doughs and occasionally rice. In the major settlements, like Ulaanbaatar, you can find a big selection of international food (we even had pizza!). But, on the steppe, expect only the most basic food.
Public Holidays in 2022
|1||New Year’s Day||January 1st|
|2||Lunar New Year||February 2nd – 4th|
|3||International Women’s Day||March 8th|
|4||Children’s Day||June 1st|
|5||Buddha Day||June 14th|
|6||Naadam Holiday||July 11th – 15th|
|7||Chinggis Khaan’s Birthday||November 24th|
|8||Republic Day||November 26th|
|9||Independence Day||December 29th|