Hire in Mongolia

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 will 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 this case, the employment agreement will be considered terminated. An employment agreement can 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.

The hours of work per week must not exceed 40 hours.

The length of a normal working day must not exceed eight hours.

The period of uninterrupted rest between two consecutive working days must not be less than 12 hours.

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 three days to 14 days.

The employer must notify the employee at least one month prior to termination if any of the following apply:

• The employer’s business entity or organization (or a branch or unit thereof) has been dissolved.
• The job or position within it has been eliminated.
• The number of employees has been reduced.
• It has been determined that the employee cannot meet the requirements of the job or position because of lack of professional qualifications, lack of skill or health reasons.

Notice of termination of all employees because of the dissolution of a business entity or organization must be given to the relevant representatives of the employees at least 45 days prior to such dissolution. The employer and such representatives of the employees will thereafter enter appropriate negotiations as provided in Mongolia’s labor laws.

If ownership of the employer’s organization or entity has been transferred to another owner, the employer must notify the employee at least two months prior to such termination. The employer must also pay the employee an amount equal to not less than his average compensation for a three month 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. The employee’s contribution is capped at MNT 420,000.

An employer must provide social and health insurance for employees employed under a contract of employment. The employer must also withhold premium payments each month as required by law. The employer will 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. This must be done in accordance with all applicable regulations.

Participation is compulsory for all Mongolian citizens, foreigners and stateless persons employed within the territory of Mongolia.

• Additional pay for working overtime or on weekly rest days is offered to employees in Mongolia. If an employee works on a public holiday and is not given another day off from work for each such day, he or she will receive compensation for such work at a rate double 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 will receive compensation for such work in an amount equal to at least 1.5 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 will receive extra compensation in accordance with the provisions of applicable collective agreement and the contract of employment.

• 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 will receive compensation in an amount specified in the applicable collective agreement.
• The idle time compensation determined by the collective agreement must be equal to at least 60% of the employee’s basic compensation. This amount cannot 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 will not be entitled to receive any idle time compensation.
• If, during idle time, the employee performs other work for the employer, he or she will be paid according to the work performed. In no event can such payment be less than his or her previous average compensation.