Hire in Mongolia

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Last updated at July 18, 2022
beautiful scenery in the country of mongolia

Currency

Mongolian Tugrik (MNT)

Capital

Ulaanbaatar

Time Zone

GMT+8

Key Country Facts

Legal System

The judiciary of Mongolia is comprised of a three-tiered court system: 1) instance courts in each provincial district and each Ulaanbaatar district, 2) appellate courts for each province and the Capital Ulaanbaatar and 3) the court of last resort (for non-constitutional matters) at the Supreme Court of Mongolia. A separate constitutional court exists for questions of constitutional law.

A Judicial General Council (JGC) nominates judges in Mongolia. These judges must then be confirmed by the parliament and appointed by the President.

Arbitration centers offer alternative dispute resolution options for commercial and other disputes.

Climate

Mongolia is a land of extremes in terms of climate. 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 frequently plummeting to minus 30 degrees Celsius in January and February. Intense dust storms can be expected during the short spring (March to June). The summer (June to September) is pleasant without being too hot.

Culture

From the oldest works of Mongolian literature to modern soft pop songs, Mongolia’s culture reflects love for parents, homesickness and 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 ancient times. Hospitality is so ubiquitous in the steppes of Mongolia that it is traditionally taken for granted.

The Mongolian word for hero (‘baatar’) appears frequently in personal names, even in the name of Mongolia’s capital Ulaanbaatar (‘Улаанбаатар’ or 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’ represent a way to describe creativity and passion; This word was used in several Mongol words and has the meaning to “rush headlong.” That is, to be inspired or to have a sense of creative thought – and even to take a flight of fancy. From Mongolian perspective, it can be seen as “the look in the eye of a horse that is racing where it wants to go, no matter what the rider wants.”

Official Language

The official language of Mongolia is Mongolian and is spoken by 95% of the population. A diversity of Oirat and Buryat dialects are spoken around the country. There are also some groups that speak Mongolic Khamnigan. In the western region of the country, Kazakh and Tuvan (both Turkic languages) are also spoken. Mongolian Sign Language is the principal language of Mongolia’s deaf community.

Mongolia HR at a Glance

Employment Law

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. However, laws are in place to protect employers’ interests as well. Employment laws are sourced in federal and state constitutions, legislation, administrative rules and court opinions. An employment relationship can also be governed by contract of employment, collective agreement or collective bargaining.

Employment Contract

According to the Labor Law, an employer is required to conclude an employment agreement with an employee in writing. This must be provided 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).

Contract Terms

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.

Termination

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.

Work Hours

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.

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.

Severance Pay

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.

Paid Leave

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.

Notice Period

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.

Restrictive Covenants

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.

Statutory Costs

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.

Social Insurance

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/Overtime Pay

  • 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.

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 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.

Tax and Social Security

Personal Income Tax

The PIT rate on employment income for resident taxpayers (e.g. those who stay more than 183 days in Mongolia in the tax year) will revert back to a flat 10% rate. This reverses the previously-approved marginal tax rates of 15%, 20% and 25%, representing 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
500,001-1,000,000 18,333 18,000 18,000
1,000,001-1,500,000 16,667 16,000 16,000
1,500,001-2,000,000 15,000 14,000 14,000
2,000,001-2,500,000 13,333 12,000 12,000
2,500,001-3,000,000 11,667 10,000 10,000
>3,000,000      

Income Tax

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 must deduct insurance from an employee’s monthly earnings and remit it to the social insurance authority on the employee’s behalf. The employer will prepare a monthly report (ND-7, 8) and submit it to the social insurance authority by the fifth day of the following month.

Quarterly/Yearly

  • Report for Withholding Tax Return for Wage, Salary other Comparable Income (TT-11);
  • Information for Withholding Tax Return for Wage, Salary Other Comparable Income (TT-11(1))

Employers must prepare and file withholding tax return TT-11, 11(1) to the tax authority on a quarterly and annual basis. April 20, July 30 and October 30 are the deadlines for the submission of the Quarterly Report and February 10 of the next year is the deadline for the Annual Report.

Reports and returns can be submitted by both parties, either the client or the payroll provider. It can be signed by the employer or a representative of the payroll provider based on previous authorization provided by the client.

Statutory benefits

In Mongolia, the Social Security Rate is a tax related to 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, healthcare and many other benefits.

Social security contributions in Mongolia finance the country’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 in Mongolia will remain the same as it was before the April 2017 modifications.

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 by GoGlobal 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.

Social Security

  Employers Contributions (%) Employees Contributions (Capped at MNT 420,000) (%)
Pensions 8.5 8.5
Medical Insurance 2.0 2.0
Benefit Insurance 0.8 0.8
Industrial Accident Insurance 1.0-3.0 0.0
Unemployment Insurance 0.2 0.2
TOTAL 12.5-14.5 11.5

 

 

Employees

Salary Payment

Salary payments generally occur monthly in Mongolia. It is common practice to pay between the 25th to the 31st day of the month or by the fifth of the following month.

Payslip

Monthly payslips are to be made available on website, PDF or paper.

Payroll Reports

Payroll reports must be kept for a minimum of five years for payroll purposes and a minimum of 10 years for accounting purposes.

Working Hours

The hours of work per week must not exceed 40 hours.The length of a normal workday is not to exceed eight hours The length of the uninterrupted rest period between two consecutive working days will not be less than 12 hours.

Holiday Allowance

Mongolia has 15 public holidays. Generally, the employees will be paid for public holidays.

Some of the holidays are fixed dates while some are based on the lunar calendar.

Annual Leave

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.

Medical Leave

If an employee contracts a normal disease or domestic injury – and is 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 a temporary disability.

Maternity & Parental Leave

Maternity 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.

Paternity Leave

  • An employee whose wife has given birth is entitled to 5 working days of paid leave.

Other Leaves - Baby Care Leave

  • An employer must 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 is required to allow a mother to take up her previous job or post upon the expiration of her baby care leave or before the expiration (if the mother wishes to return to work early). The employer must 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 provisions 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 are no specific provisions for resignation or requirements for an 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 providing notice. Employers can terminate an employment 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 mutually decided not to extend the contract
  • If a legal authority has demanded the termination
  • 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 offense

Employers who terminate a labor contract with an employee must establish a timeline for the transfer of duties to the new employee. This information must be provided when dismissing the original employee. Employers are required to provide the dismissed employee with the decision on the dismissal and any legally required dismissal allowances. Additionally, they must conclude a letter of reference about the occupation, profession, specialization, position and remuneration at the request of the employee.

Visas and Foreign Workers

Accomodation

Ulaanbaatar offers favorable choices for accommodation, ranging from a cheap guesthouse to expensive hotels of international standards. There aren’t many hotels elsewhere in the country. In the most popular places visited by tourists, there are ‘ger’ camps. These are the traditional homes of Central Asian nomads.

Food

Conditions on the vast, cold Mongolian steppe have always made food a necessity, rather than an art. Nomads make do with what they can. Hence, the typical diet consists of a lot of meat and dairy, supplemented with flour-based doughs and rice on occasion. In the major settlements, like Ulaanbaatar, you can find a big selection of international food – even pizza! However, on the steppe, only the most basic food can be expected.

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Public Holidays in 2022

S.No Occasion Date
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

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