International Newsletter

Republic of Kazakhstan’s Draft Law Proposes Over 100 Changes to the Labor Code

November 1, 2019

A draft law containing amendments to labor laws in the Republic of Kazakhstan has recently been unveiled. The draft law includes approximately 100 amendments to the labor code and some other laws. Some of the most important changes in the draft law are as follows:

  • The draft law discussed the provision of personnel by private employment agencies. This is important, as these agencies cannot provide personnel to replace employees who are on a legitimate strike or employees who lawfully refuse to work during downtime or bankruptcy proceedings.
  • Apart from secondments abroad, secondments between Kazakhstan companies are now limited to transfers of employees between related group companies (i.e., between shareholders and entities in which they hold shares or between companies under common control of a third-party shareholder).
  • The draft law addresses concerns about pay inequality between foreign and local employees, which has caused tension between those groups, as well as between local employees and management. It provides for an administrative fine for discrimination of employees by breaching the pay equity principle in the amount of approximately USD 200 on chief executive officers to USD 650 on large business entities.
  • A unified information system has been established that will serve as the state information system for registering employment agreements, submitting claims by employees regarding violations of their labor rights, providing consultations on labor law issues, and informing people of violations discovered by the labor authorities. Access to information in that system will be free of charge.
  • The draft law has approved electronic employment agreements and digital signatures.
  • Under the current labor code, an employer can dismiss an employee if it lost trust in that employee following misappropriation of money or goods, but it cannot do so in cases where he or she revealed corrupt business practices. The draft law gives employers the right to terminate employment of an employee who uses his or her job position to benefit himself or herself or a third party and such actions result in the employer’s loss of trust in him or her. The employer will have to prove the facts by conducting an internal investigation.
  • The draft law requires employers to create a conciliation commission consisting of an equal number of representatives of the employer and employees. Currently, the labor code does not expressly provide for such a requirement. The conciliation commission is the first instance for resolution of labor disputes, except those in which one of the parties is a chief executive officer or a small business entity. The draft law expands the list of disputes that cannot be resolved by conciliation commissions to include disputes with members of collective executive bodies, non-commercial organizations with up to 15 employees, and home workers, and it replaces small business entities with micro business entities, which are entities that have an annual income of no more than approximately USD 195,000 or up to 15 employees.
  • In cases of noncompliance with safety and health requirements, only the chief state labor inspector can suspend the operation of the whole organization, whereas local state labor inspectors can suspend operations of subdivisions of the organization. The period of suspension has been extended under the draft law from three days to five business days.
  • The draft law calls for greater enforcement of regulations concerning rest time between shifts.
  • In response to many injuries in recent years, the draft law obligates employers that have production facilities to effect a labor safety management system.
  • Employers have the right to submit declarations confirming the compliance of their activities and facilities with labor laws. According to the draft law, employers can submit declarations via a unified information system of social and labor sphere.
  • If employees are not receiving their wages on time, then the chief executive officer of the employer can be fined for failure to ensure payment of salaries. If the chief executive officer fails to pay the wages and/or the penalty for late payment to employees within one year after being fined, then he or she can be disqualified by a judge. The draft law provides for a new type of an administrative sanction, “disqualification,” which is forfeiture of a person’s right to be a civil servant or hold executive or director positions in companies or manage companies. A judge can order disqualification for a term ranging from six months to three years. If the disqualified person violates the ban, he or she is subject to an administrative fine of USD 130. A company that employs a disqualified person is subject to administrative fines of USD 400, 650, or 1,000, and its chief executive officer is subject to a fine of USD 200.

Written by Joel Benjamin and Kuanysh Kanlybayev of Kinstellar and Roger James of Ogletree Deakins

© 2019 Kinstellar and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.