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Employer of Record (EOR) in Afghanistan

Employer of Record Afghanistan

Skuad’s Employment of Record (EOR) service provides and assists companies with Human Resources functions, from the initial recruitment scenarios to the payment of taxes and benefits. The EOR takes on critical and time-consuming HR tasks, allowing companies to focus on the growth and success of their businesses. Skuad’s Employment of Record services are helpful for those businesses and entrepreneurs who are looking to hire and establish their business in Afghanistan without any hassle.

Afghanistan at a Glance

Area: 652,860 km²

Population: 38.9 Million

Currency: Afghan Afghani (AFN)

Capital city: Kabul

Official Language: Dari (Afghan Persian) and Pashto

GDP: 3% (2020)

Employment In Afghanistan

Over the past two decades, Afghanistan has made significant progress in many areas by transitioning into a market economy where the private sector is an important driver of economic growth, income, and employment in Afghanistan.

The main cornerstone of professionalism is building relationships and showing respect towards your employees. Unfortunately, most business interactions in Afghanistan are based on status and age. If you are planning to do business in Afghanistan, then you should be very careful about your politeness toward your workers.

Employee Entitlements In Afghanistan

Minimum Wage In Afghanistan Minimum Salary: According to the labor law of Afghanistan, a public sector employee is entitled to get a minimum of 5000 Afghani (AFN), and all the temporary workers in the private sectors are entitled to get a minimum of 5500 Afghani (AFN) as their monthly salary. However, the labor law prevents private-sector workers from being paid less than government workers.
The average salary: The average salary in Afghanistan is 11857 Afghani (AFN).
Working Hours Maximum working hours in Afghanistan are 40 hours per week
Overtime Compensation 15% overtime compensation for employees who work in the services and administrative category, and 25% overtime compensation to the night workers engaged in the production sector.
Annual Leave The employee can take ten days of paid leave each year. However, At one time they can only take three days’ leave or give a written application to the employer for their leave.
The reasons to take leaves are:
  • Marriage purpose
  • On the birth of a child
  • Death of family members
Paid Public Holidays
  • Fate for liberation: February 15
  • Nowruz: March 21-22
  • Mujahideen Victory Day: April 28
  • Labor Day: May 1
  • First day of Ramadan: Varies depending on the calendar year
  • Eid al-Fitr: Varies depending on the calendar year
  • Independence Day: August 19
  • Feast of Arafa (Eve of Eid al-Adha): Varies depending on the calendar year
  • Eid al-Adha: Varies depending on the calendar year
  • Martyrs day: September 9
  • Ashura (10th day of the Muslim new year): Varies depending on the calendar year
  • Mawlid-Sharif (Anniversary of the birth of the Prophet Muhammad) Varies depending on the calendar year.
Employees will not get compensated if public holidays fall on the weekend.
Medical leave
  • Employees are entitled to take 20 days of paid sick leave in a year.
  • Employees have to give written notice if they take leave for three days or less.
  • If the employee wants to take leave for a longer time, he has to provide a medical certificate.
  • A certificate given by a village headman or from hospitals will be considered a valid certificate.
  • After completing the first six months, the eligible employee can take 20 days of paid sick leave.
Maternity Leave
  • A pregnant woman can take 90 days of paid maternity leave in Afghanistan.
  • She can take leave for 30 days before her delivery. This leave extends to 60 days after the birth.
  • She can take an additional 15 days’ leave In the event of an abnormal birth or of twins or more than two children.
Special Leaves
  • The workers can take a leave of 10 days as special leave.
  • Employees can only take three days continuous leave at a time if there is any urgent work.
Employee health benefits in Afghanistan An employer may give their contribution to the health insurance of their employees.

Afghanistan Labor Law

Although Afghan labor law prohibits all forms of discrimination in hiring and the payment of wages and benefits, Afghanistan Labor laws and terms of an employment contract establish what rights and duties a worker is entitled to have.

Work Conditions In Afghanistan

An employee can work 40 hours per week. Employees aged between 15 to 18 years can work 35 hours per week. A pregnant woman is entitled to work 35 hours a week, and employees working underground and in conditions dangerous to their health are entitled to 30 hours of work per week.

Retirement Age:

  • The labor code sets the retirement age at 65. Employers can extend the period of activity of their employees by five years with their agreement.
  • The labor code provides for special retirement conditions for employees who perform difficult work. 
  • For each period of 5 years of difficult work, the employee's period of activity is reduced by one year if the work conditions require working underground. It can also be reduced to two years if the job is dangerous to health.

Contractors vs Full-time Employees

Employment contracts in Afghanistan

An employment agreement in Afghanistan must be signed according to the labor laws applicable in the country, whether for a fixed or indefinite period. This agreement must be signed between the employer and the employee.

The employee consents to work under the employer’s administration and supervision, and in return, the employer will pay the agreed wage to the employee. The contract specifies the start date, type of work, location, terms, duration, and salary.

According to the employment contract law of Afghanistan, All employers must provide their employees with an employment contract for a definite or indefinite period.

According to the Afghan labor code, this contract must meet the following criteria

1. Legitimacy of employee

2. Definition of the subject of the contract

3. No legal restriction to work

4. The type of job or profession that the employee will exercise

5. The salary, rights, and privileges of the employee

6. The schedules and number of hours of work

7. Leave according to the agreement

8. The place of work or the department to which the employee will be assigned

9. The date of signature of the contract

10. The terms of the contract

Fixed Term Employment Contract:

According to Article 14 (2) of the Afghan Labor Code, fixed-term contracts must be for one year. With mutual consent, employers and employees can extend this type of contract.

In a fixed-term contract, if the parties don’t take any action within the month following the end of the agreement, it is considered that the contract is renewed under the same conditions.

Part-Time Employment Contracts:

Employers may hire part-time employees in certain justified circumstances or when there is a special need. Under Afghan law, two types of part-time contracts can be entered into:

(1) A part-time contract where the employee must work at least three hours a day but less than full-time workers.

(2) A part-time weekly contract In which the employee works for a period of not less than three days a week but less than a week.

Part-time workers are not entitled to pensions or paid time off.

Skuad’s EOR solution and employers discuss among themselves contracts of work conditions related to the field concerned. Employment contracts’ laws and requirements establish minimum wages, working hours, holidays, sickness salaries, and terms of resignation.

Probation and Termination

Probation Period

In Afghanistan, employers and employees can fix the probationary period with mutual consent. The maximum probation period in Afghanistan is three months. Both parties may end the agreement by giving notice to each other.

If the worker passes the probation period. The probation period will be added to the service period.

Termination Period

An employer may terminate a short-term employment contract without reason; the law assumes that the employee is duly notified according to the rules relating to the notice period. However, the employer cannot terminate a Fixed-Term contract without a justified reason.

The labor code lists the following circumstances as grounds for terminating an employment contract:

  • Agreement of the parties
  • Expiration of the contract
  • Retirement of the employee 
  • Employees death
  • The physical or medical disability that impairs work performance
  • Cessation or interruption of more than six months of work
  • Dissolution of the business in which he works
  • Refusal to work after the appointment
  • If the probation period was unsatisfactory

EOR Solution In Afghanistan

Employment of Records (EOR) solutions are beneficial for employers who reside abroad and want to set up their business in other countries like Afghanistan. EOR services will give you the privilege of both short-term and long-term projects, giving you peace of mind, low costs, and the opportunity to enter new markets quickly.

EOR solutions manage the legal, human resource, tax, payroll, and local compliance responsibilities of your employees in countries where you lack a legal entity.

Skuad's Employment of Records Solution outsources recruitment and management functions for your company while you maintain employee orientation. With Skuad's Enhanced EOR solution, tapping into talented job markets and/or sales opportunities in Afghanistan is easier than ever.

To learn more about our international EOR services, talk to the experts at Skuad.

Types of Visas In Afghanistan

Afghanistan is among the fastest-growing visas. Many embassies issue a tourist visa, including a closing application form, a passport-like photograph, a visa fee, and a printout of your passport. 

These are the following visa types being offered by the Afghan Government:

Remote Payroll In Afghanistan Your parent company can handle the payroll of your in-house team and global workforce. Remote payroll management is profitable, but the additional responsibility is enormous. In addition, your company will take full responsibility for any non-compliance with labor laws wherever it employs a team member.
Internal Payroll In Afghanistan Creating a new subsidiary to run your payroll in Afghanistan will free your parent company from all the legal liabilities.
Internal payroll systems are time-consuming and need a staff to handle the payroll of employees.
Payroll Outsourcing Company Subsidiaries may also prefer a payroll outsourcing company in Afghanistan to manage their payments. This payroll solution gives freedom to your team from the task. However, always keep in mind that the subsidiary remains liable for non-compliance.
Skuad’s EOR Solution When working with Skuad EOR Services, our experienced team takes care of compensating your employees and offering other benefits. In addition, under our registered employer form, we guarantee full compliance.
Talk With a Skuad Expert To Know More.


Work Permit

When you hire an employee in other countries for your business, your company will be responsible for complying with the country’s labor laws. Therefore, you need to ensure that your international employees have the correct permits to work in other countries and those permits remain valid during the employment period.

In Afghanistan, the Ministry of Labor and Social Affairs (MoLSA) issues work permits based on need and number of invitations to some international workers. However, the Government Of Afghanistan offers only one type of work permit to the employees.

The cost of a work visa in Afghanistan is fixed and determined by the MoLSA. The legality of the work permit is one month, and the cost to acquire the same is $100.

If you wish to extend this visa for a year, then you have to pay an extra $50 per month to the Ministry of Interior (MoI) in the local currency of Afghanistan.

Skuad’s Employment of Record (EOR) Solutions will exempt your company from liability for legal compliance. We have the right resources to hire your employees.

Work Permit For Foreigners:

For official employment in Afghanistan, a foreign applicant must first conclude a contract with an Afghan employer and then apply for a work visa and take the work permit. After that, it checks the vacancy and issues a work permit by the Ministry of Labor and Social Affairs of Afghanistan.

In addition, approval from the local Ministry of Foreign Affairs is required. The document is valid for one year with the right to renew for a similar period.

Features of employment in Afghanistan and basic requirements:

  • The foreigner must be at least 18 years old.
  • It is not allowed to work outside the job provided.
  • You need to provide a certificate of health.
  • Commit to abiding by local laws and regulations and respecting the beliefs and traditions of the people of Afghanistan.
  • The employer is responsible for the activities of a foreigner.

Payroll and Taxes in Afghanistan

Accurate compensation management in an appropriate manner is essential to employee satisfaction at your company. However, adhering to your local office business rules has its own challenges.

The challenges of handling international payroll on your own can overwhelm your internal team. Currency exchange rates fluctuate, time zones and holidays complicate communications, and international banking practices lack standardized operations.

As you expand your business, you need a cost-effective and compliant way to manage your payroll. The best risk-free way to handle your payroll and taxation is to partner with a registered employer, ensuring your employees will receive timely compensation on an automatic schedule.

Skuad’s payroll and tax services in Afghanistan will facilitate your business’s proper payroll and tax system. With the Skuad EOR solution, you don’t have to worry about incurring payroll and taxes every month from your business.

Payroll In Afghanistan

First, you have to register your company with the Local Mustufiat office or the Afghan Revenue Department to set up your payroll. After the approval or registration of your company, you will get a TIN Number which will facilitate your company’s monthly payroll filings.

Taxation in Afghanistan

Afghanistan follows the 2009 Income Tax Law, which requires employers to reserve a percentage of all wages and salaries for taxes.

The amount deducted from the employee's salary depends on his monthly income. Employees earning less than AFN 5,000 are exempt from these taxes. The retention of each frontal arch is as follows:

5,000 to 12,500 AFN 2% of salaries earned more than 5,000 AFN
12,500 to 100,000 AFN 150 AFN plus 10% of any salary above 12,500 AFN
AFN 100,000 or more AFN 8,900 plus 20% of wages earned over AFN 100,000

Note that in all cases, a regular working period of 40 hours per week has been assumed.

Employers give pensions from a specific fund and social security for employees comes from the company's budget.

Business In Afghanistan

Afghanistan's priorities include building infrastructure, regional connectivity, and integration, improving business opportunities in Afghanistan, increasing exports, eliminating corruption, creating jobs, empowering women for economic growth, and expanding Afghanistan's vast natural resources. These include investing and reviving Afghanistan's role in the heart of Central, South, and East Asia.

Limited liability company
  • Number of partners and associates: Minimum: One director and two shareholders. A local company representative and a board for supervision should also be appointed.
  • Minimum and/or maximum capital: No legal minimum share capital requirement
  • Liability of partners: Limited to the value of the subscribed share capital
Capital company
  • Number of partners and associates: Minimum: One director and two shareholders. A local company representative and a supervisory board should also be appointed.
  • Minimum and/or maximum capital: No legal obligation of minimum share capital.
  • Liability of the partners: Limited to the amount of the subscribed share capital. Shareholders' obligation is limited to the outstanding portion of the shares to which they have subscribed.
Partnership
  • Number of partners and associates: Minimum: Two partners or associates
  • Minimum and/or maximum capital: No legal obligation of minimum share capital
  • Liability of associates: Unlimited liability. Afghan law relating to partnerships provides for a particular arrangement of association in which one or more partners have unlimited liability (general partners), and the rest of the partners have limited liability to a defined capital (special partners). However, these special associates are fully responsible to third parties. A partnership making its purchases on credit ("credit partnership") can also be created. In this type of company, each partner does not.
Competent bodies The Central Business Register of Afghanistan issues the business licenses necessary to carry out any business activity. Additional authorizations for certain activities (imports of medicines, telecommunications, banking services, hotels and restaurants, clinics, private universities, film production companies, printing houses, transport, travel agencies) must be obtained from the competent authority.

With broad reforms and donor support, Afghanistan has maintained great economic stability, implemented significant structural reforms, and developed supportive policies and valuations. It has also reduced debt and inflation, maintained a balanced budget, and made progress towards achieving development goals.

Professional Employer Organization (PEO)

Professional Employer Organization (PEO) is a human resources company hired by businesses to take over certain administrative functions, such as payroll, taxes, and employee benefits. The person, in effect, becomes a co-employer. This arrangement allows them to combine employees from multiple companies to offer those companies lower costs, reduced paperwork, and greater efficiencies, as well as better retirement, healthcare, and workers' compensation packages for their employees.

Conclusion

We understand that local laws and regulations change and it is not easy to find an accurate reference guide.

Partnering with Skuad's EOR Services can significantly reduce the business operations time in overseas markets while expanding into Afghanistan and allow you to focus on growing your business. For more information on how Skuad can facilitate the global development capabilities of your business, feel free to contact us.

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