Employer of Record in Mongolia
Skuad’s Mongolia EOR (Employer of Record) solution helps organizations expand into Mongolia easily and hassle-free. Its unified employment platform is a customized HR service that caters to various HR functions needed to set up efficient operations in Mongolia. It includes handling payroll, taxes, overseas recruitment, visa processes, and work permits.
Contact Skuad to learn more.
Mongolia At A Glance
Mongolia lies in Central Asia, nestled between China and Russia. Understanding the country’s cultural background is essential before employing a candidate. The cultural aspects of a recruitment process are as important as the technical. As an employer, you want to make sure to adhere to the country’s laws for recruitment purposes and also respect the country’s culture at the same time.
Population: 3.3 million
GDP: 6.9% (as of 2021)
Languages Spoken - Khalka Mongolia, English
Official Currency - Mongolian Tughrik
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Employment In Mongolia
With the advent of the internet and advanced technology, it is now possible to hire employees in any part of the world. Building an international team of trusted employees overseas is a possibility today. Partnering with a recruiting agency or global EOR takes the complex administrative work such as compliance, taxes, and payroll off your shoulders to focus on the growth and expansion of the company. It also reduces compliance risks while expanding in a new territory.
The average rate of employment between 2006 to 2021 has been 56%. The employment rate in Mongolia stands at 50% in 2021.
The Labor Law, 1999 under the Constitution of Mongolia is the governing body of all employment-related laws. There have been changes and new developments such as The Law of Offence passed on 1st May 2017 and came into motion from 1st July 2017. It includes new sanctions in the case of violation of the Mongolian Labor Law.
Employee Compensation and Benefits
Employees often expect benefits and perks over and above their salary. A secure management system is required so that the employee and the employer are satisfied.
According to the Labor Law, an employee is eligible for 15 paid leaves annually. These do not include public holidays such as New Year’s, Naadam, Lunar New Year, etc. If the employee has been with the company for long, he can request the employer for additional leaves. The maternity law grants women 120 days of paid leave.
Compensation in terms of overtime is 1.5 times the average compensation. Bonuses are not mandatory but are extremely common to boost morale and encourage employees to work hard.
Health Insurance Benefits
Healthcare and benefits of health insurance get funded by the government of Mongolia. It mandates free access to primary healthcare (PHC) to all the citizens of the country. It is for the first tier and does not apply to the secondary and tertiary tiers.
Employment contracts and employment agreements are different in Mongolia, both serving different purposes. Hence, it is of the utmost importance that we understand the difference between the two.
An employment agreement is used for general purposes or specific tasks at hand, and the employee can be hired for a precise time. Such employment should be in writing with the job title, a detailed job description, salary, number of work hours, and other such specifications. A copy of the same should be provided to the employee.
An employee contract is when a person is hired based on specialized knowledge or skill set. The Mongolian government has a few positions that need an employment contract. These include leadership roles such as that of Chief Executing Officer, General Manager, Director, etc. An employment contract must get recorded in writing. It is usually valid for five years, after which the employee’s performance is reviewed and evaluated, and a decision of renewal or continuation gets built accordingly.
There are several areas to be familiar with within Mongolia’s legal framework for hiring their citizens, especially for multinational companies and businesses. Some of these are as follows:
The labor contract in Mongolia must have the following details -
- Title or name of the position
- Job role
- The salary of the position open
- Any specific company conditions
Both the employer and employee need to agree to the terms and conditions mentioned in the contract, or else it will be considered invalid.
Below are some of the legal rights and entitlements of employees in Mongolia:
Contractors vs Full-Time Employees
Companies that are looking to expand into the Mongolian market can employ contractual workers and full-time workers. As an employer, it is usually better to hire full-time employees than contractors in the long run. It ensures a better return on investment and also reduces training costs and effort. More and more companies are switching from independent contractors to full-time employees for the added benefit of security and a long-term rapport. Besides, the procedure of contracting and hiring freelancers can be tedious.
Learn more from Skuad experts about the nitty-gritty involved in hiring fixed-time contractors or temporary contractors.
Hiring In Mongolia with Skuad
Placing an advertisement through various mediums is the first step to the hiring process in Mongolia. Employers must provide a detailed advertisement with job roles, responsibilities, etc. The most popular job portals in Mongolia are -
Apart from online ads, ads in newspapers and references work well too. The advantages of hiring from a portal are the ease of accessibility to many applicants, and they are cost-effective. The disadvantage of hiring from a job portal is receiving many unwanted applications from around the world.
According to Mongolian law, every employee gets treated as equal irrespective of gender. Every applicant is offered a fair chance if they fit the profile. After shortlisting and selecting the employee, an employment agreement is to be made - either a fixed-term or indefinite term as per the requirement. All essential details such as the employee’s name, job title, job role and description, salary, benefits, termination policies, etc. get incorporated into the agreement. The employer needs to state the salary in Mongolia currency.
It is compulsory to set up a legal entity to hire employees based in Mongolia. The traditional method would involve setting up a subsidiary in the country. However, with Skuad you can start operations in Mongolia within a few weeks, saving precious time and money. Hence, Skuad would take care of the hiring, training, visa, payroll, taxation, and other such processes while your company would have 100% control of their work.
To hire employees in Mongolia, employers must follow the HR compliance laws of the country. Experience a positive hiring process by partnering with Skuad.
Probation & Termination
The employer decides the probation period. However, the maximum probationary period is six (6) months which cannot be exceeded. The probationary period determines whether the individual has adequate skills or not for the job at hand.
To ensure compliance with Mongolian employment laws, Contact Skuad today.
EOR Solution in Mongolia
Establishing a successful enterprise in a different country requires expert intervention as it is nearly impossible to know their compliance policies. Employers of Record EOR with their team of experts can simplify your task of conducting business globally. Their extensive research on the country’s laws and HR policies ensures business expansion at a faster pace. An effective employer of record service manages the entire life cycle of the employees. They handle complex HR-related matters and let you focus on your core task. Employer of record companies Mongolia facilitates hassle-free business expansion.
Hire talent from all over the world and improve your business prospects with Skuad’s platform for managing distributed teams. Its unified employment platform handles the arduous task of managing global payroll, compliance, and taxation.
Talk to us and build a global team of efficient workers.
Types of Visas in Mongolia
A checklist comes in handy when applying for a visa. Here’s what you need to obtain a Mongolian Visa:
- A cover letter stating why you wish to visit/work in the country.
- Completed and signed visa application form.
- A passport with at least one (1) year’s validity.
- Copies of the passport for official purposes. The first and last pages of the passport.
- A copy of the company’s certificate of registration in Mongolia.
There is a certain quota of the total workforce that can be of foreign nationality in any company. It largely depends on the company sector and also changes year on year. It is between 5-20% of the total strength of a company. As of 2021, the Mongolian government has announced that it should be 10-65% depending on the company's strength and structure.
Payroll and Taxes in Mongolia
Before you set up payroll for employees in Mongolia, you need to be clear as to whether you wish to hire foreign nationals or locals as employees. Adherence to various taxation policies is essential, and this changes according to the nature of employment. It includes income tax, business tax, social securities, etc. Outsourcing these functions makes it easier for the company to focus on other aspects such as growth and expansion.
Taxes In Mongolia
Payroll In Mongolia
Mongolian payroll has a pay-as-you-earn system wherein personal taxes and social security are taken care of by the employer. They deal directly with the relevant authorities with a current income tax rate of 10%.
Partnering with an EOR that is well-versed with the laws of the land will make it easy for you to hire talent from all over the world and improve your business prospects. Skuad’s EOR platform enables the effective management of payrolls for organizations seamlessly.
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Before setting up a subsidiary in Mongolia, it is necessary to understand the process and legal requirements. There are three (3) company types under the Mongolian Company Law, namely limited liability companies (LLCs), public limited companies (PLCs), and private limited companies (LTD).
To set up an entity in Mongolia the following steps are required -
- Register a unique company name
- Get it verified
- Process the registration fees
- Register the company incorporation
- Register the taxpayer
- Make an application for a social security code
- Creating a company seal
The following government authorities are involved when setting up a subsidiary in Mongolia -
- The Mongolian Tax Authority
- The Mongolian Ministry of Finance
- General Authority for State Registration (GASR)
- National Development Agency (NDA)
LLC’s are the most sought-after subsidiary type as it has a reduced liability. If you choose to set up independently, you need to hire lawyers and consultants to do all the work and keep you updated.
Outsourcing the entire process to an EOR firm can make the process much smoother. With Skuad’s EOR solution, you don’t have to worry about setting up. We would take care of the entire process, right from registration to the company seal.
Professional Employer Organization Mongolia
A Professional Employer Organization, Mongolia, manages all HR-related functions, such as compliance policies of the country, employee benefits, payroll management, taxes, and risk management. A PEO firm acts as a co-employer, while an EOR firm acts as a legal employer.
Businesses willing to expand into another country must establish a legal presence in the country. Collaborating with a PEO firm will require the companies to set up a legal entity separately. However, when you partner with an EOR team, you can legally start working and hiring employees in the country as it is already a legal employer.
A PEO can take over the responsibilities and liabilities of the company and handle all HR-related matters. An EOR company allows organizations to set up legal entities in different countries and mark their presence in the global market.
Skuad’s integrated platform acts as an EOR solution. Its unified employment platform manages all HR-related functions- right from recruitment to termination everything is handled by the single platform of Skuad. You can build an efficient team of workers remotely while complying with the local laws. Skuad handles all the functions such as onboarding full-time and contractors, managing their payroll and taxes, etc.
Connect with us and elevate your business prospects while saving your time and money with the advanced EOR solutions of Skuad.
If you are considering expanding your business in Central Asia, Mongolia is an excellent consideration. With an EOR solution like Skuad’s, the business expansion process becomes much more economical than managing everything in-house with the added benefit of investing less time and attracting more returns.
Skuad can help you with all your needs for setting up a business remotely. Sign up here to learn more and keep yourself up-to-date with the services that we have to offer.