What is a Professional Employer Organization (PEO)?

A Professional Employer Organization or PEO is an HR outsourcing employment arrangement (also called co-employment). A PEO can simplify the HR needs of a company by hiring and onboarding employees, administering payroll, providing statutory benefits, and ensuring compliance with labor laws. PEOs operate by entering a joint-employment agreement with a client company. The responsibilities and liabilities of hiring and managing personnel are then shared between the PEO and the company.

If your company is hiring remote employees in Armenia, you can partner with a PEO to let them handle key HR functions. This includes hiring, onboarding new employees, and paying your remote employees their compensation, including statutory benefits.

Hiring a PEO can be a sensible and strategic move for both large and small businesses. It not only improves operations but can also allow managers to focus on growing revenue and expanding operations worldwide without having to have an in-country presence.

Do you think a Professional Employer Organization in Armenia can help your company hire remote employees? Contact Skuad to learn more about how a PEO can help you build a team in Armenia.

What are the benefits of using a PEO in Armenia?

You can build and manage your remote team easily when you partner with Skuad. Here are a few reasons a PEO can help you efficiently build your team:

  • Compliance with labor laws is ensured.
  • Payroll is processed and taxes are withheld and remitted.
  • Risks are mitigated: taxes are filed on time, laws are complied with, and employee claims are handled appropriately.
  • Competitive benefits are offered — ideal recruitment processes are designed.
  • Money and time are saved for your company using our strategic HR support.

Partnering with a PEO can help your business grow and scale. You can hire top global talent and have access to benefits that are usually reserved for larger companies. You don’t have to set up an in-country human resources department to get the same benefits.

Local legal support

Recruiting and managing a workforce is regulated by complex and changing labor laws. A PEO has access to a team of legal experts and is familiar with local laws. You can have the benefits of global expansion while cutting back on the time and money such would normally cost.

A trusted compliance partner

A PEO oversees compliance, mitigating risks and saving your company money as a result. A PEO can be your strategic partner and help your company grow.

To see what Skuad can do, schedule a demo.

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Hiring in Armenia with a PEO

It’s important to understand the local culture when hiring remote employees. Take note of commonly observed holidays. Some of them will be religious, whereas others will be secular national holidays.

Some quick facts about Armenia:

  • The official language is Armenian.
  • The population is 2.963 million.
  • Armenia's chief industries are manufacturing, mining, agriculture, and textiles.
  • The official currency is the Armenia dram (AMD).
  • 97% of Armenians are Christian and observe Christian holidays as well as national holidays.

Before hiring in Armenia, consider the following:

  • Employment contracts
  • Armenia tax rate
  • Armenia's corporate tax rate
  • Armenian income tax
  • Labor laws
  • Armenian company registration

The corporate tax rate in Armenia

The Armenia corporate tax rate is a flat tax rate of 18%. Employees will pay a flat rate on their income of 21%.

Employment laws of Armenia

Labor laws in Armenia are codified in the Labor Code of the Republic of Armenia. Among others, the law requires companies to abide by the following elements:

Work hours

The working week in Armenia is 40 hours. The work day is eight hours. 12 hours is the maximum work duration in one day, including overtime.

Overtime

Hours that are worked above normal working hours are paid at 150% of the normal salary. Nighttime hours must be paid at 130% of the normal salary.

Minimum wage

Armenia's minimum wage is 66,140 AMD, which is about $140 USD.

Social security

Workers contribute to a pension fund. If the employee earns less than 500,000 AMD in one year, the contribution is 4.5%. For earners making more than 500,000 AMD per year, there is a 10% contribution. The total contribution cannot exceed 27,500 AMD.

Paid time off in Armenia

An employee is entitled to annual leave after they have worked six continuous months for a company. The amount of time a worker can take off per year is based on how many days per week they work.

  • Employees with five days per week contracts are entitled to 20 days of leave per year.
  • Employees with six days per week contracts are entitled to 24 days of leave per year.

Working in stressful or dangerous conditions entitles workers to additional leave.

  • Employees with five days per week contracts in high-risk conditions are entitled to 35 days of leave per year.
  • Employees with six days per week contracts in high-risk conditions are entitled to 42 days of leave per year.

There are 16 annual national holidays in Armenia, some of which are observed for multiple days.

National holidays in Armenia:

  • New Year Holiday January 1 to 4
  • Armenian Christmas Holiday January 6 to 7
  • National Army Day
  • International Women's Day
  • Easter Monday
  • Armenian Remembrance Day
  • Labor Day
  • Victory and Peace Day
  • 1st Republic Day
  • Constitution Day
  • Independence Day
  • New Year's Eve

Sick leave

Sick employees get employer-paid time off from day two to day six of sick leave. Social insurance pays for sick leave after the sixth day. Employees are entitled to these benefits up to the 120 sick day or a total of 140 days in a given year.

Maternity leave

Armenian pregnant employees are entitled to 140 days of maternity leave. Half of maternity leave is before childbirth and half is taken after childbirth. If childbirth is complicated, the leave can be extended to 155 days, 85 of which will be after childbirth. Multiple births entitle the employee to a total of 180 days, 70 of which will be taken before childbirth, and up to 110 days of leave is taken following childbirth.

Male employees can take five days off in the first 30 days after the birth of their child.

Termination in Armenia

Probation periods are three months. Either party can terminate the contract with a three-day notice. Employers must have a reason for termination and must provide the employee notice.

The notice period required depends on the duration of employment with the company:

  • Less than a year of employment: 14 days’ notice
  • One to five years of employment: 35 days’ notice
  • Five to 10 years of employment: 42 days’ notice
  • More than 10 years of employment: 60 days’ notice

If the employee is dismissed for a reason pertaining to the company, if the workforce is reduced, or if the company goes bankrupt, the severance pay is equal to one month’s salary.

If the termination of an employee is employee-related — for example, old age, disability, or the military draft — severance will be based on the duration of their employment and a multiple of their daily pay:

  • Less than a year of employment: 10 x daily salary
  • One to five years of employment: 25 x daily salary
  • Five to 10 years of employment: 30 x daily salary
  • 10 to 15 years of employment: 35 x daily salary
  • More than 15 years of employment: 44 x daily salary

Three days of unpaid bereavement leave must be given for an employee’s family member’s funeral. Three days of unpaid leave must be given to employees who get married as well.

Contact Skuad today to find out how we can assist your company with hiring Armenian employees.

Payroll in Armenia is challenging. It’s easy when you use a PEO

Payroll processing is time-consuming and tedious, but it’s an essential process in any company. Many components of salary structures must be accounted for, which could potentially be overwhelming if a company is preparing and handling its own payroll. Salary has several components, including gross pay, taxes, bonuses, and payslips. Some components are required by law, such as some statutory benefits, contributions, and severance. Figuring out which are taxable and which aren't might be difficult without familiarity with local labor laws and regulations.

Keeping up with compliance can be complicated. Talk to our experts today to learn about how Skuad can manage payroll and compliance for you.

What a PEO in Armenia can and cannot do

PEOs Do

  • Offer comprehensive HR services for employers
  • Manage payroll processing, risk management, HR compliance, employment tax, employee benefits, and time and attendance management
  • Minimize liability for state unemployment taxes, payroll taxes, and payment of wages
  • Aid with employee recruitment
  • Reduce employee turnover
  • Optimize the business for current and potential employees
  • Save time on daily business operations

PEOs Do Not

  • Provide labor to your worksites
  • Make recruitment and termination decisions
  • Control your daily business operations

Businesses big and small can find value in partnering with a PEO in Armenia

Doing business in Armenia can be potentially costly and difficult without a partner in the nation who can help you hire employees and remain compliant. Regulations and laws involved with hiring and paying your employees can be complex. Partnering with Skuad to start a PEO in Armenia is the solution to save you time and money. Learn about Skuad’s pricing on the pricing page and how each solution can benefit your company.

Skuad offers solutions for expanding your organization in Armenia so that you don’t have to form a legal entity there, which could be costly and complex. Compliance with local laws is ensured by Skuad in more than 160 countries, all the while protecting your privacy with our secure systems. Partnering with Skuad might be what your business needs to grow and succeed with PEO services in Armenia.

If you’re ready to partner with Skuad, reach out to us. To learn more, schedule a demo to see how the platform works and to speak with us about how we can help your company with a PEO in Armenia.

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