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Kyrgyz Republic

January 28, 2025

Kyrgyz Republic mountains

KEY DEVELOPMENTS FOR 2025

Payment of Salary in Non-cash Form

On 1 October 2024, the amendments to the Labour Code came into effect, according to which an employer must make the payment of salary to employees in non-cash form, i.e. by wire transfer. This obligation does not apply to employers in certain limited scenarios. The Cabinet of Ministers of the Kyrgyz Republic has the right to authorize payment of salary in cash for employers of certain types of activities or in certain territories of the country.

Employers should therefore ensure (i) their payroll systems are equipped and upgraded to process such payments, (ii) all necessary bank account information is obtained and securely stored for employees and (iii) employment contracts and internal policies are updated as necessary to reflect the new payment method including details on how and when salaries will be paid.

Employer’s Civil Liability Insurance: Mandatory Obligations

On 20 November 2024, a new liability was introduced for the failure to comply with the obligations under the Law of the Kyrgyz Republic: “On Mandatory Insurance of Employer's Civil Liability for Harm Caused to the Life and Health of an Employee While Performing Their Labor (Service) Duties”. An employer’s failure to obtain mandatory insurance gives rise to a fine of circa US$35 on individuals, and circa US$150 on legal entities. The obligation to obtain mandatory insurance arises immediately as soon as the employee commences employment.

If they have not already done so, employers should immediately seek to obtain the required mandatory insurance for civil liability and have supporting documentation readily available in case the labour inspectorate should conduct audits or inspections. They should also evaluate/update any existing insurance policies and workplace policies to ensure they comply with the new legal requirements. Training sessions should be conducted for management and human resources personnel on the new legal requirements and employers should stay updated on any future changes to these regulations.

New Labour Code

On 18 December 2024, the parliament adopted the new Labour Code of the Kyrgyz Republic, which provides for significant changes including:

the simplification of the procedure for amending terms and conditions of the labour contract and the electronic termination of the employment contract;
defining public holidays and non-working days;
establishing measures for maintaining employment quotas for those disadvantaged populations including persons with disabilities and orphaned individuals;
the penalty rate for an employer’s failure to meet the deadline for payment of wages, vacation pay and/or dismissal settlement amounts set at 0.25% of the total amount, with no limitation on the interest rate of the amounts owed; and
the limitation period for bringing a claim to recover wages is set at three years.

It is anticipated that the new Labour Code will take effect in 2025 once formally signed by the President, so employers should stay informed on the progress of implementation and begin preparing for the upcoming changes by reviewing and auditing current policies and practices to ensure compliance with the new legislation once it is enacted. They should also monitor compliance after the Labour Code’s implementation and adjust policies accordingly.

Exemption from Paying Social Security Contributions

The management and residents of the High Technologies Park are indefinitely exempted from the payment of social security contributions for permanent or temporary employees. Employers who believe they fall within the scope of this exemption should:

confirm that the organization qualifies as a resident of the High Technology Park by checking all legal and regulatory requirements;
assess current employment contracts to ensure alignment with the new regulations and to take full advantage of the exemption;
revise payroll systems and processes to eliminate social security contributions for payments made to employees, ensuring compliance with the new exemption; and
inform employees about the implications of the exemption, including the potential impacts on their salary or benefits.

With thanks to Jyldyz Tagaeva and Aicholpon Alieva of Kalikova & Associates for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2023

The Procedure for Registration of Holders (Owners) of Personal Data Arrays

On 18 November 2022, the Cabinet of Ministers of the Kyrgyz Republic approved the Procedure for registering holders (owners) of personal data arrays, personal data arrays and lists of personal data in the Register of holders (owners) of personal data arrays, as well as its maintenance and publication.

The Kyrgyz Personal Data Protection Law requires the holders (owners) of personal data to develop lists of personal data in accordance with the specifics of their activities and are guided by them. The specified lists are coordinated and registered with the authorized state body, and published in the Register of holders (owners) of personal data arrays, published annually by this authorized state body. Additionally, arrays of personal data and holders (owners) of these arrays are subject to mandatory registration with the authorized state body. Although the Kyrgyz Personal Data Protection Law has been in effect since 2008, it was not implemented in practice due to absence of bylaws, detailed regulation and the authorized state body in charge for supervising the compliance with the personal data protection law requirements.

The State Agency for the Protection of Personal Data under the Cabinet of Ministers of the Kyrgyz Republic was established in accordance with the Decree of the President of the Kyrgyz Republic dated 14 September 2021 and started its operation on 10 January 2022.

Thus, organizations, including employers, that have started collecting, processing and storing personal data, prior to the adoption of the Procedure for registering holders (owners) of personal data arrays, personal data arrays and lists of personal data, must undergo registration in the Register of Holders (Owners) of Personal Data Arrays within six months from the date this Procedure enters into force. The Procedure entered into force on 6 December 2022.

Digital Nomad

On 18 August 2022, the Cabinet of Ministers of the Kyrgyz Republic initiated a pilot project to grant foreign citizens the status of “Digital nomad” through 31 December 2023.

The status of “Digital nomad” is a temporary legal status of a citizen of a foreign state (applicable to citizens of Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova, and Russia), which allows a foreign citizen to enter/stay in the territory of the Kyrgyz Republic without registration at the place of residence and work permit.

Holder of the “Digital nomad” status on the territory of the Kyrgyz Republic:

is released from the obligation to register at the place of residence on the territory of the Kyrgyz Republic;
receives a personal identification number (PIN);
is exempt from obtaining a work permit;
has the right to carry out individual entrepreneurial activities or activities as a legal entity in accordance with the tax legislation of the Kyrgyz Republic and the legislation of the Kyrgyz Republic in the field of state registration of legal entities (branches and representative offices);
has the right to register a legal entity;
has the right to open and use accounts in banks of the Kyrgyz Republic in the manner determined by the National Bank of the Kyrgyz Republic, without carrying out the registration procedure at the place of residence of a foreign citizen and registration of a legal entity.

The holders of the “Digital nomad” status is granted to foreign citizens carrying out activities in the following areas:

software development, analysis, design and programming of information systems and software products, analysis of information needs and problems of users;
designing and developing, supplying and documenting software, making changes to the software according to the task on the part of the user;
export of information technologies, information systems and software;
media art, including digital art, the creation of virtual and augmented reality, mixed reality, 3D design;
animation, graphic design, multimedia design;
programming, development of IT products, robotics and artificial intelligence;
creation of computer, mobile games and e-sports.

If employers hire as employees or engage as consultants the citizens of Armenia, Azerbaijan, Belarus, Kazakhstan, Moldova, and Russia, they can apply for the status of “Digital nomad” and ease the procedure of hiring such employees and consultants.

Remote Work

The effective Labor Code of the Kyrgyz Republic does not regulate remote work. Although the Labor Code does not prohibit remote work, it has always been a question if an employee can work remotely and how remote work should be arranged as the Labor Code provides for mandatory requirements to be followed by all employees and employers.

In the peak of the COVID-19 pandemic, employers raised the issue of amending the Labor Code to address the possibility of remote work and its regulation taking into account the mandatory requirements stipulated by the Labor Code.

Thus, the Parliament of the Kyrgyz Republic initiated a bill on introducing remote work in the Kyrgyz Labor Code. On 12 October 2022, the Parliament of the Kyrgyz Republic approved the bill in the second hearing. If the bill is approved in the third hearing and signed by the President of the Kyrgyz Republic, the employers’ concerns on regulating and arranging remote work will be resolved, as well as the employees will have the legal basis for negotiating the terms of their employment with a distance mode of working. Upon entrance into force of the bill, employers that remote workers can sign amendments to the current employment contracts to reflect the changes of the mode of work taking into account the detailed regulation.

With thanks to Jyldyz Tagaeva of Kalikova & Associates for her invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2022

Increase to Rate of Social Security Contributions for Foreign Employees

On 6 October 2021 the Parliament of the Kyrgyz Republic approved a law on equating the payment of social security contributions of foreigners to the tariffs established for citizens of the Kyrgyz Republic. This includes foreign citizens temporarily staying in the Kyrgyz Republic, who attract social security contributions in the amount of 3% payable by the employer. Such individuals will be required to pay social security contributions at the same rate as workers who are citizens of the Kyrgyz Republic. This measure has been brought into effect in order to protect the domestic labor market from the influx of foreign labor, particularly in light of high unemployment in the country.

When the law comes into force, employers should start withholding, paying and reporting on social security contributions of their foreign employees at the rate of 27.25% of all payments made to them; 17.25% of which is covered at the expense of the employer and 10% of which is covered at the expense of the employee.

Updates to Labor Code Aimed at Protecting Employees from Harassment in the Workplace

Currently the Labor Code of the Kyrgyz Republic is silent about protection of employees from harassment at work (i.e. it does not regulate and provide for any procedure in the event of any allegations of harassment in the workplace). In order to protect an employee's right to personal security, as well as to ensure the protection of employees from harassment in the field of labor relations, a draft law introducing amendments to the Labor Code was initiated and put out for public discussion.

The draft law suggests amendments related to protection of employees from harassment, including but not limited to the following:

To introduce the principles of prohibition of discrimination and harassment in the sphere of labor relations and ensuring the right to compensation for material and moral harm caused by discrimination and harassment. This is aimed at preventing direct and indirect discrimination on the basis of sex in labor and other related relations.

To supplement the Labor Code with provisions detailing the prohibition of harassment. The inclusion of this norm in the Labor Code should enable employees to fully exercise their right to compensation for harm caused by harassment.

To introduce an obligation on the employer to adopt, in the prescribed manner, local regulations aimed at ensuring labor safety in the organization and conditions that exclude harassment against employees.

To introduce a requirement for any employee committing an act of harassment against another employee to be suspended from the workplace. This is aimed at protecting other employees from the actions of said person who may create an unsafe environment for employees more generally.

To introduce a requirement for employment contracts to specify certain rules and procedure relating to the protection from harassment and potential compensation relating to the same.

If the draft law is approved and enacted, employers will be required to develop internal regulations and rules relating to the protection from harassment in the workplace.

Reduced Social Security Rates for Small/Medium Sized Businesses

In accordance with the Order of the President of the Kyrgyz Republic signed on 1 September 2021, the rate of social security contributions for small and medium-sized businesses is to be decreased temporarily from 2022 to 2024.

The President of the Kyrgyz Republic ordered the Cabinet of Ministers to decrease the rate of social security contributions, from 27.25% to 22% and 14% depending on the number of employees and relevant salaries, for three years starting from 2022 to 2024. To implement the President's Order, the Cabinet of Ministers must develop relevant laws and present these to the Parliament of the Kyrgyz Republic. When the respective laws are adopted, employers who satisfy the definition of a small or medium sized business will be required to withhold, pay and report on social security contributions for their employees at a decreased rate of 22% and 14% of all relevant payments.

KEY DEVELOPMENTS FOR 2020

Changes in the Procedure of Obtaining Employment Visas and Registration Cards

As of January 2020, foreign employees entering the Kyrgyz Republic must apply for and obtain employment visas (W1/W2 type visa) which are issued for up to 60 days and subject to extension by the Consular Department of the Ministry of Affairs of the Kyrgyz Republic. It is therefore essential for employers to instruct foreign employees to apply for and obtain these visas, given that other types of visas, including business visas, cannot be extended by the Consular Department in the Kyrgyz Republic. Applicants can now apply for a visa through the E-Visa portal and obtain an electronic visa instead of a sticker-visa in the passport.

Under the Kyrgyz laws, most foreign citizens must be registered with the State Registration Service of the Kyrgyz Republic within 5 business days of their arrival into the country. The registration card is issued for the validity term of the visa and must be extended each time the visa is extended. Previously, it was a requirement to obtain the registration card within 5 calendar days upon the extension of a visa but as of January 2020, the registration must be extended within 1 day upon renewal of the visa by the Consular Department in the Kyrgyz Republic. Failure to extend the registration within this timeframe may result in an administrative fine being imposed.

Amendments to the Labor Code

In February 2020, a draft law introducing amendments to the Labor Code was initiated and put out for public discussion. The proposed amendments include:

setting the statute of limitations for disputes regarding recovery of unpaid salary to one year from the date the employee discovered, or should have known about, their potential claim. There is currently no statute of limitations for disputes on recovery of unpaid or untimely paid salary to employees, which means that employees may file a lawsuit to recover their unpaid salaries at any time with no time limits; and
changing the penalty for untimely payment of salary so that interest of 0.15% of the outstanding amount is payable to an employee for each calendar day of delay. Currently, interest of 0.15% of the outstanding amount must be paid to an employee for each day of delay until the day of actual settlement, and interest of 0.5% of the outstanding amount must be paid to a terminated employee for each day of delay until the day of actual settlement. The total amount of interest must not exceed 200% of the outstanding amount.

The proposed amendments are still under discussion at the time of writing.

Additional Benefits and Guarantees to Healthcare Workers

The Law on 'Status of Healthcare Workers' was amended in June 2020. Pursuant to the amendments, the Ministry of Healthcare is obliged to ensure transportation of healthcare workers of state and municipal health organisations to and from their place of work and to provide them with the necessary personal protective equipment and appropriate working conditions necessary for carrying out professional activities during the state of emergency. In addition, the healthcare workers of state and municipal health organisations are entitled to: (i) compensation for carrying out activities during the state of emergency; and (ii) a lump sum payment and severance allowance in the event of disability or death during performance of their duties.

Telecommuting

The labour laws of the Kyrgyz Republic do not regulate telecommuting or remote working. When COVID-19 was declared a pandemic and the Kyrgyz Republic announced a state of emergency, employers faced uncertainty related to regulating labour relations with their employees. The absence of a legal basis for switching employees to telecommuting forced the Kyrgyz Government to make changes to the Labor Code, by introducing the concept of telecommuting and regulation of labour relations and other issues related to telecommuting. The changes have been put out for public discussion and, if they are enacted, employers will have the legal framework and basis for switching employees to remote working.

With thanks to Jyldyz Tagaeva, Alexander Ahn and Alieva Aicholpon of Kalikova & Associates for their invaluable collaboration on this update.