Hiring Employees in Uzbekistan

1. Key Points in Employment Contracts

Labor Contracts

• Full – time: Fixed – term contracts / Open – ended contracts
  • Open – ended contracts: If the term is not specified, it is considered an open – ended contract, which is the main type.
  • Fixed – term contracts: The term shall not exceed 3 years and is only signed when the nature or conditions of the work do not allow for an open – ended contract (e.g., seasonal work, temporary replacement of absent employees).
• Part – time / Interns
  • Part – time: Signed in the form of a separate employment contract, which can be fixed – term or open – ended. Part – time work is carried out during the free time outside the main job. Part – time employees enjoy all the rights and obligations stipulated in the Labor Code of the Republic of Uzbekistan.
  • Interns: Usually, a fixed – term employment contract is signed. Interns are subject to all the provisions of the Labor Code. The salary shall not be lower than the statutory minimum wage. The position must be included in the staff establishment. Internships during students’ study are separate contracts between universities and enterprises.

Part – time Employees: IC Contracts

• Legal basis: Governed by the Civil Code of the Republic of Uzbekistan, not the Labor Code.
• Contract subject: The result of specific work or services, not the performance of labor functions.
• Parties to the contract: The client and the executor (not the employer and the employee).
• Subordination relationship: The executor is not subject to the client’s internal rules and regulations, is not an employee of the company, and is not subject to disciplinary actions.
• Guarantees: Do not enjoy labor guarantees such as paid leave, sick leave, and mandatory social insurance. No labor handbook is issued.
• Risks: If a civil contract actually conceals an employment relationship, it may be re – recognized as an employment contract, bringing all consequences (fines, back payments, and social insurance premiums) to the employer.

2. Overview of Local Statutory Welfare Systems

Salary Payment

• Payment frequency: At least once every half – month (i.e., twice a month: advance payment and final settlement). The specific dates are stipulated by the collective agreement, agreement, or employment contract.
• Payment form: Paid in the national currency of Uzbekistan, the Uzbekistani som.
• Payment location: Transferred to the employee’s bank card.
• Late payment: The employer is responsible for late payment of wages, including paying interest (late fees).

Monthly Minimum Wage

• Setting: The minimum wage standard is stipulated by the legislation of the Republic of Uzbekistan and is revised regularly.
• Current minimum wage: 1,155,000 som (One million one hundred and fifty – five thousand som).

Probationary Period

• Duration: The maximum is 3 months. For enterprise managers, their deputies, chief accountants, and heads of independent departments, the maximum is 6 months.
• Form: The probationary period clause must be clearly written in the employment contract. If not, the employee is considered to be hired without a probationary period.
• Rights: During the probationary period, employees fully enjoy the provisions of labor legislation, collective agreements, agreements, and local regulations. The salary during the probationary period shall be fully paid (100%).

Employer Costs

• The employer pays:
  • Wages: Basic salary, paid leave, sick leave, compensation, and additional allowances.
  • Social insurance tax: 12% of the total salary.
  • Mandatory employer liability insurance: The premium paid to the insurance company annually.

3. Salary Payment and Statutory Holiday Responsibilities

Personal Income Tax

Personal income tax is 12% of the salary. The employer deducts it from the employee’s salary and remits it to the tax authorities.

Overtime Pay and Maximum Working Hours

• Normal working hours: No more than 40 hours per week.
• Permission: Overtime is usually only allowed with the employee’s consent. In special circumstances stipulated by law, consent may not be required.
• Limit: Overtime hours shall not exceed 4 hours within two consecutive days and 120 hours per year.
• Remuneration: Overtime pay per hour shall be at least double the normal wage.
• Prohibition: Pregnant women, employees under 18 years old, employees engaged in particularly harmful and heavy work, and other categories of employees stipulated by law are prohibited from working overtime.

End – of – Year Treatment of Unused Annual Leave

• Paid annual leave
  • Duration: The minimum paid annual leave is 21 calendar days.
  • Eligibility for leave: Employees are eligible for their first leave after working continuously for 6 months with the same employer. With the mutual consent of both parties, leave can also be taken before the 6 – month period expires.
  • Scheduling: The leave sequence is determined by the leave schedule approved by the employer in consultation with the trade union committee or other employee representative organizations.
  • Additional leave: The law, collective contracts, or local regulations may stipulate additional leave (e.g., for harmful working conditions, long – term service, disabled employees).
• Treatment of unused annual leave at the end of the year
  • Leave carry – over: With the mutual consent of both parties or under the circumstances stipulated by law, annual leave can be carried over to the next working year. The unused part of the leave must be arranged for the employee to take in the next working year.
  • Cash compensation
    • During employment: Cash compensation is only allowed for the part of the leave exceeding 21 calendar days. That is, the first 21 days of leave must be taken, and the part exceeding 21 days can be compensated according to the employee’s wishes.
    • Upon termination: When an employee leaves the company, regardless of the number of unused annual leave days and the reason for leaving, the employer must pay cash compensation for all unused paid annual leave days.

Statutory Holidays

• January 1st – New Year;
• March 8th – International Women’s Day;
• March 21st – Navruz;
• March 31st – The first day of Eid al – Fitr (Ramadan Festival);
• May 9th – Memorial and Respect Day;
• June 6th – The first day of Eid al – Adha;
• September 1st – Independence Day;
• October 1st – Teachers and Mentors Day;
• December 8th – Constitution Day of the Republic of Uzbekistan.
• According to Article 208, Paragraph 2 of the Labor Code of the Republic of Uzbekistan, if a holiday falls on a rest day, the rest day will be postponed to the first working day after the holiday.

Other Types of Leave

• Maternity Leave
  • Duration: Women are entitled to a total of 126 days of maternity leave, including 70 days before childbirth and 56 days after childbirth. If there are complications during childbirth or if multiple children are born, the post – natal leave is extended to 70 days.
  • Remuneration: The allowance for the entire maternity leave is paid by the non – budgetary pension fund under the Ministry of Economy and Finance of the Republic of Uzbekistan.
  • Basis: Provided based on the sick leave certificate (sick leave note) issued by a medical institution.
  • Labor protection: Women retain their jobs (positions) during maternity leave.
• Paternity Leave
  • There is no separate provision in Uzbek law for paid “paternity leave” similar to maternity leave.
  • Options for fathers:
    • Unpaid leave: The father of a newborn can apply for unpaid leave in consultation with the employer, and the duration of the leave is determined through negotiation between the two parties.
    • Parental leave: Like the mother or other relatives, the father has the right to apply for parental leave until the child is 3 years old. During this period, if the father is the actual caregiver of the child, he can receive an allowance until the child is 2 years old.
• Parental Leave
  • Rights: Based on a written application, the mother or other family members (father, grandparents, guardians) who actually take care of the child can enjoy it.
  • Duration: Leave can be taken until the child is 3 years old.
  • Remuneration:
    • Paid part: Before the child is 2 years old, a fixed monthly amount of parental allowance is paid by the non – budgetary pension fund.
    • Unpaid part: The leave from 2 to 3 years old is unpaid.
  • Labor protection: During parental leave, employees retain their jobs (positions), and the leave time is included in the total length of service.
• Sick Leave
  • I. Basis and procedures for obtaining sick leave notes
    • Basis: The only proof that an employee has temporarily lost the ability to work and is entitled to receive a sick – leave allowance is the certificate of temporary incapacity for work (sick – leave note).
    • Issuance: The sick – leave note is issued by a medical institution with the corresponding qualification license according to the employee’s place of residence or work.
    • Uzbekistan is actively promoting electronic sick – leave notes. Medical institutions enter the sick – leave notes into the electronic system, and this information is automatically reflected in the unified national labor system my.mehnat.uz, which can be accessed by both employers and pension funds.
  • II. Calculation and payment procedures for the allowance for temporary incapacity for work
    • General rule: The allowance amount is paid as a certain percentage of the employee’s average salary during the calculation period, based on the employee’s insurance service years (the cumulative working years of social insurance contributions).
    • Percentage of average salary (considering continuous or cumulative service years):
      • Less than 5 years of service: 60%
      • 5 – 8 years of service: 80%
      • Over 8 years of service: 100%
    • In the following cases, 100% of the allowance is paid regardless of the length of service:
      • Employees disabled due to work – related injuries or occupational diseases.
      • Participants in World War II and their equivalents.
      • Mothers taking care of sick children under 14 years old.
      • Employees raising three or more children under 16 years old.
      • Employees who have lost their ability to work due to the Chernobyl nuclear accident and its consequences.

Calculation of Incomplete – attendance Salaries

In Uzbekistan, when an employee has incomplete attendance due to absence or unpaid leave, the salary calculation logic is directly based on the principle of proportionally paying for the completed working hours.

• Basic principle: The employee’s monthly salary is based on the agreement for a full working month.
• Specific calculation methods
  • Calculation by day: The most common method is to multiply the employee’s daily wage rate by the actual number of working days.
    • Daily wage rate = Monthly salary / Number of working days in the month (excluding weekends and holidays according to the work calendar)
    • Payable salary = Daily wage rate × Actual number of working days
  • Calculation by hour: For hourly workers or situations where overtime/absence needs to be accurately calculated, it can also be calculated by hour.
    • Hourly wage rate = Monthly salary / Total working hours in the month
    • Payable salary = Hourly wage rate × Actual working hours
• Example
  • Assume an employee’s monthly salary is 5,000,000 som.
  • There are 22 working days in a certain month.
  • If the employee is absent for 2 days (absenteeism or unpaid leave):
    • Daily wage rate = 5,000,000 / 22 ≈ 227,272.73 som per day
    • Actual number of working days = 22 – 2 = 20 days
    • Payable salary = 227,272.73 × 20 ≈ 4,545,454.60 som

4. Dismissal Rules and Compensation Arrangements

Dismissal (Legal Requirements and Best Practices)

• Notice Period
  • Two – month notice in advance:
    • If an enterprise or its branch is dissolved.
    • If personnel are laid off or the establishment is changed due to technological, production, or organizational changes, or a decrease in the volume of work (products, services).
    • If the employment contract of the enterprise manager, deputy, chief accountant, or branch manager is terminated due to a change in the enterprise owner.
  • Two – week notice in advance: If an employee is incompetent for the current job due to insufficient professional ability.
  • Three – day notice in advance: If the employment contract is terminated due to the employee’s fault (e.g., violation of discipline).
• Voluntary Resignation
  • General situation: An employee can terminate the employment contract at any time but must notify the employer in writing 14 calendar days in advance.
  • Starting time of the notice period: Calculated from the next day after the employer receives the resignation application. If it is submitted by mail, it is calculated from the next day after the unit receives the mailed notice.
  • With the mutual consent of both parties, the employment contract can be terminated before the notice period expires.
  • After the notice period ends
    • The employee has the right to stop working.
    • The employer must issue a copy of the order to terminate the employment contract, the labor handbook or its electronic copy to the employee, and settle the salary.
  • During the notice period (including before the end of work on the last working day), the employee can withdraw the resignation application.
  • If the employee continues to work after the notice period ends and the unit does not terminate the contract, the resignation application will become invalid, and the contract cannot be terminated based on this application.
  • If an employee cannot continue working (e.g., admitted as a student, retired, elected to a position), the unit must terminate the employment contract at the time requested by the employee.
• Dismissal during Probation
  • During the probationary period, either party (the employee or the employer) has the right to terminate the employment contract by giving three – day written notice to the other party.
  • If the employer initiates the termination, it can only be done by issuing an order when the probation result is unsatisfactory.
  • If neither party requests to terminate the contract before the end of the probationary period, the contract will continue to be valid and can only be terminated according to general regulations thereafter.
• Dismissal by Agreement
  • Any employment contract – open – ended or fixed – term – can be terminated through the negotiation between the employee and the employer.
  • The termination of the employment contract through negotiation between the two parties shall be confirmed by signing a supplementary agreement to the employment contract.
  • The following information shall be specified in the supplementary agreement:
    • The date of termination of the employment contract.
    • The date of signing the supplementary agreement.
    • Basic information (elements) of both parties.
• Termination of Employment due to Lay – offs or Other Business Reasons
  • Lay – off notice: The employer must notify the employees 2 months in advance.
  • Required documents
    • A written notice stating the reasons and duration of the lay – off.
    • An order to terminate the employment contract.
    • Employees shall provide: A lay – off application, a copy of the labor handbook, and documents proving length of service and salary.
  • Payments upon termination of the employment contract
    • Severance pay
      • Less than 3 years of service — 50% of the average salary.
      • 3 – 5 years of service — 75% of the average salary.
      • 5 – 10 years of service — 100% of the average salary.
      • 10 – 15 years of service — 150% of the average salary.
      • Over 15 years of service — 200% of the average salary.
    • Compensation for unused annual leave.
    • Salary during the work period.
    • Accrued but unpaid bonuses.
  • Additional note: If an employee registers with the local labor authority within 30 days after the termination of the employment contract but fails to find a job, the former employer must continue to pay the employee’s average salary for 3 months based on the certificate issued by the labor authority.
• Justified Dismissal
  • Basis
    • Serious violations
      • Absenteeism (absence for more than 3 hours without justifiable reasons).
      • Drunkenness at work (including alcohol, drugs, or other intoxicated states).
      • Stealing or deliberately damaging company property.
      • Violation of labor protection regulations, resulting in serious consequences or potential risks.
      • Disclosure of business or state secrets.
    • Multiple violations of labor duties: An employee fails to perform duties without justifiable reasons multiple times and has been subject to disciplinary actions but has not corrected.
    • Loss of trust: Applies to employees managing property or funds (e.g., taking bribes, abusing power, forging reports).
    • Providing false materials or information when signing the contract.
  • Dismissal procedure
    • Collect evidence.
    • Conduct an internal investigation.
    • Request the employee in writing to provide an explanation (within 2 working days).
    • If the employee refuses to explain, record it in the presence of two witnesses.
    • Make a disciplinary decision within the following periods:
      • No more than 1 month from the date of discovery of the violation.
      • No more than 6 months from the date of the violation (2 years if discovered through an audit).
    • Issue a dismissal order, indicating the relevant articles of the Labor Code and specific reasons.
  • Salary and compensation
    • No severance pay is paid.
    • Should pay: Salary before dismissal, compensation for unused annual leave.

Conversion of Annual Leave for Departing Employees

• The labor holiday is 21 calendar days. When an employee leaves the company, the employer must pay compensation for unused annual leave.
• According to regulations, employees are entitled to 1.75 days of annual leave for each month of work (because 21 ÷ 12 = 1.75).
• Example: An employee has worked for 6 months without taking any annual leave. The average daily wage is 150,000 som.
  • 6 months × 1.75 days = 10.5 days of annual leave.
  • 10.5 × 150,000 = 1,575,000 som in compensation.
• Important reminder: When an employee leaves the company, the employer must pay compensation for these unused holidays. This compensation is subject to personal income tax and social insurance premiums. Even if an employee has worked for only 2 – 3 months, compensation should be calculated at the rate of 1.75 days per month.

Official Website of Labor Laws

https://lex.uz

5. Incentive Measures and Policy Analysis for Local Hiring

Local Employment Protection Policy

In the Republic of Uzbekistan, to implement the local employment protection policy, employers must strictly abide by labor laws and establish a fair and transparent employment relationship system.

• Internal labor discipline regulations
  • Mandatory: All units (regardless of the form of ownership) must formulate them.
  • Importance for employment security
    • Clarify the working hours and rest system, recruitment and dismissal procedures, employees’ rights and obligations, reward and punishment systems, and the scope of serious disciplinary violations.
    • Help to achieve unified standards for disciplinary management and prevent employers from making arbitrary decisions when dismissing or disciplining employees.
  • Requirements: Need to be negotiated with the employee representative organization (if there is a trade union) and should be signed by employees to confirm their awareness.
• Employee personal data processing and protection system
  • Mandatory: Must be formulated according to the Personal Data Law of the Republic of Uzbekistan.
  • Importance for employment security: Regulate the collection, storage, use, and transmission of employees’ personal information to prevent discrimination or other unfair treatment due to privacy leakage.
• Documents related to labor protection and work safety
  • Mandatory: Include post – safety operation procedures, safety training systems, and assessment processes.
  • Importance for employment security: Ensure employees’ safety and health, which is the basic prerequisite for maintaining continuous labor ability and ensuring long – term employment.
• Preparation of the position establishment table
  • Mandatory: Must be formulated by state organs and budget – funded units; although not mandatory for private enterprises, it is extremely necessary in practice.
  • Importance for employment security: Clarify the unit’s organizational structure, position names, staff establishment, and salary standards, which are the basis for legal and compliant recruitment, job transfer, and lay – offs.
• Collective contracts (if any)
  • Mandatory: If either the employees or the employer makes a written request for negotiation, the other party must participate in the negotiation.
  • Importance for employment security: Can provide additional protection for employees on the basis of the law, such as compensation when terminating the employment contract and increased welfare benefits.

Quota Allocation for Foreign Employees’ Work Permits

The Cabinet of Ministers of the Republic of Uzbekistan can adjust the quota for labor migrants annually. These decisions are not always announced in a timely and extensive manner, and accurate information is often lacking in public channels. To obtain accurate and up – to – date quota information, it is necessary to directly contact the State Employment Service of the Republic of Uzbekistan under the Ministry of Employment and Poverty Reduction. This agency has the most authoritative information and is responsible for the management of permit issuance.

Financial Policies

• Types of special economic zones
  • Free economic zone
  • Science and technology innovation zone
  • Tourism and leisure zone
  • Free trade zone
  • Industrial zone
• Preferential policies and treatments
  • Legal protection
    • Enjoy legal protection and preferential policies.
    • Stable tax policies, with a maximum of 10 – year preferential treatment.
    • Claims can be made according to law for illegal interference.
  • Customs preferences
    • Exempt from some customs duties and fees (except for value – added tax and customs handling fees), including non – domestic building materials required for construction projects, non – domestic technological equipment on the approved list, and raw materials and components for export.
  • Tax preferences
    • Exempt from corporate income tax, property tax, land tax, unified tax for micro and small enterprises, and contributions to some special funds.
    • Deferred payment of value – added tax on imported goods for up to 120 days.
    • Simplified refund of excess value – added tax within 7 days.
  • Investment preferential period
    • Investment amount (US dollars) Preferential period
    • US$300,000 – US$3,000,000 3 years
    • US$3,000,000 – US$5,000,000 5 years
    • US$5,000,000 – US$10,000,000 7 years
    • Over US$10,000,000 10 years
  • Foreign exchange management
    • Independently choose a commercial bank to open a foreign – currency account, either domestically or overseas.
    • Income in foreign exchange must be deposited into the account.
    • Transactions in foreign currency are allowed within the zone, including payments from non – zone entities to zone entities.
  • Others
    • Land can be leased through online auctions.
    • Have the right to require the zone management to ensure infrastructure according to the investment agreement.
    • Can build the required infrastructure independently.
• Special preferences for IT parks (until January 1, 2028)
  • Exempt from all taxes and contributions to special funds.
  • Personal income tax is 7.5% (usually 12%).
  • Pay 1% of the total monthly income to the park.
  • Only applicable to IT – related business operations.
• Government subsidies and grants
  • Employment subsidies: The government provides subsidies to enterprises creating new jobs through the “State Employment Promotion Fund”, especially for target groups (e.g., youth, women, and the disabled). These subsidies can be used to partially pay salaries or the cost of purchasing equipment.
  • Training subsidies: Enterprises investing in employee training and retraining can receive partial compensation for training costs.
  • Agricultural subsidies: Some agricultural projects can receive direct subsidies and preferential loans.
  • State guarantee: For eligible investment projects, the government can act as a loan guarantor, reducing the financial risk of enterprises.
• Investment project support
  • Direct investment: For some strategic or large – scale projects, the government can directly invest or provide project financing through state – owned banks.

6. Human Resources Analysis and Employment Suggestions

Number of Employed People

• Total: Over 14 million people (as of early 2024, data from the Statistics Committee under the President of the Republic of Uzbekistan).
• Structure: The number of employed people in the service, industrial, and construction sectors is increasing actively. Traditionally, there are more employed people in agriculture.

Unemployment Rate

• Level: Approximately 6.8% (as of early 2024, statistics committee data).
• Characteristics: The unemployment rates of youth and women are slightly higher (the country is actively addressing this through projects).

Average Salary Trend

In the first quarter of 2025, the average salary in Uzbekistan was 5.8 million som, and in Tashkent, it was 9.9 million som.

Employment Suggestions

• Strictly abide by labor laws: Uzbek law, especially the new labor law implemented since April 2023, has very strict requirements for protecting workers’ rights and interests. Violations will lead to heavy fines and legal disputes.
  • Be sure to sign written employment contracts.
  • Pay salaries, paid – leave salaries, and compensation in a timely and full – amount manner.
  • Standardize the handling of all personnel files: related procedures such as recruitment, transfer, dismissal, and disciplinary actions.
  • Comply with regulations on working hours, rest time, overtime, and holidays.
  • Handle procedures for foreign employees in accordance with the law: Obtain the necessary work permits for each foreign employee. Failure to do so will result in the repatriation of employees and fines for the company.
• Electronic office work
  • my.mehnat.uz: An online platform that all employers must use for employment contract registration and electronic labor file management. All personnel changes must be entered into the system in a timely manner using an electronic signature.
  • 1С: Salary and Personnel Management System (ЗУП) Uzbekistan version: This is the core tool for automated personnel management and salary calculation. It supports personnel file management (recruitment, transfer, dismissal, leave), working – hour statistics, various salary calculations and deductions, and generates necessary reports. (Compliant with Uzbek labor law regulations: The system has been adapted according to labor – law requirements)

7. Cultural Adaptation

Language

• Official language: Uzbek (mandatory for official documents and correspondence).
• Widely used: Uzbek and Russian (Russian is widely used in major cities, business environments, and among the middle – aged and elderly).
• Emerging language: English (increasingly popular among young people, in the IT and tourism industries).
• Practice: When dealing with official documents and communicating with government agencies, Uzbek should be used.

Religious Customs

• Dominant religion: The majority of the population in Uzbekistan is Sunni Muslim. Islam is deeply integrated into the country’s culture, traditions, and daily life.
• Respect for traditions and festivals: It is necessary to respect religious customs, especially during sacred periods.
  • Ramadan (the fasting month): During this period, many employees will fast (abstain from food and water from dawn to sunset). This may affect their energy levels and work efficiency during the day. It is recommended to show understanding and flexibility, for example, in scheduling meetings or high – intensity tasks.
  • Festivals: Eid al – Fitr and Eid al – Adha are major Islamic festivals and are also statutory non – working days in Uzbekistan. Please plan your work process according to these holidays.
  • Prayer and Friday congregational prayer: Some employees may perform daily prayers (salah) five times a day at specific times (about 10 minutes each time). Friday congregational prayer (Jumu’ah prayer in the mosque): For Muslim men, the Friday congregational prayer in the mosque around noon every week is mandatory. This takes a certain amount of time (usually including travel and the prayer itself, about 1 to 1.5 hours). It is recommended that employers provide flexibility or facilitate this prayer, as it is an important religious obligation. Refusing may be considered extremely disrespectful.
• Dietary and behavioral characteristics: When organizing company events or banquets, it should be considered that most Muslims do not eat pork and drink alcohol. Please provide halal food and non – alcoholic beverage options. Generally, excessive alcohol consumption and overly revealing clothing should be avoided in business and public settings, especially for women.

Business Culture

• Hierarchy and respect: Uzbek business culture is usually hierarchical. High respect must be shown to the elderly and superiors.
  • Address: Using honorifics (e.g., surname plus patronymic) or traditional polite titles (e.g., “Aka” for an elderly man and “Opa” for an elderly woman) is very common and highly regarded.
• Interpersonal relationships and trust: Building interpersonal relationships and trust plays an extremely important role in business. Uzbek people tend to do business with people they know and trust.
  • Practice: Meetings usually start with informal conversations about family, health, or common interests. This is a way to build personal connections before getting into business topics. Don’t rush to get straight to the point.
• Punctuality: Business meetings and activities are expected to be punctual. However, in some regions or informal meetings, there may be a slight delay, which should be understood.
• Negotiation
  • Duration: The negotiation process may be quite long. Decisions are not always made quickly, and it may take multiple meetings to reach an agreement.
  • Qualities: Patience, perseverance, and a willingness to compromise are important during the negotiation process.
• Hospitality: Uzbek people are known for their hospitality. Accepting an invitation to tea, lunch, or dinner is part of business etiquette and should be appreciated. Refusing may be considered disrespectful. It is also a great opportunity for informal communication and deepening relationships.
• Written agreements: Although oral agreements and personal trust are important, all key points and transaction terms must be confirmed in writing (contracts, memorandums, letters). This helps to avoid future misunderstandings.
• Dress code: In business settings, it is recommended to wear conservative and formal clothing. Men usually wear suits or shirts with trousers. Women should wear formal dresses, skirts, or pantsuits, avoiding overly revealing clothing.