How to Hire Remote Employees In 

Kyrgyzstan

The Basics

Currency
Kyrgyzstani som (KGS)
Employer Taxes
17.25%
Payroll Frequency
Monthly
Official Language
Kyrgyz/ Russian

Employment in 

Kyrgyzstan

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Kyrgyzstan

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Kyrgyzstan can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Kyrgyzstan, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Kyrgyzstan.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Kyrgyzstan is not the same as paying workers in your own country. Employees have to be paid using Kyrgyzstan’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Kyrgyzstan

 Specific Information

Working Hours

In general, the work week is 40 hours: 5,8-hour days.

Overtime

Overtime must be paid at least time and half of the worker's normal pay for the first two hours and double time thereafter.

Holiday and weekend work must be paid at least double time the worker's normal pay rate.

Payroll Tax

Employer

Employer

  • Social Security
  • Employee Health Fund
  • Pension Contributions

Minimum Wage

The minimum wage is KGS 970 per month (2015 revision). As per established practice, wages are paid directly to an employee in cash. Other modes of payment are not popular.

Payroll

Pay Cycle

Employees are paid on the 22nd of each month.

13th Salary

13th month pay is not mandatory.

Leave

Paid Time Off

Employees are generally entitled to 4 weeks of paid annual leave, which can be taken all at once or 2 weeks at a time.

Employees receive 28 days of annual paid leave.

Public Holidays

There are 14 public holidays in a year. The authorities follow the practice of allowing another day if a scheduled holiday falls on a Sunday.

Sick Days

Employers are not required to provide paid sick leave but most employers provide some time off for illness.

Maternity Leave

A pregnant female employee is entitled to take up to 70 days of leave before the birth of her child and 56 days after the birth. In the event of a birth with complications or the birth of more than one child at the same time, the mother is entitled to 70 days of leave after the birth.

Female workers in certain remote or mountainous regions are entitled to additional maternity leave.

During maternity leave, employers pay workers 100% of the employee’s wages for the first 10 working days.

Beginning on the 11th day and continuing through the end of the leave, the employee on leave receives a benefit paid by the government.

Paternity Leave

A child’s father or any close relative serving as a caregiver can opt for the same leave benefits as that of the female employee.

Parental Leave

In kyrgyzstan, both parents may take unpaid leave when needed until the child is three years old.

Other Leave

Childcare leave - The employer may grant additional unpaid leave which can be used by the mother, father or guardian until the child reaches the age of 3.

Adoption Leave

Marriage Leave

No Info.

Bereavement Leave

No Info.

Termination

Termination Process

If the employee’s performance on probation is not satisfactory, the employer may terminate the employment contract by giving at least 3 days’ prior written notice to the employee stating the reasons for considering the employee to have failed to satisfactorily complete the probationary period.

If during the probationary period the employee determines that this job is not suitable for them, the employee may terminate the employment contract by giving 3 days’ prior written notice to the employer without stating the reasons for such termination.

Employees holding indefinite term contracts may be terminated based on the grounds stated in the labor code.

After the probationary period, the written notice period is dependent on the cause for termination.

Employees are generally entitled to a severance payment, the amount of which is dependent on the reason for termination.

Notice Period

The notice period in Kyrgyzstan is:

If the employee’s performance on probation is not satisfactory, the employer may terminate the employment contract by giving at least 3 days’ prior written notice to the employee stating the reasons for considering the employee to have failed to satisfactorily complete the probationary period.

If during the probationary period the employee determines that this job is not suitable for them, the employee may terminate the employment contract by giving 3 days’ prior written notice to the employer without stating the reasons for such termination.

After the probationary period, the written notice period is dependent on the cause for termination.

Severance Pay

Employees are generally entitled to a severance payment, the amount of which is dependent on the reason for termination.

Probation Period

Probationary periods are limited to 3 months, or for managers and similar positions, 6 months.