Economic downturns, corporate reorganisations and global restructuring projects or digitalization may require foreign companies operating in Kazakhstan to reduce or reorganise their workforce. While labour law in Kazakhstan allows dismissals and restructuring, the legal framework is highly formalised and employee-protective, creating significant risks for employers unfamiliar with local requirements.
Proper planning and attention to the detail can help to mitigate legal risks foreign employers face when implementing layoffs or workforce restructuring in Kazakhstan.
- Kazakhstan Labour Law: A Highly Regulated Environment
Employment relations in Kazakhstan are governed primarily by the Labour Code of the Republic of Kazakhstan, which establishes mandatory rules for hiring, termination, and employee protections. Unlike some jurisdictions where redundancy decisions are largely commercial, Kazakh law requires employers to strictly follow procedural and substantive requirements.
Failure to comply may result in:
- Court-ordered reinstatement of employees
- Payment of average wages for forced absence
- Administrative fines and inspections
- Reputational and operational risks
Foreign employers are often surprised by the level of documentation and formal justification required for dismissals.
- Grounds for Layoffs and Restructuring
Kazakh law permits termination of employment on several grounds relevant to restructuring, including:
- Staff reduction or liquidation of the employer
- Changes in organisational structure
- Redundancy of positions
- Inability to continue employment due to business reorganisation
However, economic difficulties alone are not sufficient unless properly documented and supported by internal corporate decisions. Employers must be able to demonstrate that layoffs are based on legitimate organisational changes rather than individual employee performance or discriminatory reasons.
- Mandatory Procedures: Where Employers Most Often Make Mistakes
- a) Formal Decision and Documentation
Before initiating layoffs, employers must adopt:
- A formal decision on staff reduction or restructuring
- Updated staffing schedules
- Internal orders specifying affected positions
Informal or retroactive documentation is a common reason courts invalidate dismissals.
- b) Notice Periods
Employees must generally be notified at least one month in advance of termination due to redundancy or liquidation, unless a longer notice period is stipulated in the employment contract. Failure to observe notice periods exposes employers to compensation claims.
- c) Notification of Authorities
Employer is also required to notify job centre in writing or via the state-run online resource “Labor Exchange.” (https://www.enbek.kz/ru ) no less than one month before the start of the layoff. This is especially relevant for mass layoffs or closure of operations. Following data are to be provided: number and categories of employees that may be affected by the redundancy, indicating the positions and professions, specialties, qualifications and wages of the employees to be laid off and the timeframe during which they will be laid off.
- Protected Categories of Employees
Kazakh law provides enhanced protection to certain categories of employees. Termination of employment with these individuals is either prohibited or subject to additional requirements.
Protected categories include:
- Pregnant women
- Employees on maternity or childcare leave
- Employees on sick leave or vacation
- Single parents of minor children (in certain circumstances)
- Employees 2 years before retirement – only with the consent of a special commission
- Trade union activists
Ignoring these protections often leads to reinstatement and penalties.
- Severance Pay and Compensation Obligations
When terminating employment due to staff reduction or liquidation, employers must pay:
- Severance compensation (typically at least one month’s average salary)
- Outstanding salary and unused vacation
- Additional compensation if provided by employment contracts or internal policies
Errors in calculating average earnings or delayed payments frequently result in disputes and fines.
- Alternative Options to Direct Layoffs
Foreign employers may consider alternatives to mass layoffs, such as:
- Mutual amicable termination agreements
- Redeployment or transfer to other positions
- Reduced working hours or part-time arrangements
- Outsourcing or secondment
Each option has its own legal implications and must be implemented carefully to avoid requalification as unlawful termination.
- Litigation Risks and Common Employee Claims
Employees challenging dismissals in Kazakhstan often rely on:
- Procedural violations
- Lack of proper justification for redundancy
- Discrimination or unequal treatment
- Incorrect severance calculations
Kazakh courts tend to scrutinise employer actions closely, especially where foreign companies are involved, making preventive legal review essential.
- Special Considerations for Foreign Employers
Foreign companies operating in Kazakhstan should pay particular attention to:
- Alignment between global restructuring policies and local labour law
- Language requirements for employment documents
- Coordination between HR, legal, and tax teams
- Immigration status of foreign employees affected by layoffs
Termination of foreign nationals may also trigger immigration consequences, including cancellation of work permits and residence rights for family members.
Conclusion
Workforce restructuring and layoffs in Kazakhstan are legally permissible but procedurally complex. Foreign employers who underestimate local labour law requirements face significant legal and financial risks. Careful planning, accurate documentation, and compliance with mandatory procedures are essential to implement restructuring smoothly and lawfully.
Juralink assists foreign employers with workforce restructuring in Kazakhstan, including legal risk assessment, preparation of termination documentation, negotiation of mutual separation agreements, representation in labour disputes, and coordination of employment, tax, and immigration matters. Our integrated approach helps companies manage restructuring efficiently while minimising legal exposure.
About Juralink
Juralink is an international law firm advising foreign investors, multinational companies, and individuals on legal and advisory matters in Kazakhstan and Central Asia. Our multilingual team provides support in employment law, corporate restructuring, tax, immigration, dispute resolution, compliance, and accounting and payroll outsourcing.
