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Which issues would you most highlight to someone new to your country?
Armenia is a developing country with a fast-growing economy. The main issues in the country are bureaucracy and the fact that the institutions are not yet fully functioning. Another major obstacle can be the closed borders with some neighbouring countries, which hinder its trading capacity.
However, the government is mitigating these issues both at home and internationally. As a result, Armenia consistently ranks higher than most of its neighbours in the Ease of Doing Business Index (45th).
What do you consider unique to those doing business in your country?
Armenia has an economic advantage over its neighbours in terms of labour and technology, as well as a stable banking system and a global network of Armenian businesspeople working in the world’s financial centres. Easy access to credit, high acceptance of foreign investors and an effective tax system, coupled with high productivity levels, make both starting and managing a new business project relatively smoothly.
This has paved the way for Armenia to become an emerging regional financial centre. Hence, there are numerous opportunities to profit long term in sectors such as financial services, information technology, tourism, mining and agriculture.
Is there any general advice you would give in the employment area?
The main advantage in Armenia is the low-cost and high-quality workforce. International best practices in production and business management, as well as finance and law, are widely used. Many young professionals have been educated at top universities in the United States and Europe and have gained experience working in foreign firms. They help to bridge the gap between Armenia and more developed economies.
Further, labour unions have little, if any, influence on the labour market and there are no class actions against businesses.
Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?
At present, the law does not regulate the employment rights of foreign workers. There is no mechanism for obtaining an employment permit and thus they can work in Armenia without permission. A special regulation on foreign workers’ employment rights is much needed, as is a mechanism to grant employment permits to foreign workers. However, under Armenian law, nationals and foreigners enjoy the same employment rights.
What are the emerging trends in employment law in your jurisdiction?
At present, the key trend in employment law is the guarantee of employees’ rights, particularly their right to a minimum wage, which must rise in line with price increases. Another important trend is the crystallisation – from a legal standpoint – of the balance between the rights of employees and those of the employer.
The employment relationship
Country specific laws
What laws and regulations govern the employment relationship?
The employment relationship is governed by the Constitution and the following main specific laws
- the Labour Code;
- the Civil Code;
- the Law on Employment;
- the Law on the Minimum Monthly Wage;
- the Law on Employers’ Union; and
- the Law on Trade Unions.
In addition, several decisions of the government and injunctions issued by the minister of labour and social issues have set precedents, and certain international treaties apply which have priority over national legislation.
Who do these cover, including categories of worker?
The Labour Code covers the rights of all workers without exception, as well as employers’ and employees’ rights and termination of the labour contract. If there is no regulation dealing with a specific employment relationship under the Labour Code, the Civil Code applies. Other specific laws cover special labour relationships.
Are there specific rules regarding employee/contractor classification?
The Labour Code sets out no specific rules in this regard. However, by examining the relevant legislation employees can be classified as public sector employees and non-public sector employees. The Civil Code covers contractual relations in regard to independent contractors, but these are not considered to be employment relations.
Must an employment contract be in writing?
The employment contract is valid only if it is executed in writing.
Are any terms implied into employment contracts?
The employment contract must accord with the requirements of existing legislation. According to the Labour Code, the following information must be included in the employment contract:
- the name and surname of the worker (and optionally, his or her father’s name);
- the name of the company or the name and surname of the physical entity (ie, the employer and, optionally, his or her father’s name);
- the structural sub-division (where available);
- the date on which employment starts;
- the position and/or official duties;
- the basic salary and method of payment;
- any bonuses, additional payments or premiums granted to employees;
- the validity period of the employment contract (if necessary);
- the duration of the probation period on which the parties have agreed; and
- the worktime duration, where incomplete working time is set.
The employment contract should also specify the date and place where the contract was concluded. The parties can also agree to include other information.
Are mandatory arbitration/dispute resolution agreements enforceable?
The dispute between the employee and the employer can be submitted to the arbitration tribunal for resolution by an agreement between the parties though the latter doesn’t restrict their right to lawsuit.
There is a dispute resolution stage in the collective employment disputes, which is the Conciliation Commission and is mandatory.
How can employers make changes to existing employment agreements?
An employer can make changes to the essential conditions of the existing contract by notification to the employee in written form, in terms defined in the Labour Code. The changes must also be made by written agreement between the employer and employee.
Is a distinction drawn between local and foreign workers?
A foreign worker has the same legal standing as an Armenian citizen, unless the law provides otherwise.
What are the requirements relating to advertising positions?
The requirements for advertising positions are set out in legislation and differ according to the position. However, these requirements apply only to public service workers. In the private sector there are no requirements in this regard.
For example, an appointment for the Civil Service should be announced no later than one month before it is to be filled and the announcement must be made in a publication with a print run of at least 3,000 and in other media.
For available community service places, the competition should be announced no later than one month before it is to be filled and the announcement must be made in a publication with a print run of at least 1,000 and in other media.
What can employers do with regard to background checks and inquiries in relation to the following:
(a) Criminal records?
In general, this is not regulated by legislation. However, for some government positions the employer can carry out checks in relation to criminal records (some positions cannot be taken up by a person who has been sentenced for a crime and whose criminal record has not been removed or cleared by the prescribed procedure.
(b) Medical history?
(c) Drug screening?
(d) Credit checks?
(e) Immigration status?
(f) Social media?
Wages and working time
Is there a national minimum wage and, if so, what is it?
According to the Law on the Minimum Monthly Wage, the minimum monthly wage is Dram 55,000, excluding taxes (approximately €100). The minimum wage has increased by 10% to 15% almost every year since 2011.
The minimum salary does not include bonuses, additional payments, awards and other incentive payments.
Are there restrictions on working hours?
Working hours cannot exceed 40 hours per week.
The daily period of work must not exceed eight working hours, except for the exceptions set out in the Labour Code, other laws, normative legal acts and any collective agreement. Including overtime, work cannot exceed 12 hours daily (including rest and meal breaks) and 48 hours weekly.
The working time of employees in specific categories (eg, healthcare organisations working on an uninterrupted shift basis, guardianship organisations and utility supply organisations) may amount to 24 hours a day. However, the working time of such employees must not exceed 48 hours weekly and the rest period between working days must not be less than24 hours. The list of these jobs is set by the government.
The duration (including meal and rest breaks) of an employee’s working day, where the employee has two or more employment contracts with the same employer or with different employers, cannot exceed 12 hours daily.
Shorter working times are as follows:
- 24 hours per week for employees aged 14 to 16;
- 36 hours per week for employees aged 16 to 18; and
- for employees who work in an environment where it is not possible to reduce the level of harmful factors to that defined by health and safety legislation due to technical or other reasons, no more than 36 hours per week.
For employees performing work which involves heavy mental and emotional strain, the order and conditions of shortened working hours are determined by the law or a collective or employment agreement.
Hours and overtime
What are the requirements for meal and rest breaks?
Employees are entitled to a meal and rest break – which must be between 30 minutes and two hours – halfway through the working day, but no later than four hours after starting work. The meal and rest break is not included in working time and the employee can use it at his or her discretion. The employee has a right to leave the workplace during the break.
In types of work where it is impossible to give the employee a meal and rest break given production conditions, the employee must have the opportunity to eat during work.
The beginning and the end of meal and rest breaks are fixed by the employer’s internal disciplinary rules, the work schedule or a collective or employment agreement.
How should overtime be calculated?
At the employer’s request, overtime shall not exceed four hours during two successive days and 180 hours per year. The employer must record the precise number of overtime hours of every employee in a working time logbook.
What exemptions are there from overtime?
The Labour Code exempts the following employees from overtime:
- employees under 18 years of age;
- employees studying in secondary and vocational schools without interrupting work, on study days;
- employees who work in harmful or dangerous conditions for health;
- pregnant women (women who take care of a child under the age of one may do overtime only if they consent to it); disabled persons, unless such overtime is not prohibited by a medical conclusion; and
- employees who work in other conditions according to the legislation of Armenia and the collective agreement.
Is there a minimum paid holiday entitlement?
According to the Labour Code, the period of annual minimum paid holiday is 20 working days for employees working a five-day week and 24 working days for employees working a six-day week.
What are the rules applicable to final pay and deductions from wages?
If the employer or the employee rescinds an employment contract, it must reach a full and final settlement with the employee on the day of rescission, unless a different procedure for is set out by the Labour Code, law or the employment agreement. If the employee moves to another job with the same employer, the employer need not make a full and final payment to the employee. The employer must pay the employee his or her wages and any other payments due on the day of final settlement, and fill out and hand over the employee’s employment record book in the prescribed manner. If any arrears are owed to the employer, the following deductions or charges can be made from wages:
- advance salary payments;
- excess payments made as a result of mechanical calculation errors;
- advance payments for business trips, the performance of specific tasks or a move to another workplace, which were not spent and not returned; and
- compensation for damage caused to the employer by the employee.
If the employee’s debt does not exceed his or her average monthly wage, the employer has the right to make deductions if it has issued a corresponding legal act for deductions no later than one month after the actions defined by law come to fruition.
The employer cannot recover any wages calculated and overpaid as a result of the incorrect application of the law, with the exception of mechanical calculation errors. Deductions cannot exceed 50% of the employee’s monthly wages.
What payroll and payment records must be maintained?
The employer must keep records of the wages paid to all employees, noting the calculated, paid and deducted amounts.
Discrimination, harassment & family leave
What is the position in relation to:
No legislation on age discrimination exists. Under Armenian law, a person enjoys the right to employment from 14 years of age, although special regulations apply and limits are imposed on working hours.
No legislation on disability discrimination exists; however, for some types of job a disability can be an impediment in relation to the physical work.
No legislation on gender discrimination exists. The law prohibits the hiring of pregnant women or women taking care of a child under the age of one for heavy or harmful work.
(e) Sexual orientation?
No legislation on medical discrimination exists; however, for some jobs a medical condition can be an impediment in relation to the physical work.
The law guarantees the legal equality of the parties to employment relationships irrespective of gender, race, nation, language, origin, citizenship, social status, religion, marital or family status, age, political affiliation, trade union membership and other factors unrelated to the employee’s professional qualities.
Family and medical leave
What is the position in relation to family and medical leave?
Employees enjoy guarantees when they are on medical leave. In particular, employees who have lost their functional capacity as a result of an injury at work or who suffer from a work-related disease can retain their position and duties until they have recovered their functional capacity. If the temporary loss of functional capacity is not a result of an injury at work or a work-related disease, the employee shall retain his or her position and duties if he or she is absent from work for no more than 120 successive days or no more than 140 days within the past 12 months.
During the period of temporary functional loss, the employer pays the employee benefits for the relevant working days.
What is the position in relation to harassment?
The Labour Code does not cover harassment. However, sexual harassment is punishable under the Criminal Code.
What is the position in relation to whistleblowing?
There are no regulations on whistleblowing.
Privacy in the workplace
Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?
According to the Constitution, everyone has the right to privacy in relation to correspondence, telephone conversations, mail and other communications. In regard to labour relations, no legal act specifically prohibits or provide for the monitoring of communications in the workplace. However, the employer can set down rules for privacy and monitoring in its internal disciplinary rules.
To what extent can employers regulate off-duty conduct?
The Labour Code regulates all relations between the employer and its employees. The employer has no rights over its employees outside of working hours, but employees must keep private any information obtained from third parties while performing the work.
Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?
There are no specific rules on this issue. However, in its internal disciplinary rules the employer can provide that employees should not use social media accounts during working hours. Failure to follow these rules can lead to disciplinary action.
Trade secrets and restrictive covenants
Who owns IP rights created by employees during the course of their employment?
IP rights created by employees during the course of their employment belong to the employer; however, under the law, alternative provisions can be included in the employment contract.
What types of restrictive covenants are recognised and enforceable?
Restrictive covenants are not recognised or enforceable in Armenia.
Are there any special rules on non-competes for particular classes of employee?
No special rules exist for non-compete agreements.
Discipline and grievance procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?
No specific rules regarding discipline and grievance procedures exist. Discipline is regulated by internal rules, which can differ from one employer to another.
Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?
Although non-governmental organisations have developed rapidly in recent years, labour unions are still uncommon and those which do exist do not function efficiently.
Although organisations of business entities are rare, some effective bodies do exist, such as the Armenian Chamber of Commerce and Industry and the Union of Manufacturers and Businessmen (Employers) of Armenia.
What are the rules on trade union recognition?
Trade unions can be established in the form of a non-governmental organisation. As such, there are no specific rules regarding the establishment of trade unions. After registration with the relevant state agency, such an organisation is legally recognised.
What are the rules on collective bargaining?
Collective labour dispute proceedings comprise two stages:
- The collective labour dispute is first examined before the Conciliation Commission and a mediator is involved. This phase is mandatory for all parties. The parties’ representatives, the commission and the mediator shall use all options set out in the legislation to resolve the dispute.
- If the dispute involves the execution of a collective contract and no agreement is reached before the commission, the parties may apply to court for a resolution within 10 days of conclusion of the conciliation process.
Are employers required to give notice of termination?
An employer must give notice of termination in the following cases:
- Where the company is liquidated, the employer should give written notice to the employee no later than two months before liquidation. The same requirement applies in the event of changes in production volumes, economic or technological changes, changes in working conditions and/or redundancies due to industrial necessity.
- The employer must give notice where the essential working conditions have changed, the employee is no longer suitable for the position or the work or the employee has a long‐term inability to work (if he or she does not come to work for more than 120 successive days or no more than 140 days within a 12-month period because of a temporary inability to work, if the law and other normative acts does not provide that the job and title be preserved for a longer term in case of certain diseases).
- Where the employee reaches retirement age (unless otherwise specified in the employment agreement), the employer must give notice of termination no later than:
- 14 days before termination to employees with up to one year’s service;
- 35 days before termination to employees with between one and five years’ service;
- 42 days before termination to employees with between five and 10 years’ service;
- 49 days before termination to employees with between 10 and 15 years’ service; and
- 60 days before termination to employees with more than 15 years’ service.
What are the rules that govern redundancy procedures?
Under the Labour Code, the employer can terminate the employment contract on the grounds of redundancy if, after considering the employee’s training, qualifications and health status, the employer has offered him or her a transfer to other work and the employee has rejected this offer. If there is no other work to offer the employee, the contract is terminated without such offer.
Are there particular rules for collective redundancies/mass layoffs?
If an organisation is liquidated or must reduce headcount and at best 10% of the total number of employees are to be dismissed, but no less than 10 employees in a two-month period, the employer must submit data on the number of dismissed employees (together with their professions, ages and genders) to the State Employment Service and to the employees’ representative no later than three months before rescinding the employment contract.
Where mass dismissals result from the bankruptcy of the employer, the employee data shall be submitted to the State Employment Service no later than three days after the court has issued the civil bankruptcy judgment.
What protections do employees have on dismissal?
During the notice period the employer must provide the employee with time off to look for a new job (at least 10 % of the notice period). The time off shall be provided in accordance with a schedule proposed by the employee. The employee should retain his or her average wage for this time, calculated based on his or her average hourly wage.
In case of redundancy, the employer shall be entitled to terminate the contract if the employee has rejected the offer of a transfer to other work. In all cases the employer must fully settle its account with the dismissed employee on the day of dismissal.
Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?
Labour disputes are subject to the jurisdiction of the common first-instance courts. The parties can also apply to the arbitration tribunal if there is special agreement between them. However, the latter does not restrict their right file suit.
What is the procedure and typical timescale?
A labour dispute constitutes grounds for an expedited trial. However, the court can decide whether to examine the case in an expedited trial. If it does not, the proceedings can take up to one year.
What is the route for appeals?
Decisions of the common first-instance courts can be appealed to the Court of Appeal, and Court of Appeal decisions can be appealed to the Cassation Court. Decisions of the Cassation Court can be appealed to the European Court of Human Rights.