Guide to Hiring Employees in Mongolia

Expanding your business operations into Mongolia can be an exciting endeavor. With its growing economy and rich cultural heritage, Mongolia offers a promising landscape for businesses seeking new opportunities. However, navigating the intricacies of hiring employees in Mongolia requires a thorough understanding of its legal framework, cultural norms, and business practices.

This comprehensive guide aims to provide you with everything you need to know about hiring employees in Mongolia, from understanding the labor market to complying with local regulations and building successful working relationships.

Understanding the Labor Market in Mongolia

Before delving into the specifics of hiring employees, it’s essential to understand the labor market dynamics in Mongolia. Mongolia has a relatively small population compared to its vast territory, with a population of approximately 3.3 million people as of 2021. However, the country’s economy has been steadily growing, driven primarily by mining, agriculture, and tourism sectors.

The labor force in Mongolia is diverse, with a mix of skilled and unskilled workers across various industries. Ulaanbaatar, the capital city, serves as the primary hub for economic activities and hosts a significant portion of the country’s workforce. When hiring employees in Mongolia, businesses can tap into a pool of talent with varying levels of expertise and experience.

Recommended Employer of Record Services in Mongolia:

Legal Framework for Employment

Complying with local labor laws and regulations is crucial for businesses operating in Mongolia. The legal framework governing employment in Mongolia is primarily based on the Labor Law of Mongolia, which outlines the rights and obligations of both employers and employees.

Some key aspects of employment law in Mongolia include:

Employment Contracts: Employment contracts are a fundamental requirement when hiring employees in Mongolia. These contracts should clearly outline the terms and conditions of employment, including job responsibilities, working hours, compensation, benefits, and termination procedures.
Minimum Wage: Mongolia has a minimum wage requirement set by the government, which employers must adhere to. As of [insert year], the minimum wage in Mongolia was [insert amount] per month.
Working Hours: The standard working week in Mongolia is 40 hours, typically spread over five days. Overtime work may be required, but it should be compensated according to the provisions of the Labor Law.
Employee Benefits: Employers in Mongolia are required to provide certain benefits to their employees, including social insurance, health insurance, and paid leave. The specifics of these benefits may vary depending on factors such as the employee’s length of service and job position.
Termination Procedures: Termination of employment in Mongolia must be conducted in accordance with the procedures outlined in the Labor Law. Employers must provide notice or compensation to employees in case of termination, depending on the circumstances.
Work Permits: For foreign nationals seeking employment in Mongolia, obtaining a work permit is necessary. Employers hiring foreign workers must ensure that they have the appropriate permits and comply with immigration regulations.

How to Hire Employees in Mongolia?

The hiring process in Mongolia generally follows a structured pattern, with some variations depending on the industry and company size. Here’s an overview of the typical hiring process in Mongolia:

Job Posting: The process usually begins with the company posting a job vacancy either on their website, job portals, or through local newspapers. The job posting includes details such as job title, responsibilities, qualifications required, and how to apply.
Application Submission: Interested candidates submit their applications, including their resumes (CVs) and cover letters, either through email, online application forms, or by physically delivering them to the company’s office.
Recruitment Channels: Utilize a mix of recruitment channels to attract talent, including online job portals, social media, recruitment agencies, and networking events. Additionally, word-of-mouth referrals are prevalent in Mongolia, so leveraging your professional network can be beneficial.
Local Partnerships: Building partnerships with local universities, vocational schools, and professional associations can help you access a pool of qualified candidates and establish your brand presence in the local market.
Cultural Sensitivity: Understanding and respecting Mongolian cultural norms is essential during the recruitment process. Building rapport with candidates, demonstrating cultural awareness, and showing genuine interest in the local culture can help foster positive relationships.
Language Considerations: While English is widely spoken, especially in business settings, proficiency in the Mongolian language can be advantageous, particularly when dealing with employees who may not be fluent in English.
Interview Process: Conducting thorough interviews that assess both technical skills and cultural fit is crucial. Be prepared to answer questions about your company culture, values, and long-term vision to attract top talent.
Negotiation and Offer: When extending job offers, be prepared to negotiate on salary, benefits, and other terms based on market standards and the candidate’s qualifications. Clearly communicate all aspects of the employment offer to avoid misunderstandings.

Interviewing Process in Mongolia

The interviewing process in Mongolia can vary depending on the industry, company, and position being applied for. However, there are some common practices and cultural considerations that are important to understand when preparing for a job interview in Mongolia:

Initial Screening: After receiving applications, companies may conduct an initial screening process to shortlist candidates. This may involve reviewing resumes, conducting phone interviews, or inviting candidates for preliminary meetings.
Face-to-Face Interviews: Face-to-face interviews are the norm in Mongolia, and they are typically conducted by a panel of interviewers, especially for higher-level positions. These interviews may take place at the company’s office or a designated interview location.
Language: Mongolian is the official language of Mongolia, so proficiency in Mongolian is often essential, especially for roles that require frequent communication with local clients or stakeholders. However, in some industries, such as IT or international organizations, proficiency in English or other languages may be required or preferred.
Dress Code: Dressing professionally is important in Mongolian culture, especially for interviews. Men typically wear suits or business attire, while women often opt for business suits or conservative dresses. It’s essential to present yourself neatly and professionally.
Preparation and Research: Demonstrating knowledge about the company, its culture, and the role you’re applying for is crucial. Employers appreciate candidates who have taken the time to research the company’s background, products or services, recent developments, and industry trends.
Behavioral Questions: Interviewers in Mongolia often ask behavioral questions to assess candidates’ past experiences and how they handled various situations. Be prepared to provide specific examples of challenges you’ve faced, actions you’ve taken, and the outcomes you’ve achieved.
Cultural Sensitivity: Showing respect for Mongolian culture and customs is essential during the interview process. Politeness, humility, and modesty are valued traits. It’s also common to greet interviewers with a handshake and maintain eye contact throughout the interview.
Follow-up: Sending a thank-you email or note to the interviewers after the interview is considered courteous and can leave a positive impression. It’s an opportunity to express gratitude for the opportunity and reiterate your interest in the position.

Onboarding Process in Mongolia

Designing an effective onboarding process in Mongolia requires an understanding of the local culture, work environment, and legal requirements. Here’s a general framework for an onboarding process tailored to Mongolia:

1. Pre-arrival Preparation:

Provide a comprehensive welcome package including information about the company, its mission, values, and policies. This package can be sent electronically before the employee’s first day.
Arrange for any necessary visas or work permits well in advance to avoid delays.

2. Orientation Day:

Begin the first day with a warm welcome from HR and key team members.
Provide an overview of the company’s history, organizational structure, and goals.
Introduce the new employee to their team members and key colleagues.
Review company policies, procedures, and any relevant compliance requirements.
Conduct a tour of the workplace, highlighting key areas and facilities.

3. Training and Development:

Offer job-specific training to familiarize the new employee with their role and responsibilities.
Provide training on relevant tools, software, and systems used within the company.
Offer language training if necessary, especially for employees not fluent in Mongolian.
Encourage participation in ongoing professional development opportunities.

4. Cultural Integration:

Provide cultural sensitivity training to help the new employee adapt to the local work culture and customs.
Facilitate opportunities for the new employee to socialize and build relationships with colleagues.
Encourage participation in company events and activities to foster a sense of belonging.

5. Support and Feedback:

Assign a mentor or buddy to help the new employee navigate their role and the company culture.
Schedule regular check-ins with HR or a supervisor to provide feedback and address any concerns.
Create an open-door policy where employees feel comfortable expressing their thoughts and asking for assistance.

6. Legal and Administrative Procedures:

Ensure all necessary paperwork, including employment contracts and tax forms, is completed accurately and on time.
Provide guidance on local labor laws, regulations, and employee rights.
Assist with setting up any necessary bank accounts or other administrative tasks.

7. Follow-up and Evaluation:

Conduct follow-up meetings at regular intervals to assess the new employee’s progress and address any issues that may arise.
Solicit feedback from the new employee about their onboarding experience and areas for improvement.
Make any necessary adjustments to the onboarding process based on feedback and lessons learned.

Building Successful Working Relationships

Once you’ve hired employees in Mongolia, building and maintaining successful working relationships is essential for the long-term success of your business. Here are some strategies to foster a positive work environment and promote employee engagement:

Clear Communication: Establish open lines of communication with your employees and encourage feedback. Providing regular updates on company goals, performance expectations, and any changes in the business environment helps keep everyone aligned.
Cultural Integration: Embrace Mongolian culture within your workplace by celebrating local holidays, organizing cultural events, and promoting diversity and inclusion. Encourage cross-cultural exchange among employees to foster a sense of belonging.
Training and Development: Invest in the professional development of your employees by providing training opportunities, skill-building workshops, and career advancement programs. This not only enhances employee satisfaction but also contributes to the overall growth of your business.
Recognition and Rewards: Acknowledge and reward employees for their contributions and achievements. Whether through monetary incentives, awards, or simple expressions of gratitude, recognition fosters a positive work culture and motivates employees to excel.
Work-Life Balance: Promote a healthy work-life balance by offering flexible work arrangements, promoting wellness initiatives, and encouraging employees to take time off when needed. A supportive work environment that prioritizes employee well-being leads to higher productivity and job satisfaction.
Conflict Resolution: Address conflicts and issues in the workplace promptly and constructively. Encourage open dialogue and mediation to resolve conflicts amicably and maintain positive working relationships among team members.

Types of Employment Contracts in Mongolia

In Mongolia, employment contracts can take various forms, each governed by specific regulations and tailored to meet the needs of both employers and employees. Here are some common types of employment contracts in Mongolia:

1. Fixed-Term Contracts:

These contracts are for a specific duration, with a defined start and end date. They are commonly used for temporary or project-based work. However, under Mongolian law, fixed-term contracts cannot exceed two years unless otherwise specified by law.

2. Open-Ended Contracts:

Also known as indefinite contracts, these agreements have no predetermined end date. They continue until either the employer or the employee terminates the contract according to the terms specified within it. Open-ended contracts are typical for permanent positions.

3. Part-Time Contracts:

Part-time contracts are used when an employee works fewer hours than a full-time employee. The terms of employment, including wages, benefits, and working hours, are adjusted accordingly. Part-time contracts provide flexibility for both employers and employees.

4. Seasonal Contracts:

These contracts are common in industries that experience fluctuations in demand based on seasons, such as agriculture or tourism. They specify employment during certain times of the year when work is available, with an understanding that employment may cease during off-seasons.

5. Probationary Contracts:

Probationary contracts are used to assess an employee’s suitability for a particular role during a probationary period. Typically, these contracts have a shorter duration than regular contracts, during which the employer evaluates the employee’s performance before deciding whether to offer permanent employment.

6. Remote Work Contracts:

With advancements in technology, remote work contracts have become increasingly common. These contracts outline the terms and conditions for employees who work remotely, often from home or other locations outside of the traditional workplace.

7. Project-Based Contracts:

In industries such as construction, engineering, or consulting, project-based contracts are prevalent. These contracts are structured around specific projects, outlining the scope of work, deadlines, and compensation tied to project milestones or deliverables.

8. Fixed-Term Renewal Contracts:

In some cases, fixed-term contracts may be renewed upon agreement between the employer and employee. The terms of renewal, including any changes to salary or responsibilities, should be clearly specified in the original contract or in a separate renewal agreement.

9. Collective Bargaining Agreements (CBAs):

In unionized workplaces, CBAs establish the terms and conditions of employment through negotiations between employers and labor unions. These agreements cover a range of issues, including wages, working hours, benefits, and dispute resolution mechanisms.

Work Permits and Visas in Mongolia

In Mongolia, there are several types of work permits and visas available for foreign nationals who wish to work in the country. Here are some common types:

Work Visa (Type B): This visa is issued to foreign nationals who have secured employment with a Mongolian company. The employer usually sponsors the visa application process. The duration of the visa depends on the employment contract, typically ranging from one to three years.
Work Permit: Foreign nationals who intend to work in Mongolia are required to obtain a work permit. The work permit is usually obtained by the employer on behalf of the employee and is issued by the Mongolian authorities. It is essential for legal employment in the country.
Business Visa (Type J): While not specifically a work visa, the business visa allows foreign nationals to enter Mongolia for business-related activities, including attending meetings, conferences, or exploring business opportunities. However, it does not permit the holder to engage in gainful employment.
Investor Visa (Type I): Foreign investors who plan to invest a significant amount of capital in Mongolia may apply for an investor visa. This visa allows the holder to reside and conduct business activities in the country. While it’s not a work permit per se, it enables the holder to engage in entrepreneurial activities.
Residence Permit (Type R): This permit is not strictly for work purposes but allows foreign nationals to reside in Mongolia for an extended period. However, holding a residence permit may facilitate the process of obtaining a work permit, as it demonstrates a long-term commitment to living in the country.
Volunteer Visa: Individuals participating in volunteer programs or projects in Mongolia may apply for a volunteer visa. While volunteering, individuals are not typically compensated monetarily, but they may receive other benefits such as accommodation or meals.
Specialized Visa Categories: Depending on the nature of the work or the individual’s circumstances, there may be specialized visa categories available. For example, visas for diplomats, journalists, researchers, or individuals working in specific industries may have unique requirements.

Payroll and Taxes in Mongolia

Payroll and taxes in Mongolia are governed by the country’s tax laws and regulations, which undergo periodic updates and amendments. Here’s an overview of payroll and taxes in Mongolia:

Payroll Process:

Employee Registration: Employers must register their employees with the Social Insurance General Office (SIGO) and the Tax Authority within 5 days of their employment start date.
Salary Calculation: Wages are typically calculated on a monthly basis. The salary may include base pay, allowances, bonuses, and other benefits as agreed upon in the employment contract.
Deductions: Various deductions are made from employees’ salaries, including income tax, social insurance contributions, and health insurance contributions.
Payment: Salaries are usually paid monthly, either through bank transfers or cash, as per the employer’s policies.

Taxes:

Personal Income Tax (PIT): Mongolia has a progressive tax system with tax rates ranging from 10% to 25%. Taxable income includes salaries, bonuses, allowances, and other benefits. Certain deductions and allowances are available to taxpayers to reduce their taxable income.
Social Insurance Contributions: Both employees and employers are required to contribute to the social insurance fund. The social insurance rate is typically around 22% of an employee’s salary, with the employer and employee each contributing a portion.
Health Insurance Contributions: Similar to social insurance, both employees and employers contribute to the health insurance fund. The health insurance rate is generally around 2% to 3% of an employee’s salary.
Other Taxes and Levies: Value Added Tax (VAT): Mongolia imposes VAT on the supply of goods and services at a standard rate of 10%.
Corporate Income Tax: Businesses operating in Mongolia are subject to corporate income tax at a rate of 10% to 25%, depending on the type of business and its income level.

Compliance and Reporting:

Tax Returns: Employers are responsible for withholding taxes from employees’ salaries and remitting them to the tax authorities. Employers must file various tax returns and reports, including monthly salary reports and annual tax returns.
Audits and Inspections: The tax authorities may conduct audits and inspections to ensure compliance with tax laws and regulations. Non-compliance can result in penalties and fines.
Updates and Changes: Employers need to stay updated on changes to tax laws and regulations to ensure compliance and avoid penalties.

Employee Benefits in Mongolia

Employee benefits in Mongolia can vary depending on the industry, company size, and specific employment contract. However, there are some common benefits that are typically offered to employees in Mongolia:

Social Insurance: Mongolian law mandates employers to contribute to social insurance funds on behalf of their employees. This includes contributions to pension, health, unemployment, and industrial accident insurance. Employees also make contributions to these funds from their salaries.
Paid Leave: Employees in Mongolia are entitled to paid annual leave, typically ranging from 15 to 21 days per year depending on the length of service. Additionally, there are public holidays and special leave entitlements for certain events such as weddings or funerals.
Healthcare Benefits: Employers may offer health insurance coverage as part of the employee benefits package. This can include coverage for medical expenses, hospitalization, and sometimes dental and vision care.
Retirement Benefits: Employers often provide retirement benefits in the form of a pension plan or contributions to an employee’s individual retirement account. This helps employees save for their future and ensures financial security after retirement.
Bonuses and Incentives: Many employers offer bonuses and incentives to recognize and reward employees for their hard work and achievements. These bonuses can be performance-based, profit-sharing, or discretionary.
Training and Development: Some companies invest in employee training and development programs to enhance skills and knowledge. This can include workshops, seminars, online courses, or support for further education.
Flexible Working Arrangements: In certain industries or companies, employees may have the option for flexible working hours, telecommuting, or other arrangements to help maintain work-life balance.
Transportation and Housing Allowances: In some cases, employers may provide transportation allowances or reimbursements for commuting expenses. Housing allowances or assistance with accommodation costs may also be offered, especially for employees relocating for work.
Employee Assistance Programs (EAP): EAPs provide confidential counseling and support services to employees facing personal or work-related challenges. This can include mental health counseling, legal advice, financial planning, and other resources.
Maternity and Paternity Leave: Mongolian labor law grants maternity leave to female employees and paternity leave to male employees. Maternity leave typically lasts for 120 days with full pay, while paternity leave is usually around 14 days.

Holidays and Leave Policies in Mongolia

In Mongolia, holidays and leave policies are regulated by the Labor Law of Mongolia and other relevant regulations. Here’s an overview of the types of holidays and leave policies commonly observed in Mongolia:

Public Holidays: Mongolia observes several public holidays throughout the year. These holidays are typically designated by the government and are days when most businesses, government offices, and schools are closed. Some of the major public holidays in Mongolia include Tsagaan Sar (Lunar New Year), Naadam Festival (the national festival of Mongolia), Independence Day, and New Year’s Day.
Annual Leave: Employees in Mongolia are entitled to annual leave, also known as paid vacation leave. The duration of annual leave varies depending on factors such as length of service and industry standards. Typically, employees are entitled to at least 15 to 21 days of paid annual leave per year.
Sick Leave: Employees are entitled to sick leave for medical reasons. The duration of sick leave and the conditions for taking sick leave are specified in the labor laws and employment contracts. Employers may require medical certificates or other documentation to support sick leave claims.
Maternity and Paternity Leave: Female employees are entitled to maternity leave to give birth and care for their newborn child. The duration of maternity leave is usually around 120 days, but it can vary depending on the circumstances. Male employees may also be entitled to paternity leave to care for their newborn child, though the duration is typically shorter than maternity leave.
Unpaid Leave: In certain situations, employees may request unpaid leave from their employers. This could be for personal reasons such as family emergencies or educational purposes. The conditions for granting unpaid leave may vary depending on the employer’s policies and the provisions of the labor laws.
Special Leave: Employees may be granted special leave for specific reasons such as attending religious ceremonies, participating in civil duties, or fulfilling military obligations. The duration and conditions for special leave are typically determined by the employer’s policies or relevant regulations.
Bereavement Leave: Employees may be entitled to bereavement leave in the event of the death of a close family member, such as a spouse, parent, or child. The duration of bereavement leave and the conditions for taking it may vary depending on the employer’s policies and cultural customs.

Termination of Employment Procedure in Mongolia

In Mongolia, termination of employment follows specific procedures outlined by the Labor Law of Mongolia. Here’s a general overview:

Grounds for Termination: Termination of employment can occur on various grounds, including mutual agreement, expiration of fixed-term contracts, employee resignation, employer-initiated termination, or termination due to specific reasons such as redundancy, employee misconduct, incapacity, or breach of contract.
Notice Period: Both the employer and the employee are typically required to provide advance notice before terminating the employment contract. The length of the notice period depends on factors such as the duration of employment and the reason for termination, as specified in the labor contract or relevant regulations.
Severance Pay: In cases where termination is initiated by the employer, severance pay may be required. The amount of severance pay is typically based on the length of service and other relevant factors outlined in the labor law or collective bargaining agreements.
Dismissal Procedure: If termination is due to reasons such as employee misconduct or incapacity, the employer must follow a fair dismissal procedure. This may involve providing the employee with written notice of the reasons for termination, giving them an opportunity to respond, and conducting a fair investigation before making a final decision.
Documentation: Employers are generally required to maintain proper documentation related to the termination of employment, including records of any notices provided, correspondence with the employee, and details of severance payments made.
Legal Remedies: Employees who believe they have been unfairly terminated may have recourse to legal remedies, such as filing a complaint with the relevant labor authorities or pursuing a claim through the courts.
Collective Agreements: In some cases, termination procedures may be governed by collective agreements negotiated between employers and trade unions. These agreements may specify additional requirements or procedures for termination.

What Jobs Are in Demand in Mongolia?

In Mongolia, like in many countries, the demand for certain jobs can fluctuate based on economic, social, and technological factors. Here are some sectors and specific jobs that have shown consistent demand or are expected to be in demand in Mongolia:

Mining and Resources: Mongolia is rich in natural resources, particularly coal, copper, and gold. Therefore, jobs related to mining, such as geologists, mining engineers, equipment operators, and environmental specialists, are often in demand.
Construction and Infrastructure: With ongoing development projects, especially in urban areas like Ulaanbaatar, there is a continuous need for construction workers, architects, civil engineers, project managers, and urban planners.
Tourism and Hospitality: Mongolia’s unique landscapes and cultural heritage attract tourists from around the world. Jobs in hospitality, including hotel management, tour guides, chefs, and customer service representatives, are often in demand, especially during the tourist season.
Healthcare: There is a growing demand for healthcare professionals, including doctors, nurses, pharmacists, and medical technicians, to meet the healthcare needs of Mongolia’s population.
Education and Training: As the country invests more in education, there is a demand for teachers, particularly those with expertise in English, STEM subjects (Science, Technology, Engineering, and Mathematics), and vocational training.
Information Technology (IT) and Software Development: With the global shift towards digitalization, there is an increasing demand for IT professionals, including software developers, cybersecurity experts, network administrators, and data analysts.
Finance and Banking: As Mongolia’s economy grows, there is a need for professionals in finance, accounting, banking, and investment management to support businesses and individuals in managing their finances.
Agriculture and Agribusiness: Agriculture plays a significant role in Mongolia’s economy, and there is a demand for agricultural specialists, livestock breeders, agronomists, and agricultural engineers to improve productivity and sustainability in the sector.
Environmental Conservation and Renewable Energy: With a focus on sustainable development and mitigating the impacts of climate change, there is a demand for professionals in environmental science, renewable energy, conservation biology, and sustainable resource management.
Transportation and Logistics: As Mongolia expands its transportation infrastructure and improves connectivity with neighboring countries, there is a demand for professionals in transportation management, logistics coordination, freight forwarding, and supply chain management.

Why Hiring Talents in Mongolia?

Hiring talents in Mongolia can offer several advantages for businesses looking to diversify their workforce and tap into new markets. Here are some compelling reasons why hiring talents in Mongolia could be beneficial:

Cultural Diversity: Mongolia boasts a rich cultural heritage influenced by its nomadic traditions, Buddhism, and unique customs. By hiring talents from Mongolia, companies can infuse diversity into their teams, fostering creativity, innovation, and a broader perspective in problem-solving.
Language Skills: Many Mongolian professionals are proficient in multiple languages, including English, Russian, and Chinese. This linguistic diversity can be advantageous for companies looking to expand into international markets or serve multicultural clientele.
Skilled Workforce: Mongolia has a growing pool of skilled professionals in various fields such as mining, technology, finance, and tourism. By tapping into this talent pool, businesses can access individuals with specialized knowledge and expertise, contributing to their growth and success.
Cost-Effective Labor: Compared to hiring in more developed economies, labor costs in Mongolia can be relatively lower. This cost advantage can be especially attractive for businesses seeking to optimize their operational expenses without compromising on the quality of talent.
Strategic Location: Mongolia’s strategic location between Russia and China positions it as a gateway for businesses seeking to establish a presence in the Asia-Pacific region. Hiring talents in Mongolia can provide companies with local insights and connections, facilitating smoother market entry and expansion strategies.
Innovation and Adaptability: Mongolia’s dynamic economic landscape and rapid urbanization have spurred innovation and adaptability among its workforce. Employing talents from Mongolia can inject fresh perspectives and a proactive approach to problem-solving within organizations, driving competitiveness and resilience.
Government Support: The Mongolian government has been actively promoting foreign investment and business development through various incentives and initiatives. This supportive environment can create opportunities for companies to recruit and retain top talents, backed by favorable policies and regulations.
Global Connectivity: With improving infrastructure and connectivity, Mongolia is increasingly integrated into the global economy. This connectivity enables businesses to leverage remote work arrangements, tapping into Mongolian talents regardless of geographical barriers.

The Costs of Hiring Employees in Mongolia

Hiring employees in Mongolia involves various costs, which include both direct expenses and indirect expenditures. Here are some of the key costs associated with hiring employees in Mongolia:

Salary and Benefits: The primary direct cost of hiring employees in Mongolia is their salary, which varies depending on factors such as the employee’s skill level, experience, and the industry. Additionally, employers are required to provide benefits such as social insurance, health insurance, and paid leave, which also contribute to the overall cost.
Social Insurance Contributions: Employers in Mongolia are required to contribute to social insurance funds for their employees, which cover benefits such as pensions, healthcare, and unemployment insurance. The contributions are calculated based on the employee’s salary and are typically shared between the employer and the employee.
Tax Obligations: Employers must withhold income tax from their employees’ salaries and remit it to the relevant tax authorities. The tax rates vary depending on the employee’s income level and tax residency status.
Work Permits and Visas: If hiring foreign employees, additional costs may arise from obtaining work permits and visas. Employers may need to pay application fees and fulfill other requirements set by the Mongolian government.
Recruitment and Training: Recruiting and training new employees also incur costs. This includes expenses related to advertising job vacancies, conducting interviews, and providing orientation and training to new hires.
Labor Law Compliance: Employers need to ensure compliance with labor laws and regulations, which may involve legal fees for consulting with legal experts or hiring HR professionals to ensure adherence to employment laws.
Safety and Health Regulations: Employers are obligated to provide a safe working environment for their employees and comply with health and safety regulations. This may involve investing in safety equipment, training programs, and periodic inspections to ensure workplace safety.
Severance Pay and Termination Costs: In the event of employee termination, employers may be required to provide severance pay in accordance with labor laws. Additionally, there may be costs associated with legal procedures or settlements related to employment disputes.
Employee Benefits and Perks: In addition to mandated benefits, some employers offer additional perks such as bonuses, transportation allowances, or meal subsidies to attract and retain talent. These benefits contribute to the overall cost of hiring employees.
Administrative Overheads: Employers incur administrative costs related to payroll processing, maintaining employee records, and fulfilling reporting requirements to government agencies.

How to Use an Employer of Record (EOR) in Mongolia?

Using an Employer of Record (EOR) in Mongolia can be a strategic decision for businesses looking to expand their operations into the country without establishing a legal entity. Here’s a guide on how to effectively utilize an EOR in Mongolia:

Firstly, identify your business needs and goals in Mongolia. Determine whether you require a temporary presence for a specific project or if you’re looking to establish a more permanent foothold in the market. Understanding your objectives will help you choose the right EOR service provider.

Once you’ve selected an EOR, it’s essential to communicate your requirements clearly. Provide detailed information about the roles you need to fill, the duration of employment, and any specific compliance regulations you must adhere to in Mongolia. Transparency is key to ensuring smooth collaboration between your company and the EOR.

Work closely with the EOR to onboard employees effectively. Provide necessary documentation and information to facilitate the hiring process. This includes contracts, job descriptions, and any relevant legal or tax forms required by Mongolian authorities.

Collaborate with the EOR to manage payroll and benefits for your employees in Mongolia. Ensure that they are compensated fairly and in compliance with local labor laws. The EOR will handle tax withholding, social security contributions, and other payroll-related tasks on your behalf.

Maintain open communication with the EOR throughout the employment period. Address any issues or concerns promptly to avoid disruptions to your business operations. Regularly review the performance of the EOR and provide feedback to ensure continuous improvement.

Finally, stay informed about changes in labor regulations and compliance requirements in Mongolia. The EOR should keep you updated on any developments that may impact your business activities. By staying proactive and engaged, you can maximize the benefits of using an EOR in Mongolia while mitigating potential risks.

Read More Hiring Guides: