Kazakhstan

Nurzhan Stamkulov, Ali Dautalinov, Assem Zhaksylykbayeva Lawyers, Synergy Partners Law Firm LLC In this article we prepared an overview of the regulations related to executive body dismissal in limited liability company in Kazakhstan. This issue combines two practice areas: employment legislation and corporate legislation. Kazakhstan employment legislation Article 52.23 of Kazakhstan Employment Code stipulates that an employer may terminate the employment agreement in unilateral manner with an executive body of a company in compliance with corporate legislation. Kazakhstan corporate legislation In accordance with article 43.2.2 of the Act on limited liabilities companies[1] a sole shareholder or general meetings of shareholders of a company could terminate employment agreement with the executive body on any date without any conditions. The executive body could be named in any manner: director, president, general manager or chief executive officer[2]. In dismissal procedure of a CEO, following questions arise: How does an employer should do properly in order to dismiss a director or CEO? What are mandatory compensations an employer must pay during dismissal procedure? What is the methodology or rules for paid compensation during dismissal procedure? Based on our practice, we will provide short answers to these questions. Please note that during executive body dismissal procedure corporate law provisions will be prevail, while an employment law practice should be additional procedural regulations. CEO's dismissal procedure A company may terminate an employment agreement with CEO and replace the CEO at any time. To do so, a company shall issue the following documents: a general meeting of Shareholders / a Sole Shareholder’s resolution on the dismissal of the CEO. a notice of termination to an employee. an order for termination of the employment agreement. In accordance with article 61.3 Kazakhstan Employment Code an employer gives an employee a copy of the dismissal order or sends it by email within three business days from the date of such order has been issued. Mandatory compensation for unused days of annual paid leave for any employee dismissal According to article 96.2 of Kazakhstan Employment Code, once an employment agreement is terminated, an employer must pay compensation to an employee for any unused days of annual paid leave. If an employee has fully used annual paid leave, no compensation will be paid by an employer at the date of termination of an employment agreement. Calculation of compensation for unused days of CEO’s annual paid leave Please note that amount of compensation for unused annual paid leave must be calculated in accordance with the following acts: Rules for calculating average salary[3] (hereinafter – the Rules); and Methodological recommendations for calculating average salary[4] (hereinafter – the Methodology). The compensation shall be based on an employee’s average daily salary[5]. Period for calculating a CEO’s average salary is 12 months. According to article 114.2 of Kazakhstan Employment Code and articles 2.2 of the Rules, the average salary must be calculated based on the previous 12 calendar months. Any paid bonuses shall be included in a CEO’s average salary calculation An employee’s average salary calculation must include a fixed salary and bonuses for work results[6]. Financial assistance, health improvement and treatment allowance, payments not related to work results should not be included in the employee’s average salary calculation[7]. CEO’s annual paid leave days Kazakhstan Employment Code stipulates 24 calendar days for annual paid leave[8]. But Kazakhstan Employment Code also allows an employer to grant additional days for annual paid leave. If there were no acts or resolutions on additional leave days, a CEO has standard 24 days of annual paid leave. CEO’s average daily salary According to article 8 of the Rules, an employee’s average daily salary is equal to the sum of fixed salary and bonuses for the last 12 months divided by working days for the last 12 months. For example, a CEO earned 250,000 Euro over the past 12 months (including bonuses). There were 246 business days from January 2024 to January 2025. In this case a CEO’s average daily salary will be about 1,016 Euro (= 250,000 Euro / 246 business days). Compensation for unused annual paid leave According to articles 15 and 7 of the Rules, compensation for unused annual paid leave is calculated by multiplying an employee’s average daily salary to the number of working days while unused days goes by after dismissal. For example, a CEO used 10 days out of 24 of annual paid leave. This means a CEO must receive compensation for the 14 unused days of annual paid leave. In this example, compensation for unused annual paid leave will be 14,224 Euro (= 1,016 Euro * 14 business days). Compensation for a CEO dismissal stipulated by Kazakhstan Employment Code Kazakhstan Employment Code doesn’t specify any compensation for the CEO dismissal. However, Kazakhstan Employment Code says that an employment agreement could have any provisions stipulated by parties regarding compensations. We recommend checking provisions of each employment agreement for any obligations related to compensation due to early termination. If a company has other acts, policies, internal regulations, we recommend checking them also. [1] Article 43.2.2 of the Act on limited liabilities companies dated April 22, 1998 No. 220-I [2] Article 51.1 of the Act on limited liabilities companies dated April 22, 1998 No. 220-I [3] Unified rules for calculating average salary approved by Order of the Minister of Health and Social Development of the Republic of Kazakhstan dated November 30, 2015, No. 908. [4] Methodological recommendations on the application of the Uniform Rules for calculating the average salary, approved by the Order of the Minister of Health and Social Development of the Republic of Kazakhstan dated November 30, 2015 No. 908 Approved by the Vice Minister of Health and Social Development of the Republic of Kazakhstan Nurymbetov B.B. on February 25, 2016 [5] Artilce 96.2 of Kazakhstan Employment Code, Articles 15 and 7 of the Rules [6] Article 6 and 14 of the Rules [7] Article 6 of the Rules and Appendix to the Rules [8] Article 88 of Kazakhstan Employment Code

Kazakhstan employment regulations on maternity leave Nurzhan Stamkulov, Ali Dautalinov, Assem Zhaksylykbayeva Lawyers, Synergy Partners Law Firm LLC Kazakhstan employment regulations provide for:    a) mandatory maternity leave by law;      and b) optional unpaid leave to care for a child until the child reaches the age of 3. For employers it is important to consider the duration of maternity leave granted to employees and calculations of payments. In this article, we tried to cover answers to questions related to maternity leave and unpaid leave. The duration of maternity leave granted to employees by law In accordance with article 99.1 of Kazakh Employment code a pregnant woman applies for maternity leave by submitting a medical certificate indicating the starting date when a woman will not attend the office/place of job. The law allows women to take leave and not visit place of job not only before childbirth, but also after the childbirth with guaranteed minimum days. The duration of maternity leave depends medical conditions of a woman. For convenience, please see the table for duration of maternity leave. Situations for maternity leave   Minimum days when a woman will have leave during pregnancy   Minimum days when a woman will have leave after a childbirth Usual situation for a woman 70 days 56 days A situation where a woman has complicated childbirth or the birth of 2 or more children 70 days 70 days A situation where a woman was born or lived in nuclear contaminated area 91 days 79 days A situation where a woman was born or lived in nuclear contaminated area — complicated childbirth or the birth of 2 or more children 91 days 93 days If a woman has early childbirth on 22-29 weeks from the pregnancy date and a child is born with a body weight of 500 grams or more and if a child has been lived more than 7 days The law does not provide leave. In practice the employer provides unpaid leave for days required to recover based on medical prescriptions or medical recommendations 70 days 93 days for woman was born or lived in nuclear polluted area 56 days, if a child lived less than 7 days   An employer must consider all relevant facts and medical conditions of the pregnancy when calculating the total duration of maternity leave. We recommend asking the pregnant employee for the necessary details. Due to outdated legal provisions and limited social coverage for maternity leave, in practice most companies try to continue paying a woman the same salary during pregnancy and for six months after the child’s birth. State social payments are made to pregnant women starting from the seventh month of pregnancy, as well as childcare payments until the child reaches 1.5 years of age. In practice, these amounts are very low, and employers often provide additional payments to bring the employee’s income closer to her regular monthly salary. Employee’s payments during maternity leave Please note that Kazakhstan employment law regulations indicate that an employer is free of any obligations to pay salary during maternity leave, unless it is stipulated by an employment agreement. In accordance with Article 99.4 of the Kazakhstan Employment Code, an employer may provide payment for maternity leave if this is stipulated in the employment contract, collective agreement, or the company’s internal policies. Usually in standard employment agreements there are no provisions related to any additional payments or an employers’ obligations to pay during maternity leave. State payments during maternity leave During maternity leave, Kazakhstan state authorities will pay social payments to a woman in maternity leave during such 4 month that is about and rounded to average monthly salary calculated in accordance with Rules for calculating average salary[1]. The article 77.1 of the Kazakhstan Social Code stipulates that female individual must receive state payments from the State Social Insurance Fund (SSIF) or payments from the state during the maternity leave in any cases. This means an employee in case of maternity and pregnancy must receive social payments from state SSIF in any case. State social payments are calculated according to Rules for calculating the social benefits in connection with pregnancy and childbirth[2]. We recommend skipping details on any state social payments, as it is a state obligation. Additional social payment regarding maternity leave In practice many companies try not only to follow employment law standards, but instead try to cover and pay additional payments related to maternity leave: an employer allows women to take maternity leave from the 4 months of pregnancy. although a woman receives social payments during maternity leave, an employer during a woman’s pregnancy pays the same average monthly salary from 4 months before childbirth and 6 months after a childbirth. It is important to note, that Employment regulations set only minimum guarantees, that could not be lower that state standards. However, an employer could apply any higher standards and pay more by its own discretion. This approach requires that an employer will issue special order, and any amendments to an employment agreement are not required.  An employee must read such order and sign that she is informed about such order. These steps are sufficient, enough for an employer. In practice, we recommend considering medical conditions on pregnancy, medical history and records and other facts of the woman who gave birth or in the pregnancy period. [1] Unified rules for calculating average salary approved by Order of the Minister of Health and Social Development of the Republic of Kazakhstan dated November 30, 2015, No. 908. [2] Rules for calculating the social benefits in connection with pregnancy and childbirth, approved by the Order of the Deputy Prime Minister - Minister of Labor and Social Protection of the Population of the Republic of Kazakhstan dated June 27, 2023, No. 248

Draft Law of the Republic of Kazakhstan "On Artificial Intelligence" – Principles of Regulation and Practical Aspects This article is dedicated to the analysis of the provisions of Kazakhstan’s Draft Law “On Artificial Intelligence” (hereinafter – “Draft Law”) and its comparison with international approaches to the regulation of this technology. The Draft Law was approved by the Mazhilis (Chamber of the Parliament of the Republic of Kazakhstan exercising legislative functions) in its first reading on May 14, 2025. There is no need to prove the growing significance of artificial intelligence (AI) systems and their active integration into the daily lives of internet users and private businesses around the world, including Kazakhstan. AI is rapidly becoming an integral part of digital technologies, and its widespread use raises a number of ethical, technological, and legal challenges. All of this underscores the need for clear legal regulation to protect citizens and ensure sustainable technological development. In view of this, legislators and government bodies around the world, including those in Kazakhstan, have begun developing approaches to the regulatory governance of AI technologies. International Practice of Legal Regulation of Artificial Intelligence The first regulatory act of its kind aimed at governing the development and use of artificial intelligence systems was the Regulation of the European Parliament and of the Council laying down harmonised rules on artificial intelligence (Artificial Intelligence Act) and amending certain Union legislative acts (hereinafter – the “AI Act”), which was adopted by the European Parliament on 13 March 2024 and by the Council of the EU on 21 May 2024. The AI Act has, in part, served as a foundation for the Kazakh Draft Law. For instance, the AI Act introduced the first legal definitions of an artificial intelligence system (hereinafter – “AI system”), its users, developers, and other actors involved in the creation, distribution, and use of AI systems. Furthermore, the AI Act classifies the levels of risk associated with AI applications and identifies practices deemed unacceptable due to their excessive risk level, which are completely prohibited within the European Union. Examples include manipulating human behaviour to influence decision-making, exploiting individuals’ vulnerabilities, social profiling to predict criminal behaviour, creating facial recognition databases without consent, and using AI to detect emotions in the workplace or educational settings, among others. Such systems may not be placed on the EU market. In addition, the AI Act requires pre-market conformity assessments of AI systems and post-market monitoring. These provisions have had a notable influence on the content of the Kazakh Draft Law. It is worth noting that the EU document clearly distinguishes between personal use of AI and its professional application, distinctions that are not present in the Kazakh Draft Law, which may, in our view, complicate its practical implementation. Key Elements of AI Regulation in the Draft Law of the Republic of Kazakhstan The Kazakh Draft Law consists of 28 articles and includes general provisions that define key terms, goals, and principles for regulating public relations in the field of artificial intelligence. The Draft also sets out the framework for state governance, regulation, and support in the AI sphere, outlines the rights and obligations of the parties involved, and introduces a classification of AI systems by risk level along with corresponding risk management procedures. The Draft defines artificial intelligence as an information and communication technology that imitates or exceeds human cognitive functions for the purpose of performing intellectual tasks and finding solutions. An AI system is defined as an informatization object that operates based on AI. A generative AI system is described as a system that creates synthetic content, including alteration of biometric data (such as voice, face, video, and movement) and distortion of reality. Meanwhile, the sole definition provided for an AI system user refers to a person who uses the system either to carry out a specific task or to make use of its results. Other key participants in the AI systems market, as defined by the Draft Law, are the owners and holders of such systems. The text of the Draft Law does not distinguish between these two categories, but it does establish their rights and obligations. There is also no definition of AI system developers or any potential requirements for them, although the mechanisms provided by the Draft Law, including the creation of data libraries for AI training, imply that AI systems will be developed and tested within the territory of the Republic of Kazakhstan. Owners and holders of AI systems have the right to set conditions for their use and to protect their rights. They are obligated to manage risks, ensure the security and reliability of the systems (including protection against malfunctions and unauthorized access), maintain documentation depending on the level of impact the AI system has on the safety, rights, and interests of citizens, society, and the state, provide user support, and disclose information about the system’s operating principles and the user data it utilizes. At the same time, users of AI systems have the right to receive information about how the AI operates and what data is used, to protect their personal and confidential information, and to take measures to safeguard their intellectual property rights over content created with the use of AI. They are also required to use the systems within their authorized access rights and to comply with the established rules and safety measures. The Draft Law also defines the role of the state in public relations within the field of artificial intelligence. It establishes a central executive (authorized) body responsible for leadership and cross-sectoral coordination in the AI domain. This authorized body develops and implements state policy on artificial intelligence, coordinates activities across industries, drafts and approves regulatory legal acts, and proposes measures to improve legislation. In addition, it approves the list of required documentation and the criteria for classifying objects as AI systems, identifies priority sectors of the economy for AI implementation in collaboration with other government agencies, and performs other functions as prescribed by law. One of the key innovations of the Draft Law is the introduction of the National AI Platform and its Operator. The National AI Platform is a technological platform intended for the collection, processing, storage, and distribution of data libraries (grouped datasets, although the Draft Law does not specify which ones exactly) and the provision of services in the field of artificial intelligence. Its operator is a legal entity designated by the Government of the Republic of Kazakhstan, which ensures the development and functioning of the platform, provides technical support, offers AI services, and collects, processes, and stores data libraries in accordance with the requirements established by the Government. At the same time, the National AI Platform offers a controlled environment for the development, training, and pilot operation of AI systems. The procedure for interaction between the platform operator and users of these services is to be established by the authorized body, however, such a procedure has not yet been defined. Data owners and holders are also entitled to freely use and distribute their data, subject to the restrictions established by the legislation of the Republic of Kazakhstan. The training of AI systems in Kazakhstan will be carried out based on data libraries provided for lawful and pre-defined purposes. The creation and provision of such libraries must comply with data governance requirements approved by the Government. Data library owners and holders are obliged to ensure the quality of the data libraries they provide and to define the terms and procedures for access to them. They are also entitled to freely create, use, and distribute data libraries in compliance with the law and to monitor their use for training AI systems within the declared purposes and conditions. Other state authorities, in addition to the authorized body, participate in the implementation of state policy in the field of artificial intelligence, provide the operator of the National AI Platform with access to data, and form data libraries in accordance with data governance requirements approved by the Government, although such requirements have not yet been developed. In addition, state authorities exercise other powers as provided by law. As for the legal framework, artificial intelligence systems are classified by risk level: minimal risk - their failure or shutdown has little impact on users; medium risk - may reduce operational efficiency and cause material damage; high risk - may lead to emergencies or have serious consequences for security, economy, defense, international relations, and the livelihood of citizens. AI systems are also classified according to the degree of independence in decision-making and the extent of their impact on users into the following categories: assistive systems, where artificial intelligence supports the user and final decisions are made solely by the user, semi-autonomous systems, where the owner or user is granted limited rights for automated decision-making within predefined parameters, while the person granting these rights may intervene in the decision-making process or alter the outcomes of the system's operation, and fully autonomous systems, which make decisions independently of predefined parameters and cannot be controlled by the system’s owner. Furthermore, Article 18 of the Draft Law, in alignment with the AI Act, establishes a complete ban in the Republic of Kazakhstan on the creation and placing on the market of AI systems with the following functions: the use of subconscious, manipulative, or other methods that significantly distort an individual’s behavior, limit their ability to make informed decisions, or force decisions that may cause harm or pose a threat to life, health, property, or otherwise negatively affect the individual; the exploitation of a person’s moral and/or physical vulnerability due to age, disability, social status, or any other circumstances, with the intent to cause or threaten harm; the evaluation and classification of individuals or groups over a certain period based on their social behavior or known, presumed, or predicted personal characteristics, except in cases provided for by the laws of the Republic of Kazakhstan; the creation or expansion of databases for personal data subject recognition through untargeted extraction of personal data, including facial images, from the Internet or video surveillance footage; the classification of individuals based on their biometric data to draw conclusions about their race, political views, religious affiliation, or other attributes for the purpose of any form of discrimination; the detection of a person’s emotions without their consent, except as permitted by the laws of the Republic of Kazakhstan; remote real-time biometric identification of individuals in public places, unless otherwise provided by the laws of the Republic of Kazakhstan; the creation and dissemination of outputs of AI systems that are prohibited under the laws of the Republic of Kazakhstan. At the same time, the draft law does not establish specific criteria for implementing the listed prohibitions, which creates legal uncertainty. Many AI systems already in use in the Republic of Kazakhstan partially possess the listed functions, and it remains unclear whether they will be banned or allowed for use. The draft law provides the following risk management mechanisms: identification and analysis of known and foreseeable risks when using an AI system for its intended purpose, risk assessment for both intended and reasonably foreseeable unintended use, and the implementation of risk management measures aimed at preventing and eliminating such risks. If there is a risk of circumstances arising as outlined in Article 18, the owners and holders of AI systems must take measures to minimize harm and protect the interests of citizens and society, including by suspending or completely ceasing the operation of the AI system. Practical Application of the Draft Law’s Provisions and Comparison with the AI Act The provisions of the Draft Law do not clearly explain how the risk management mechanism for AI systems and control over compliance with established requirements should function in practice, and most of its norms are largely declarative in nature. In comparison, the European Union’s AI Act provides a comprehensive set of regulatory mechanisms for high-risk AI systems. For instance, it includes an obligation to maintain technical documentation containing a description of the AI system’s purpose, its architecture, interaction with hardware and software components, cybersecurity measures, as well as detailed information on the data used, its origin, characteristics, methods of collection and cleansing, labeling, and processing methodologies. Furthermore, AI Act sets out requirements for managing high-risk systems, such as establishing necessary infrastructure, hiring, and managing personnel, the activities of law enforcement agencies, and more. There are also requirements regarding the data used to train and test AI systems, including the need for a data quality plan covering parameters such as accuracy, completeness, compliance with standards, integrity, and relevance. Moreover, even within the European Union, the adoption of the AI Act raised concerns regarding the practical implementation of some of its provisions. A number of Member States and international organizations expressed concern over the pace of the law’s development, pointing to the insufficient elaboration of certain norms. After the Act was adopted, businesses began to face delays in the issuance of the necessary guidance documents, which are essential for the effective implementation of its requirements. Since 2021, the European Commission has faced increasing pressure from the industry calling for a reconsideration of the regulatory approach, including the easing of requirements or even abandoning the Act altogether. The main concerns relate to the potential obstacles to innovation, especially due to the uncertainty in applying strict requirements and the high compliance burden for smaller companies.[1] The Kazakh Draft Law sets out a basic regulatory framework for artificial intelligence systems, including the distribution of roles and responsibilities among stakeholders. In practice, the implementation of the provisions of the Draft Law appears challenging without subsequent regulatory detailing. Many provisions require clarification, which may complicate the application of the norms and lead to discrepancies in law enforcement. Given this, it can be assumed that effective application of the norms will only be possible with active development of secondary legislation and the creation of necessary technical standards. [1] The European Commission considers pause on AI Act’s entry into application, 4 июня 2025 https://www.dlapiper.com/en/insights/publications/ai-outlook/2025/the-european-commission-considers-pause-on-ai-act-entry-into-application