Synergy Partners Law Firm LLC | View firm profile
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