Synergy Partners Law Firm LLC

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