Kazakhstan: New Work Permit Rules: Step Forward Or Step Back?

Work Permit Rules have been under discussion for a long time, and their publication on October 6 in the electronic data base was not a surprise. However, what was a surprise is that apparently they were adopted by the Order of the acting RK Minister of Healthcare and Social Protection No. 559 on 27 June 2016. It is not clear why the Rules have remained unpublished for so long. We can only guess that the reason could be  the fact that the recent legislative change shifting authority to adopt such rules from the Government to the Ministry will enter into force only on 1 January 2017. It is yet to be seen how exactly the authorities will justify this discrepancy.

The new work permit rules1 (New Work Permit Rules) will become effective starting from 1 January 2017.

The New Work Permit Rules envisage two types of work permits to be issued to employers:

  • Work permit for attracting foreign labor force (i.e. so-called 'general regime'); and
  • Work permit for employment under "inter-corporate transfer."

Self-employment of foreign nationals will be regulated by separate rules.

Major features of the New Work Permit Rules

1. Unlike the currently effective rules, the New Work Permit Rules do not contain a list of exemptions. Such list is provided by the law2 which will provide for a substantially revised list of exemptions (New List of Exemptions), compared to the one provided under the currently effective rules. For instance, and most importantly, the New List of Exemptions will not include, inter alia, heads of branches and representative offices of foreign legal entities.

Since the New Work Permit Rules do not envisage a transition period, it is not clear whether currently employed heads of branches and representative offices of foreign legal entities who are not nationals of Kazakhstan and the Eurasian Economic Union should receive work permits immediately once the New Work Permit Rules will come into effect.

2. Ratio of local personnel3 against foreign personnel as provided under the currently effective rules will remain the same. In particular, the following ratio will apply:

  • Ratio applicable to foreign employees attracted under 'general regime' is 70% of local personnel for the 1st and the 2nd categories, and 90% for the 3rd and the 4th categories.
  • In case of inter-corporate transfer, foreign managers and specialists may not exceed 50% of the local personnel of the same level.

In other words, the New Work Permit Rules do not require hiring more local personnel than required under the currently effective rules.

An important helpful change for the purposes of calculating the ratio is that the New Work Permit Rules expressly provide that nationals of state-members of the Eurasian Economic Union (i.e. Russia, Belorussia, Armenia and Kyrgyzstan) will not be counted as foreign employees for the purpose of calculating the local content in personnel. This means that nationals of these states will be counted as Kazakh nationals for the purposes of the ratio calculation.

Work permits to be issued under 'general regime'

The most significant amendments introduced by the Work Permit Rules into the 'general regime' include:

  • Introduction of new state fee for issuance and (or) extension of work permits. Amount of new state fee will vary depending on type of economic activity (by industries) and category of foreign employees (ranging from approximately US$154 to US$1,500).
  • Abolishing the requirement to make a guarantee fee deposit to ensure departure of a foreign employee upon expiration of relevant work permit.
  • Abolishing special conditions that currently could be imposed on an employer attracting foreign labor force as conditions for obtaining a work permit (e.g. training of local personnel, creation of vacancies, etc.).
  • Abolishment the requirement to conduct a search for candidates on the internal market prior to the application for issuance of a work permit.
  • Change of the term of a work permit for the 1st category (directors and deputy directors). Now the maximum term of a work permit will be decreased from three years to 12 months with possible extensions.
  • Change of the term of a work permit for the 2nd and 3rd categories (medium level managers and specialists). The maximum number of extensions of work permits for these categories of foreign employees will increase from two to three extensions.
  • Change of the term for issuance of work permits. The competent authority will have seven business days (but not 15 as provided under the currently effective rules) for making a decision to issue or refuse a work permit.

Work permits to be issued for inter-corporate transfer

The most significant amendments introduced by the New Work Permit Rules in relation to the procedure of issuance of work permits for inter-corporate transfer include:

  • Introduction of a new condition for issuance of work permits of this category i.e. exam on knowledge of the state (i.e. Kazakh) language. A foreign employee will be required to pass an exam on knowledge of Kazakh language at elementary level to be certified by the local competent authority.
  • Clarification of the procedure for  searching for candidates on the internal market. This requirement (to conduct search) will be effective until 1 January 2021.
  • Possibility to provide a letter or an agreement on inter-corporate transfer (instead of a labor agreement) to the competent authority for the purpose of determining the term of a work permit.

There are some other changes envisaged in the New Work Permit Rules. The New Work Permit Rules contain a number of discrepancies/inconsistencies and ambiguities vis-à-vis other legal acts. Thus, further collaboration with the RK Government/competent authority on rectification of such discrepancies/inconsistencies is needed.

Dentons will actively participate in bringing the problematic issues of the New Work Permit Rules to the attention of the Government with the aim of adopting the necessary amendments and clarifications.  We will keep you posted on the progress.

Footnotes

1. Rules and Conditions of Issue and (or) Extension of Permits to Employer for Attraction of Foreign Labor Force as well as Inter-Corporate Transfer.

2. RK Law on Occupancy of Population dated 6 April 2016 effective as of 1 January 2017.

3. Reference is made to nationals of the Republic of Kazakhstan

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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