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Revised Labour Law and its impact on business and payroll compliance

Mongolia • No. 04 /2021 • September 2021

The revised Labour Law (the “New Labour Law”) was adopted on 2 July 2021 and will come into force next year. The proposal for revising the Labour Law was submitted to the Parliament on March 28, 2018. Furthermore, there had been huge expectations of the revised Labour Law, which replaced the current law after 22 years. With this Tax and Legal Alert, we highlight the key changes in the New Labour Law and its impact on business and payroll calculations.

Application

The New Labour Law will come into force on 1 January 2022. An employment agreement concluded prior to the adoption of the New Labour Law shall be valid for a period agreed upon by the parties. However, if the employment agreement is amended in accordance with the New Labour Law, the legal status and labour conditions of the employee should not be deteriorated.

Key changes

1. Base salary of employees during the probation and apprenticeship period

2. Allowance during a non-compete period

3. Employment deemed to be continuous while employees on a leave

4. Extra pay for night works

5. Annual leave loading

6. Severance pay

7. Limitations on work hours

8. Shift-works

9. On-call schedule

10. Roster shifts

11. Employers’ obligation to provide pay slips to employees

12. Employees’ obligation to pay back study costs

13. Reimbursement for employees who use personal tools and items for work

14. Paternity leave

15. Employing a person with disabilities

Further actions to be taken

Employers are recommended to take the following measures in relation to the New Labour Law:

  • Update/amend/renew key employment documents such as employment contracts and labor/HR policies/manuals;
  • Develop/update an employee data protection policy; 
  • Conduct a payroll cost analysis to see impact and budgeting for 2021 and onwards.

Contact us

Tsendmaa Choijamts

Director, Tax and Legal services, PwC Mongolia

Tel: +976 70009089

Maryna Tarnavska

Senior Manager, Tax and Legal services, PwC Mongolia

Tel: +976 70009089

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