Labor Law: Employers Will Welcome Proposed Changes To The Labor Code

The Ministry of Healthcare and Social Development of the Republic of Kazakhstan developed a new draft Labor Code of the Republic of Kazakhstan. In addition to other novelties, a number of proposed amendments to the labor legislation should benefit the rights and interests of employers. The draft Labor Code is expected to be shortly passed to the Majilis of the Parliament of the Republic of Kazakhstan. Please find below the most significant, in our view, proposed amendments to the labor legislation.

Non-competition clause

In contrast with the current Labor Code of the Republic of Kazakhstan (the "Current Code"), the draft new Labor Code of the Republic of Kazakhstan (the "Draft Code") provides for the possibility of inclusion into an employment contract, an obligation on an employee not to engage in activities which may cause direct or indirect damage to the employer (the "non-competition clause"). If a non-competition clause is included in an employment agreement, compensation for the employee should be established for the entire period of such non-competition clause. If the employee breaches the non-competition clause, causing damage to the employer, the employer may claim compensation of its losses and the employee must compensate all or a part of such losses in accordance with the terms of the employment agreement.

According to the Draft Code, the breach by an employee of the non-competition clause may also become one of the grounds for termination of an employment agreement at the initiative of an employer.

Validity of an employment agreement

According to the Draft Code, upon the expiry of an employment agreement, the parties may extend it for an indefinite or definite period of at least one (1) year. For comparison, the Current Code provides for the possibility to extend an employment agreement only for an indefinite period (except for certain cases).

In accordance with the Draft Code, if by the moment of expiry of an employment agreement neither party gives a written notice on termination of the labor relations within the last working day (shift), the agreement will be deemed extended for the same period for which it was earlier concluded. At present, the Current Code provides for the extension of such employment agreement only for an indefinite period in such situation.

Also, the Draft Code states that if no validity period is established in an employment agreement, the agreement will be deemed concluded for one (1) year, while under the Current Code, an employment agreement is deemed concluded for an indefinite period in such situation.

Probation Period

As under the Current Code, the Draft Code provides that a probation period may not exceed three (3) months. However, the Draft Code permits extension of the probation period for chief executive officers of organizations and their deputies, chief accountants and their deputies, heads of branches and representative offices up to six (6) months.

Secondment

The Draft Code introduces a new clause...