Final settlement on dismissal: what must be paid under the Labour Code of Kazakhstan

People usually come with a question about the final settlement on dismissal after receiving less than expected, or nothing at all. The employee does not understand what payments they are entitled to under the Labour Code of Kazakhstan, what was deducted and on what basis. The employer, in turn, wants to be sure they have properly discharged their obligations to the employee and without the risk of a dispute.

The article covers what the final settlement on dismissal consists of, how the payments relate to the ground for ending the contract, and by what deadline the money must be paid. It separately considers compensation for unused holiday, the treatment of bonuses, allowances and sick pay, as well as deductions. At the end — what to do if the amount is understated or delayed, and how to challenge the settlement.

Final settlement on dismissal: what payments are due under the Labour Code of Kazakhstan

Employment relations in Kazakhstan are governed by the Labour Code of Kazakhstan of 2015. It determines what the final settlement on dismissal consists of: the employer must settle in full with the employee no later than three working days after the employment contract ends.

What payments are due on dismissal depends on the ground for terminating the contract and the time actually worked. Some amounts are universal, while others arise only on certain grounds. Pay for the period worked is retained regardless of the reason for dismissal, if the work has been done. Compensation is due for unused days of paid holiday. Certain grounds give the right to severance pay and other payments under the contract or an act of the employer.

• wages for the time actually worked up to the day of dismissal;
• compensation for unused paid leave;
• severance pay in cases expressly provided for by the Labour Code of the Republic of Kazakhstan or the employment contract;
• additional payments, allowances and bonuses accrued under the terms of the contract;
• amounts due under a collective agreement or an act of the employer;
• other payments provided for by agreement of the parties upon termination of the employment contract.

What is included in the final settlement upon dismissal: salary, compensation and deductions

Upon termination of an employment contract, the employee receives the payments due as at the date of dismissal. Their composition depends on the ground for termination of the contract and the time actually worked. The payment deadlines are established by Article 113 of the Labour Code of the Republic of Kazakhstan. Payments are made no later than three working days after termination of the contract.

A mandatory part of the settlement is wages for the time worked, including additional payments, allowances and bonuses under the remuneration system. Compensation for unused leave is calculated separately: for all days of basic and additional paid leave that the employee has not taken. Compensation for unused leave is paid on any ground for termination of the employment contract.

• wages for the time actually worked, with additional payments and bonuses
• compensation for unused basic paid leave
• compensation for unused additional paid leave
• other compensatory payments expressly provided for by the Labour Code of the Republic of Kazakhstan or the employment contract
• deduction from the accrued amounts of individual income tax, mandatory pension contributions and contributions to the compulsory social health insurance
• deductions under enforcement documents and compensation for damage within the limits permitted by the Labour Code of the Republic of Kazakhstan

Table of payments: final settlement on various grounds for dismissal

The ground for dismissal determines the set of payments. Under the Labour Code of the Republic of Kazakhstan, on any ground the employer must pay wages for the days actually worked and compensation for unused days of paid annual leave. The remaining amounts depend on the ground for termination of the employment contract.

By agreement of the parties, the terms set out in the agreement are added to the mandatory amounts. In the case of a reduction in the number or staff — compensation in connection with loss of employment in the amount established by the Labour Code of the Republic of Kazakhstan. Upon dismissal at the employer's initiative for culpable acts — only the mandatory amounts.

A dispute over the amounts is first considered by a conciliation commission, if one has been established at the employer; if there is no commission or the dispute is not resolved — by a court.

Additional payments depend on how the ground is worded in the employment contract and in the employer's act.

Payment on dismissal: payment deadlines and the day of issue

The Labour Code of the Republic of Kazakhstan of 2015 determines when monetary obligations to the employee are closed. The general rule: the amounts due are paid no later than three working days after termination of the employment contract; the employer has no right to delay payment beyond that period.

The period runs from termination of the employment contract, not from the employee's last shift.

The employee's absence on the day of dismissal does not change the period. It is not permissible to delay the period or to make payment conditional on the return of property, the handover of a pass or internal procedures.

• The employee has submitted a written demand for payment — this records the breach, but the payment period remains the same: three working days after termination of the contract.
• The employee was absent on the day of dismissal — the money is still transferred within the three-day period, as a rule to a card account.
• The day of dismissal falls on a weekend or public holiday — the three working days are counted excluding weekends and public holidays.
• The employee refused to receive the payment — a statement is drawn up, and the amounts are deposited until the employee applies for them.
• A dispute over the amount of the payment — the employer is obliged to pay the undisputed part within the established time limit.
• A delay in the final settlement — grounds for claiming a penalty for each day of delay.

How compensation for unused leave is calculated upon dismissal

Compensation for unused leave upon dismissal is calculated on the basis of the average daily earnings and the number of leave days not taken by the time the employment contract is terminated. The procedure is set out in the Labour Code of the Republic of Kazakhstan and applies upon dismissal at the employee's initiative, by agreement of the parties, or at the employer's initiative.

Average daily earnings are determined for the calculation period preceding the month of dismissal. It includes payments related to work: salary, additional payments, allowances, and bonuses provided for by the remuneration system. Payments not related to remuneration, and amounts for periods when the employee did not actually work, are not included in the calculation.

• Determine the calculation period preceding the month of dismissal.
• Gather the payments included in the calculation of average earnings.
• Calculate the average daily earnings for the calculation period.
• Determine the number of days of unused leave.
• Multiply the average daily earnings by the number of unused leave days.
• Check the total amount taking into account mandatory deductions.

A correct calculation upon dismissal is not only the amount paid out, but also a document explaining each payment and deduction. It is precisely this that most often resolves a dispute before it even begins.

Final settlement upon dismissal: how bonuses, allowances and sick leave are taken into account

Average earnings for the final settlement upon dismissal are determined under the Labour Code of the Republic of Kazakhstan and the acts of the authorised labour body. It includes payments related to work activity: the official salary, permanent additional payments and allowances for working conditions, qualifications, combined duties, night work and public holidays. One-off payments not related to the remuneration system are not taken into account.

The treatment of bonuses depends on their type. Production bonuses provided for by the remuneration system are included at the amounts actually accrued. Bonuses for anniversaries, holidays and other rewards not related to work results are not included in the base.

Allowances and additional payments established by the employment contract or an act of the employer for special working conditions are taken into account on a par with the salary. One-off financial assistance and reimbursement of expenses do not fall into this category.

• official salary and tariff rate;
• production bonuses provided for by the remuneration system;
• allowances and additional payments for working conditions, qualifications, combined duties;
• additional payments for night work, public holidays and weekends;
• other mandatory allowances and additional payments.
• Not included: one-off bonuses for holidays and anniversaries, financial assistance, temporary incapacity benefit and reimbursement of expenses.

Table: which amounts are deducted from the final settlement upon dismissal and why

Deductions from the final settlement upon dismissal are permissible only on the grounds expressly set out in the Labour Code of the Republic of Kazakhstan of 2015. The employer may not expand the list by internal orders or by contract. An employee may recover an unlawfully withheld amount.

Lawful deductions: repayment of an unworked advance, compensation for damage to the employer, recovery of overpaid amounts. The ground and the amount are confirmed by payslips, acts and orders.

The law limits the extent of deductions: the total amount of all deductions at each payment may not exceed half of the sum due to the employee. Any shortfall is recovered in the manner established by law.

• an unworked advance issued against wages
• compensation for direct actual damage caused by the employee
• recovery of overpaid wages in the event of a counting error
• recovery of amounts received by the employee in connection with his unlawful actions
• deductions under enforcement documents
• other grounds expressly provided for by the Labour Code of the Republic of Kazakhstan

The list of grounds is closed: any deduction not named in the Labour Code of the Republic of Kazakhstan is considered unlawful.

Final settlement on dismissal: what to do if the amount is understated or delayed

If the final settlement is not paid on dismissal, the first step is to record the demand in writing. An application addressed to the head is submitted in two copies: one with a mark of acceptance stays with the employee, the second is registered with the employer. State the date of termination of the employment contract, the list of unpaid amounts and the demand to make the payment. Payments are made no later than three working days from the moment of termination of the contract.

If the settlement is delayed, the employee is entitled to claim the principal debt and a penalty for the delay. Under the Labour Code of the Republic of Kazakhstan, the employer must pay a penalty for each day of delay starting from the day following the due date; it is calculated on the basis of the base rate of the National Bank of the Republic of Kazakhstan. The amount of the penalty is determined by law and does not depend on the employer's fault. The claim for compensation is included in the same application or submitted separately.

• Submit a written application for payment of the settlement with a mark of acceptance.
• State in the application all unpaid amounts and the period of delay.
• Claim a penalty for delayed payment under the Labour Code of the Republic of Kazakhstan.
• Keep copies of payslips, statements and the dismissal order.
• Record the date of the application and the employer's response.
• Apply to the conciliation commission or the court if payment is refused.

Final settlement on dismissal: how to challenge the amount and recover the debt

A dispute over the final settlement on dismissal arises when the amount is understated, payments are withheld or the employer cites a lack of funds. This is an individual labour dispute. Under the Labour Code of the Republic of Kazakhstan, it is first considered by the conciliation commission, if one has been established. If there is no commission or the disagreements have not been resolved, the employee is entitled to go to court.

The application to the commission is submitted in writing, setting out the claims and attaching supporting documents. The commission's decision is drawn up in writing; if the employee disagrees or the decision is not enforced, they may go to court. A claim for wages is filed under the rules of civil procedure, and the employee is exempt from the fee for claims arising from employment relations.

The basis for payment is documents on the amount and composition of the debt. The court and the commission examine them together. If the documents are held by the employer, apply for an order requiring their production.

Final settlement on dismissal for the employer: paperwork and liability

The final settlement on dismissal for the employer means transferring the amounts and completing a set of HR documents. The Labour Code of the Republic of Kazakhstan of 2015 obliges the employer to formalise the termination of the contract: an employer's act on termination of the contract, entry of information into the Unified System of Labour Contracts (ESUTD), and familiarisation of the employee against signature.

The payslip is issued together with the payments. It shows the accruals and deductions so that the employee can see how the final amount is made up. The document confirms that obligations have been fulfilled and serves as evidence in a dispute.

Payment must be made no later than three working days after termination of the contract. Delay entails liability for non-payment.

Liability for non-payment or late settlement is provided for by administrative legislation: a fine, and in case of a repeat violation — stricter measures. The dispute is considered by a conciliation commission or a court.

• Issue an order terminating the employment contract
• Enter information on termination of the contract into the Unified Labour Contract Accounting System (ESUTD) and familiarise the employee with the act
• Issue a payslip showing the accruals and deductions
• Make the payments no later than three working days after termination of the contract
• Confirm the handover of documents with the employee's signature
• Keep HR documents in accordance with the established procedure

Settlement upon dismissal: answers to frequently asked questions

Holiday pay is included in the final settlement: compensation is due for unused days of annual leave, and where leave was taken in advance the question of deduction arises. Payments are made no later than three working days after termination of the contract.

A probationary period does not change the procedure: the settlement is calculated under the same rules, including compensation for unused leave; leave entitlement is calculated in proportion to time worked. Dismissal during this period does not deprive the employee of payments or of the right to challenge their amount.

Frequent questions concern deductions: holiday pay taken in advance where the employee is dismissed before the end of the working year, a counting error, proven bad faith on the part of the employee. In other cases, amounts cannot be deducted without the employee's consent, and the dispute is decided by a court.