Legal and compliance checklist for Employer of Record (EOR) services in Armenia
- Gegidze • გეგიძე | Marketing
- Jun 12
- 10 min read
Table of contents:
Introduction: Why Armenian labor law isn’t a suggestion
You can hire a developer in Yerevan in 48 hours.
You can also trigger a government audit in 72.
Welcome to Armenia.
If you're hiring here, there’s no “we’ll deal with the paperwork later” clause. Labor law in Armenia isn’t a checklist; it’s a landmine field disguised as bureaucracy.
And if you skip a step?
Kaboom, say hello to fines, back taxes, and unenforceable contracts.
What is the biggest myth foreign companies believe? That Armenia’s size makes it flexible.
That's just because it’s a smaller market, the rules are “relaxed.” Spoiler: they’re not.
In fact, Armenia is one of the fastest-aligning labor markets in the region when it comes to European compliance models. Think digital payroll portals, tax filings with military-grade formatting requirements, and employment contracts that must be filed in Armenian, even if your hire doesn’t speak it.
Let’s talk consequences.
You onboard a dev as a contractor, thinking it’s faster. You pay in USD. They work full-time, only for you, follow your Slack schedule, and use your tools. The tax inspectorate knocks. Reclassification happens.
Suddenly, you’re liable for unpaid income taxes, social contributions, severance, and possibly penalties on top. That $1,500/month dev just cost you $18,000 in retroactive compliance.
And the kicker, Armenian labor courts side with employees. Almost always.
So, unless you enjoy debating Article 115 of the Armenian Labor Code (hint: it’s about terminations), you might want a better plan.
That’s why this guide exists. You’re going to walk away with:
The clauses your employment contracts legally must include
What benefits are state-mandated (and what can you skip)
A step-by-step on how to stay actually compliant, not just “LinkedIn-compliant”
The difference between hiring through an EOR, setting up your own entity, or winging it (don’t)
A checklist so sharp your legal team might cry tears of relief
If you’re building a remote team in Armenia, or even hiring one incredible engineer, this is the difference between sleeping well and scrambling at tax season.
Let’s get into it.
The Big 6 compliance rules for hiring in Armenia
Remote hiring in Armenia might sound like a straightforward process, until you realize it's not just about finding great talent, but navigating a legal system that expects you to know what Form 5.1-D is, why it needs to be bilingual, and how to register employment contracts in a government portal that crashes every Friday afternoon.
Let’s keep it real: if you're not handling these six core compliance areas properly, you’re not just "non-compliant", you’re inviting audits, fines, and legal disputes that could make your seed round disappear faster than a glass of Armenian brandy.
Here’s what you absolutely, unequivocally, cannot ignore:
You must register every contract digitally, in Armenian
In Armenia, verbal agreements and English-only contracts won’t cut it. Every employment agreement must:
Be in Armenian (bilingual versions are acceptable)
Include job title, scope, compensation, working hours, leave policies, and termination clauses
Be registered with the Electronic Employment Contracts system (e-gov.am) before work begins
Miss this step? You’ve hired illegally. That means any IP clauses, non-competes, or confidentiality terms? Void. Your new hire legally owns the code they wrote.
You must pay in AMD through local banking channels
All salaries must be paid in Armenian dram (AMD). Not USD. Not EUR. And not under the table via crypto or Wise transfers.
What this means for you:
Set up a local payroll system (yourself or via an EOR services in Armenia)
Withhold income tax (flat 21%) and social security (4.5%) at source
File payroll monthly with the State Revenue Committee
Skip proper payroll filings? Expect audits, interest, and a whole lot of retroactive paperwork.
You must observe mandatory benefits and leave
Armenian law outlines very specific minimums:
Paid annual leave: Minimum 20 working days
Sick leave: Fully paid up to 5 days by the employer; the rest covered by social insurance
Maternity leave: 140 days, paid by the Social Insurance Fund
Paternity leave: 5 paid days
Public holidays: 15 per year
There’s no flexibility here. These aren’t guidelines. They’re enforceable obligations.
You must provide a safe and compliant remote setup
Remote ≠ loophole.
Employers are liable for the working conditions, even if the employee is at home
You must provide the necessary equipment, or compensate for it
A written policy outlining remote work terms is strongly recommended
If you’re using an EOR in Armenia, make sure they’re managing IT and liability coverage
You can't just send a MacBook and hope for the best.
Terminations must follow protocol; no at-will allowed
There is no such thing as at-will employment in Armenia. Every termination must have:
Justified cause (performance, restructuring, etc.)
Notice periods (ranging from 1 week to 2 months)
Proper documentation and final salary payout on the last day
Severance in some cases, depending on the reason and tenure
Do this wrong? You’re looking at reinstatement orders and backpay rulings from a labor court that will side with the employee.
You must file reports and taxes on time, or pay the price
Monthly payroll declarations are due by the 20th of the following month
Late filings = fines + interest
Employee data must be stored per Armenia’s personal data protection law
This is where most foreign companies stumble. Not because they’re reckless, but because they assume it’s “just like the EU.”
It’s not.
What can go wrong (if you skip these steps)
Let’s say you hire a brilliant Armenian developer. You’re in a rush, big launch coming, backlogged sprints, the usual startup chaos. You tell yourself, “We’ll formalize the contract later.”
Spoiler: Later turns into a labor court hearing in Yerevan, and your IP just walked out the door with the last Git commit.
Here’s what really happens when companies treat compliance like a to-do list they’ll get to someday:
Misclassification messes
You hired a “contractor,” but gave them working hours, company tools, and a Slack profile next to your full-timers. Guess what?
In Armenia, they’re an employee.
And if you didn’t file the right taxes, register the contract, or provide benefits?
You owe back pay, social contributions, and penalties, plus interest.
Your IP is gone. Just… gone.
That NDA you signed in English via DocuSign?
Doesn’t count under Armenian labor law if there’s no registered employment contract in Armenian (or bilingual). Which means:
That custom architecture they built?
The product roadmap?
That prototype?
They own it.
Unless you want to spend the next six months negotiating retroactive IP assignments in court, good luck raising your next round.
You can’t fire them. Legally.
Termination in Armenia isn’t a handshake and a goodbye email.
Skip the cause documentation, the notice period, or final salary payout, and your former hire can file a reinstatement lawsuit.
And guess what? Armenian courts usually side with the employee.
So now your company owes backpay, court fees, and possibly a mandatory rehire.
Your name lands on the State Revenue Committee’s radar
Didn’t register payroll? Used USD to pay in crypto? Forgot to withhold tax?
Welcome to the audit list.
The SRC doesn’t do friendly reminders. It does:
Penalties (up to 25% of unreported salary)
Daily interest on unpaid contributions
A formal letter to your HQ, in Armenian legalese
Your team morale tanks
It starts with a late paycheck.
Then they realize PTO isn’t tracked. Sick days? Not compensated. Maternity leave? Unclear. There’s no policy, just chaos.
You can’t build a stable, committed team on the hope that “we’ll get compliant next quarter.”
In Armenia, talent is sharp, and the good ones won’t wait around.
Can an EOR in Armenia solve this?
Yes. And faster than your legal team can Google “How to hire in Armenia without breaking the law.”
Let’s be clear, an Employer of Record (EOR) isn’t just another vendor. It’s the legal firewall between your business and Armenia’s labor code.
Here’s what a solid EOR provider in Armenia can handle (so you don’t have to):
Employment contracts in Armenian
Drafted, translated, and fully compliant. No loopholes. No lost IP.
Payroll in drams, not dollars
Calculated, taxed, and filed on time without your CFO needing a crash course in Armenian tax brackets.
Social fund registration and deductions All the pension, healthcare, and social contributions were handled correctly from day one.
Leave tracking and labor law compliance
Including parental leave, paid holidays, and local working-hour rules so your people stay protected, and so do you.
Termination procedures, notice periods, severance
Structured, legally documented, and dispute-proof.
And maybe most importantly?
It’s all on one invoice, with one point of contact. No surprise audits. No lawyer-on-speed-dial. No, “we didn’t know.”
If you want to hire in Armenia without spending six months setting up a local entity, or losing six nights of sleep worrying about the Labor Inspectorate, then yes, an EOR in Armenia can absolutely solve this.
And if you're thinking, “Can Team Up do all this?”
You’re already reading the answer. Let’s talk.
EOR vs PEO vs DIY setup: Which is safer for compliance?
When it comes to hiring in Armenia, you’ve got three paths. One protects your team and your sanity. The other two? Let’s just say they’re riskier than drinking homemade mulberry vodka before a board meeting.
Let’s break it down.
Employer of Record (EOR)
Legal employer: The EOR
Entity needed: Nope
Who files taxes, drafts contracts, and pays social contributions: The EOR
Speed to hire: Fast. Like “onboard by Monday” fast
Control: You manage the work, they handle the red tape
Risk level: Low
This is your safest bet if:
You don’t have a legal entity in Armenia
You need to hire fast and legally
You’d rather not deal with the Armenian Labor Code (trust us on this)
Bonus: Your IP stays protected. Contracts are bulletproof. And local tax authorities stay out of your inbox.
Professional Employer Organization (PEO)
Legal employer: You
Entity needed: Yes
Who handles compliance: Shared
Speed to hire: Medium
Control: You have more flexibility, but also more liability
Risk level: Medium
PEOs are great if:
You already have a legal entity in Armenia
You want help running HR, but can stomach some risk
You have a local legal team backing your every move
But beware: You’re still the legal employer. If something goes wrong, misclassification, benefits dispute, tax misstep, it’s on you.
DIY (Set up your own entity)
Legal employer: You
Entity needed: Yes (and it takes time)
Who handles compliance: Also, you
Speed to hire: Slow
Control: Total. But not always in a good way
Risk level: High
Let’s be real: setting up an entity sounds sexy in investor decks, but unless you’ve got:
Local lawyers
Payroll experts
HR admins
Tax advisors
And lots of time
…you’re basically flying blind.
It’s fine for corporates with deep pockets and headcount in the dozens. But for everyone else?
It’s a compliance landmine waiting to go off.
So which one’s safer?
If your goals are:
Hire quickly
Stay compliant
Sleep at night
Not end up in Armenian court...
Then go with an EOR services in Armenia.
One partner. One invoice. One less headache.
12-point compliance quick-reference for hiring through EOR services in Armenia
Hiring talent in Armenia without tripping a legal wire? It’s possible, but only if you know exactly what the Labor Code expects of you.
This checklist is for founders, CFOs, and HR leads who want the speed of global hiring without the chaos of retroactive fines, IP risks, or a surprise call from the Armenian State Revenue Committee.
Skip any of these, and you’re not just non-compliant, you’re exposed.
Written employment contract
Every hire in Armenia must have a written contract, signed before day one, in Armenian, and compliant with local statutes.
What to include:
Job description
Compensation
Working hours
Leave policies
Termination clauses
Language: Armenian (or bilingual with Armenian)
Mandatory contract registration
You’re not done when it’s signed. All employment agreements must be registered with Armenia’s State Revenue Committee.
Miss it? You could face legal invalidation of the contract, meaning no tax records, no IP protection, and no enforcement in disputes.
Onboarding deadline
Employees must be onboarded in the tax system before their first working day. This includes:
Tax ID verification
Social fund registration
Benefit contributions
Minimum wage compliance
The national minimum wage in Armenia is 75,000 AMD/month. If you underpay, even accidentally, you’re on the hook for back payments and fines.
Payroll in AMD
Salaries must be paid in Armenian dram (AMD), via official banking channels. Paying in USD or EUR might sound startup-friendly, but it’s a compliance red flag.
Tax withholding accuracy
Employers must withhold:
23–36% combined income tax (progressive scale)
5% social security contributions
3% military insurance (yes, really)
Use the wrong rates? Expect tax arrears with interest.
Official working hours
Standard hours are 40/week. Anything beyond that = overtime, which must be:
Capped at 4 hours/day
Paid at 150% of base rate
Pre-approved (documented!)
Paid leave requirements
Every employee is entitled to 20 working days of paid annual leave, more if they work in difficult or hazardous conditions.
You can’t replace leave with a payout unless it’s a final settlement. Period.
Public holidays & time off
Armenia recognizes 16+ public holidays. Employees must be given paid time off or compensated appropriately.
Remote teams in Armenia? Still applies.
Termination must be justified
There’s no at-will employment. Termination must fall under recognized legal grounds, with:
1 month’s notice minimum
Documentation of cause
Final salary + unused leave paid out immediately
Fail this? You could owe up to 6 months’ salary in severance.
Data & Privacy Laws
Employee records, contracts, payroll data? Must be stored inside Armenia and follow local data protection regulations.
If you're using global tools like GSuite or BambooHR, double-check where your servers live.
IP & confidentiality clauses
Want to protect your code, designs, or client lists? Your contracts must include:
Clear IP assignment clauses
NDA obligations in Armenian
Local enforcement language
Without these, your ownership could be contested, especially if a developer walks off with your source code.
Final thoughts: When in Armenia, don’t wing it
Hiring in Armenia without a clear compliance plan is like trying to code in a language you’ve never seen before, with your investor watching over your shoulder.
Here’s the truth: Armenia’s labor laws aren’t “guidelines.” They’re the rules. Enforced. With real financial penalties, loss of IP protection, and enough bureaucratic back-and-forth to make your HR team cry into their Slack threads.
So, what’s your play?
If you're testing the waters, use an EOR to hire fast and stay safe.
If you're scaling a team, protect your payroll, contracts, and data before it becomes a problem.
If you're already making hires but aren’t 100% sure what’s in those contracts, pause and fix it before you learn the hard way.
Team Up exists for this exact moment.
We know Armenia. We’ve built teams here. We speak the language, legally and literally.
Want to onboard talent in Armenia without losing sleep (or control)?
Book a demo.
We’ll walk you through what full compliance looks like and how you can get there without opening a single government portal.
Because in Armenia, “figure it out later” just means “pay for it sooner.”