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PEO services for small businesses in Kazakhstan: What you should know



Table of contents:




Introduction


Running a small business in Kazakhstan is already a balancing act. You are hiring talent in Almaty or Astana, managing payroll through state portals, interpreting labour laws that seem to change just when you think you understand them, and trying to keep monthly reporting accurate enough to avoid a letter from the State Revenue Committee.


So, it is no surprise that PEO services for small businesses in Kazakhstan have become the lifeline that founders start researching the moment HR chaos becomes an actual business risk.


A PEO promises stability. Predictability. Someone to take over the administrative weight so you can focus on sales, product, or the hundred other things your business needs.


But here is the part many people don’t know. PEOs can save your company or complicate everything, depending on how well you understand the rules that govern employment in Kazakhstan. And Kazakhstan is not a country where you can afford to “wing it.”


If you are trying to stay compliant while building a team, this guide will walk you through what a PEO really does here, how payroll works under Kazakhstan’s tax system, when a PEO makes sense, and the one rule that determines whether you are even allowed to use a PEO in the first place.





What Is a PEO in Kazakhstan? (And Why Founders Keep Mixing It Up With EOR)


A PEO, Professional Employer Organisation, is not magic. It does not replace your company. It does not remove legal liability. It does not let you hire workers in Kazakhstan without a local entity. What it does is give you an outsourced HR and payroll infrastructure on top of the legal entity you already operate.


A Kazakhstan-ready PEO typically handles:


  • Monthly payroll calculations

  • Income tax withholding (10%)

  • Employee pension contributions (10% to the Unified Accumulative Pension Fund)

  • Employer-side social tax (around 9.5%, depending on exemptions)

  • Mandatory social medical insurance (OSMS) contributions

  • Sick leave and maternity pay rules

  • Employment contract drafting under Kazakhstan’s Labour Code

  • HR document retention and policy support

  • Digital reporting through the “Cabinet of Taxpayer” portal


What a PEO does NOT do


  • It does not become the legal employer

  • It does not remove compliance risk from your company

  • It does not let you hire without a Kazakhstan-registered legal entity

  • It does not handle corporate tax responsibility


A PEO is HR infrastructure. An EOR is an employment infrastructure. There is a big difference.


When companies skip this distinction, they end up with non-compliant structures and payroll penalties. Nobody wants that, especially not in a jurisdiction as structured as Kazakhstan.





Why Small Businesses in Kazakhstan Start Looking for PEO Services


Local founders, foreign companies expanding into Central Asia, and hybrid teams working across Almaty, Astana, Shymkent, and Atyrau all hit the same walls.


The labour code is precise.


Kazakhstan’s Labour Code requires:


  • written employment contracts

  • specific probation rules

  • structured termination processes

  • correct accrual of leave

  • strict maternity protections


A PEO helps translate these rules into day-to-day HR.


Payroll complexity is real.


Kazakhstan’s payroll obligations include:


  • 10% employee pension fund contribution

  • 10% personal income tax

  • employer social tax (approx 9.5%)

  • social insurance contributions

  • medical insurance (OSMS) from both the employer and the employee


Miss one percentage or filing deadline, and you will hear from the state.


Digital reporting is mandatory.


Every employer must report through:


  • Cabinet of Taxpayer (Salyk)

  • Unified Accumulative Pension Fund portals

  • OSMS medical insurance system


A mistake is recorded permanently. Audits pull from digital trails.


HR hiring is expensive.


Most early-stage Kazakh businesses cannot justify a full-time HR manager or payroll specialist. A PEO fills that operational gap at a fraction of the cost.


Talent expects structure.


Especially in IT and finance, employees want:


  • professional contracts

  • stable payroll

  • medical insurance where possible

  • clear leave policies


A PEO makes your company look like an employer worth trusting.



How PEO Payroll Works in Kazakhstan (A Deep Dive You Actually Need)


Payroll accuracy in Kazakhstan is not optional. It is monitored, recorded, and compared directly with pension fund and social insurance data. This is why founders should understand exactly what their PEO will handle.



Income Tax Withholding (10%)


Kazakhstan uses a flat personal income tax rate.


A PEO ensures:


  • calculation based on gross salaries

  • correct withholding of 10%

  • proper monthly submissions

  • compliance with tax reporting schedules


No adjustments. No “flexibility.” The state expects precision.


Pension Fund Contributions (Employee 10%)


Kazakhstan’s Unified Accumulative Pension Fund (UAPF) is mandatory.


A PEO ensures:


  • 10% of employee income is withheld

  • correct remittance to the pension fund

  • Monthly reporting is submitted through the UAPF systems


Pension filings must match payroll submissions. Any discrepancy triggers questions.


Employer Social Tax (Typically 9.5%)


This is the contribution that many foreign companies misunderstand.


Employer social tax can include:


  • social contributions

  • unemployment insurance

  • maternity fund allocations


Percentages vary depending on your industry and potential benefits for hiring persons with disabilities or working in targeted economic zones.


A PEO must calculate this correctly every single month.


OSMS Medical Insurance (Employer + Employee)


Kazakhstan’s compulsory medical insurance system requires contributions from both sides.


A PEO handles:


  • calculating employee OSMS

  • calculating employer OSMS

  • ensuring monthly digital submissions


Employees expect medical insurance coverage to be active. One late payment affects real healthcare access.


Sick Leave, Maternity Leave, and Annual Leave Tracking


The Labour Code requires:


  • minimum 24 days paid annual leave

  • sick leave based on medical certificates

  • maternity leave of 126 days minimum (combination of pre/postnatal)

  • additional social protections


A PEO keeps your documentation airtight so you do not end up in labour disputes.


Digitally Registered Employment Contracts


All employment contracts must be compliant with the Labour Code and professionally documented.


PEOs manage:


  • drafting

  • registering

  • amending

  • terminating

  • storing for audit readiness


A missing clause or incorrectly handled termination can escalate to legal issues. Kazakhstan’s labour inspection bodies take documentation seriously.



The Rule Every Foreign Founder Misses: A PEO Requires a Kazakh Legal Entity


This is the part nobody tells you in the beginning.


A PEO cannot legally employ workers on your behalf in Kazakhstan. Ever.


Why?


Because PEO = co-employment.


Co-employment = you must have your own legal entity in Kazakhstan.


A PEO does not:


  • issue employment contracts in their name

  • carry your employment risk

  • shield you from compliance investigations


If you do not have a Kazakhstan entity, you cannot use a PEO.




PEO vs EOR in Kazakhstan: Which One Fits Your Situation?


Founders usually choose the wrong model because no one explains this simply.


A PEO makes sense if:


  • You already have a Kazakhstan legal entity

  • You want someone to run HR and payroll

  • You need help staying compliant

  • You have a team of 8–20 people

  • You want a better structure, not a new employer


An EOR makes sense if:


  • You have no Kazakh legal entity

  • You want to hire fast

  • You want zero local liability

  • You are testing the Kazakhstan market

  • You want predictable monthly costs

  • You want someone else to be the legal employer


If you are scaling across Central Asia or the Caucasus, EOR is almost always the cleaner, safer option, a model Team Up already leads regionally.



PEO Pricing in Kazakhstan: PEPM vs Percentage Models


Kazakhstan’s PEO pricing follows global standards, but with local nuancesthat  founders should understand.


PEPM: Per Employee Per Month


  • predictable

  • easy to budget

  • good for stable teams


Percentage of Payroll


Usually 4–12%


  • more flexible

  • can become expensive for senior hires in IT, engineering, or finance


Pricing factors include:


  • payroll complexity

  • benefits administration

  • contract volume

  • leave management

  • employee documentation requirements

  • termination support

  • HR policy creation



Hidden PEO Costs in Kazakhstan That Founders Usually Discover Too Late


PEO decks talk about “simplified HR” and “all-in-one solutions”. The contract tells a different story. If you are a small business in Kazakhstan, here is where the extra money usually hides.


1. Onboarding and Implementation Fees


Many PEOs charge you just to get started.


You might see:


  • a one-time implementation fee

  • a per-employee onboarding fee

  • separate charges to migrate existing staff into their system


None of that is illegal. It is just rarely front and centre.


Questions to ask:


  • “Do you charge an implementation fee for Kazakhstan. How much?”

  • “Is there a per-employee onboarding charge?”

  • “Does your fee include migrating current employees, or is that extra?”


If you do not ask, you will find out on the first invoice.


2. Off-Cycle Payroll and Corrections


Real life rarely fits neatly inside a payroll calendar.


You might:


  • Hire someone mid-month

  • Need to pay a bonus

  • Correct a previous error


Some Kazakhstan PEO providers bill extra for any off-cycle payroll run, or for changes after payroll has been processed through the Cabinet of Taxpayer.


Ask:


  • “Are off-cycle runs included or charged separately?”

  • “If we need to correct a payroll mistake next month, is that included in your fee?”


You want a clear yes or no.


3. Markups on Benefits and Insurance



As private medical insurance, voluntary benefits, and allowances become more common in Almaty and Astana, PEOs often negotiate packages and then add their own margin.


That can show up as:


  • inflated per employee benefit cost

  • bundled “admin” lines that hide the real premium

  • unclear differences between insurer price and PEO service fees


Ask for transparency:


  • “What is the base premium from the insurance provider?”

  • “What part of this is your admin fee or margin?”

  • “Can you show the pricing breakdown line by line?”


If they resist, you are paying more than you should.


4. Minimum Monthly Fees and Headcount Floors


Some PEO contracts are designed for larger enterprises. Small teams in Kazakhstan get hit hardest by minimums.


Look for:


  • a minimum monthly invoice, regardless of the number of employees

  • a minimum headcount requirement

  • base fees that apply even if you drop to 3 or 4 employees


Ask:


  • “What is the minimum monthly fee if we only have 5 employees?”

  • “If our headcount drops, do we still pay a minimum?”


If you are an early-stage company testing the Kazakh market, this matters a lot.


5. Fees for HR Documents and Reporting


You will need:


  • employment certificates for banks and visas

  • experience letters

  • detailed breakdowns for investors or auditors

  • custom reports on payroll, tax, and contributions


Some PEOs include all of this. Others charge per item or per hour.


Ask:


  • “Are employment certificates and reference letters included in the monthly fee?”

  • “Do you charge extra for custom payroll or tax reports?”


6. Termination, Amendments, and Legal Support


Kazakhstan has strict rules around:


  • termination procedures

  • notice periods

  • compensation

  • documentation


A PEO may charge separately for:


  • handling dismissals

  • drafting termination documentation

  • contract amendments

  • consultations with their legal team


Ask:


  • “Is termination handling included. Are there any extra fees?”

  • “Are contract changes priced separately?”


The goal is simple. No surprises.



When PEO Services Are a Smart Move for Small Businesses in Kazakhstan


Let us be fair. PEOs are not the bad guy. When used in the right context, they are absolutely useful.


Here is when a PEO genuinely makes sense for a Kazakh SME.


1. You Already Have a Kazakhstan Legal Entity


This is non-negotiable.


If you:


  • have a ТОО or other local legal entity

  • are registered with the State Revenue Committee

  • Already run payroll in some fashion


Then a PEO can plug into your structure and clean up the HR mess.


Without a local entity, you are simply not allowed to use a PEO model correctly. In that case we are talking about EOR, not PEO.


2. You Have Moved Past “DIY HR”


If this sounds familiar, you are in PEO territory:


  • Payroll spreadsheets live on one person’s laptop

  • People ask, “Are we sure these contributions are right?” every month

  • You are guessing how to handle maternity or sick leave

  • Contracts are copy-paste templates that no lawyer has reviewed


Once you are at 8 to 20 employees, this stops being a minor inconvenience and becomes a business risk. A PEO gives you structured, repeatable processes that can survive an audit.


3. You Cannot Justify an In-house HR Team Yet


A solid HR or payroll specialist in Kazakhstan costs real money. Add:


  • salary

  • social tax

  • medical and social contributions

  • workspace

  • HR tools


A PEO gives you:


  • experienced HR operations

  • a working payroll engine

  • documentation and compliance support


All without adding another full-time headcount.


4. You Need Better Benefits to Compete for Talent


In Almaty’s tech and financial sectors, employees compare:


  • Whether payroll is on time

  • whether contracts look professional

  • whether medical insurance is included

  • How leave and overtime are handled


A PEO helps you introduce:


  • professional benefit structures

  • standardised leave policies

  • documentation that does not look like it was written in a hurry


You look more credible to senior talent, which matters when you are fighting with global companies for the same engineers or analysts.


5. You Want to Fix Compliance Before Something Breaks


Most compliance issues in Kazakhstan do not come from bad intentions. They come from:


  • miscalculating social tax

  • failing to report OSMS correctly

  • underpaying pension contributions

  • weak termination documentation


A PEO does not turn off all risk, but it dramatically reduces the chances that you will be caught by a simple mistake.



When PEO Services Become a Liability in Kazakhstan


Now the uncomfortable part. There are plenty of cases where using a PEO is the wrong move.


1. You Do Not Have a Local Entity


This is the biggest one.


If you do not have a company registered in Kazakhstan, you cannot:


  • Enter a compliant co-employment relationship

  • treat a PEO as your “local employer”

  • outsource employer status


Any provider that says otherwise is not offering true PEO. They are either selling something different or setting you up for problems with the authorities.


If you want to hire without opening a local entity, you need an Employer of Record in Kazakhstan, not a PEO.


That is exactly what Team Up does.


2. Your Headcount Is Very Small


If you only plan to hire:


  • one sales manager in Astana

  • two engineers in Almaty

  • a small remote support pod


then PEO overhead often does not make sense. You are paying for a structure meant for bigger teams.


In this stage, EOR is usually:


  • simpler

  • cheaper overall

  • faster to start

  • easier to exit if the experiment does not work out


3. You Want to Hire Fast


PEO assumes:


  • your company is already formed

  • your tax registration is live

  • your bank account exists

  • your legal address and statutory setup are complete


If you are still working through incorporation, a PEO cannot speed up hiring. You are blocked by corporate housekeeping.


With an EOR, you can:


  • hire in days

  • start working with local talent while you evaluate the market

  • decide later if setting up your own entity is even worth it


4. You Want Zero Legal Exposure in Kazakhstan


Under a PEO model:


  • Your company signs the employment agreements

  • Your company is audited for payroll and HR compliance

  • Your company is liable if something is incorrect


A PEO reduces operational mistakes but does not shield you legally.


If your board or investors want minimal local exposure, you should not be the legal employer. You want an EOR provider to carry that role for you.


5. You Are Hiring Across Multiple Countries


If Kazakhstan is one of several countries on your hiring roadmap, running separate PEOs under separate entities quickly becomes a coordination mess.


Think:



Different entities. Different PEOs. Different contracts.


An EOR partner that covers the region gives you:


  • one operating model

  • consistent documentation standards

  • unified reporting

  • fewer points of failure


That is where Team Up is built to operate. Across the Caucasus and Central Asia, not just one country at a time.



How to Choose a PEO in Kazakhstan Without Getting Burned



If, after all this, you still look at your situation and say “yes, a PEO is the right tool for us, then you need to choose carefully.


Here is how to evaluate a PEO like someone who has actually read the Labour Code.


1. Test Their Kazakhstan-specific Knowledge


Ask questions tthat hey cannot improvise.


For example:


  • “Walk me through how you calculate payroll for a Kazakh resident with a gross salary of X KZT, including pension, OSMS and social tax.”

  • “How do you handle maternity leave and who pays what.”

  • “What is your process when the tax authorities dispute a filing.”


If they respond in vague global HR language instead of clear Kazakh specifics, that is a hard red flag.


2. Demand Simple, Boring Pricing


You want:


  • a clear per-employee or percentage of payroll fee

  • a written list of what is included

  • explicit mention of what is not included

  • clarity on minimum fees and contract length


If it feels like a puzzle, assume there are traps.


3. Look at the Tools Behind the Sales Pitch


Ask to see:


  • How employees view payslips

  • How leave and sick days are tracked

  • How managers approve changes

  • What reports can you export for finance and audits


If everything looks dated or clunky, that friction will show up every month.


4. Stress Test Their Support Before You Sign


Support is where many PEOs fail.


Try this:


  • Send email questions about a realistic HR scenario in Kazakhstan

  • See how fast they reply

  • See whether they give specific, law-grounded answers or generic ones


You are not buying a brochure. You are buying day-to-day problem-solving.


5. Clarify Responsibility for Mistakes


Ask directly:


  • “If you miscalculate payroll and we are fined, what happens?”

  • “Do you carry any liability or professional insurance for your work?”

  • “Will you correct historical filings at your cost or ours?”


Get it in writing. Not just “clients rarely have problems”.


6. Check Their Existing Client Base in Kazakhstan


You want a PEO that:


  • already handles Kazakh companies or subsidiaries

  • has experience in your sector, like IT, services or energy

  • can talk through anonymised examples without scrambling


You do not want to be the pilot project.



Final Guidance: PEO vs EOR in Kazakhstan, and Where Team Up Actually Fits


Here is the honest summary.


A PEO in Kazakhstan is a good solution if:


  • You already operate a local legal entity

  • Your headcount is big enough that HR chaos is a real risk

  • You want professionalised payroll and documentation

  • You understand that you remain the legal employer

  • You are comfortable carrying local legal exposure


A PEO is the wrong solution if:


  • You do not have a Kazakhstan entity

  • You are just starting to test the market

  • You only need a handful of people

  • You want clean, predictable monthly costs with minimal risk

  • You plan to hire in more than one country across the region


In that scenario, you do not need a PEO. You need an Employer of Record.


That is where Team Up comes in.


Team Up acts as your EOR for Kazakhstan and the wider region. That means:


  • We are the legal employer on the ground

  • We issue fully compliant Kazakh employment contracts

  • We handle payroll, pension, social tax and OSMS

  • We file everything through the correct state systems, on time

  • We protect your IP and confidential work with enforceable local terms

  • You get one consolidated invoice and a simple model that your CFO can understand


You run the team as if they were your own employees.


We handle the legal, payroll, and compliance side so you do not lie awake wondering what you missed in the Labour Code.


If you are serious about hiring in Kazakhstan without building a full corporate structure first, PEO is not the starting point. EOR is. And that is exactly the part of the work Team Up is built to own.



FAQ


1. What are PEO services for small businesses in Kazakhstan?

PEO services for small businesses in Kazakhstan provide outsourced HR, payroll, and compliance support through a co-employment model. The PEO manages payroll calculations, tax withholding, pension contributions, contract documentation, and digital reporting while your company remains the legal employer.

2. How does a PEO work in Kazakhstan?

A PEO handles operational employer tasks—payroll, HR admin, leave tracking, employment contracts, and compliance filings. You continue managing daily work, and the PEO manages the processes that keep your business compliant with Kazakhstan’s Labour Code and tax regulations.


3. Do I need a local legal entity in Kazakhstan to use PEO services?

Yes. You must have a Kazakhstan-registered company to use a PEO. A PEO cannot legally employ workers for a foreign business. If you want to hire in Kazakhstan without opening an entity, you must use an Employer of Record (EOR).

4. What is the difference between a PEO and an Employer of Record (EOR) in Kazakhstan?

A PEO manages HR and payroll, but does not become the legal employer. An EOR becomes the official employer in Kazakhstan, issues compliant contracts, pays salaries, handles pension and social tax reporting, and allows foreign companies to hire without establishing a local entity.

5. How does PEO payroll work in Kazakhstan?

PEO payroll includes income tax withholding (10%), pension contributions (10%), employer social tax, OSMS medical insurance contributions, social insurance, leave calculations, payslip generation, and digital filings submitted through Kazakhstan’s tax portals.

6. Is a PEO or EOR better for hiring remote employees in Kazakhstan?

If you already have a Kazakhstan entity, a PEO can streamline your HR and payroll operations. If you do not have an entity, an EOR is the only compliant model for hiring remote employees in Kazakhstan.

7. Are PEO services cost-effective for small businesses in Kazakhstan?

PEO services can be cost-effective for companies with growing teams who need structured HR processes and reliable compliance support. Businesses with 1–5 employees or no local entity typically save more money with EOR services.

8. What hidden costs should businesses expect when using a PEO in Kazakhstan?

Common hidden costs include onboarding fees, off-cycle payroll charges, benefit plan markups, minimum monthly fees, document drafting fees, contract amendment charges, and year-end payroll reporting costs.

9. Can a PEO legally employ workers for foreign companies in Kazakhstan?

No. A PEO cannot legally hire employees for a foreign company. Only an Employer of Record can act as the legal employer for foreign businesses hiring in Kazakhstan.

10. How do I choose the best PEO service provider in Kazakhstan?

Look for a PEO with strong knowledge of Kazakh labour law, transparent pricing, modern HR and payroll technology, fast support response times, and a proven track record of managing payroll and compliance in Kazakhstan.


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