Hiring employees in Georgia: contracts, taxes, pension

Georgian labour law is considered flexible, but that does not mean staff can be engaged any way you like. There is a mandatory minimum: a contract, payroll withholding and monthly reporting.

What an employee costs

Beyond the salary itself the employer withholds income tax and takes part in the funded pension system. The pension contribution is split between the employee, the employer and the state.

The pension system

The scheme is three-sided: part is withheld from the employee's pay, part is added by the employer, part comes from the state. Participation is mandatory for most workers, with some categories excluded by age.

The employment contract

A contract is mandatory and has to be in writing. Verbal arrangements do not hold in a dispute, and their absence is an employer's most exposed point in an inspection.

• the parties and the start date;
• the position and the duties;
• the amount and manner of remuneration;
• working time and schedule;
• the term, if the contract is fixed-term;
• probation terms, where there is a probation period.

Working time and leave

The hiring steps

• draft and sign the employment contract;
• collect the employee's documents;
• register as an employer;
• set up payroll and withholding;
• file monthly with RS.ge.

Termination

A contract can be terminated on the grounds set out in law, with notice and, in a number of cases, compensation. Notice periods and payment amounts depend on the grounds — this is a block worth checking against the specific situation rather than a general rule.

Foreign employees

For foreign nationals a work permit (PTD) is added to the employment paperwork. The legal basis has to be in place before work starts, otherwise the contract exists but cannot be worked under.

Contractor or employee

Engaging an IE instead of hiring looks simpler and cheaper, but dressing an employment relationship as a civil one is a known risk. If the person works to your schedule, at your place and under your direction, the relationship can be reclassified.

We run payroll, withholding and employee reporting, and handle PTD applications for foreign specialists.