Labour relationships in Kazakhstan are governed not only by the provisions of the Labour Code of Kazakhstan, but also by special legislative acts (on civil service, on internal affairs authorities, etc.). The procedure for consideration of labour disputes in courts is specified by the Civil Procedural Code of Kazakhstan and Labour Code of Kazakhstan. In addition, this area is covered by the Regulatory Resolution of Supreme Court No. 9, dated 19 December 2003.

When considering labour disputes, the courts should distinguish civil and legal relations and labour relations. The nature of employment relationships may be expressed by situations where an employee performs certain work by a particular occupation, qualification, position subject to the internal code of conduct, and the employer pays the employee a salary and ensures working conditions determined by the labour laws.

Courts not only restore labour rights infringed, but also identify the causes and conditions that led to such infringement, and conduct preventive work for elimination and prevention of future infringements. The court may make special rulings to the state authorities, public organisations and officials to eliminate violations of the law, causes and conditions leading to labour violations.

The competence and powers of the courts in the area of labour disputes is determined not only by the scope of disputes within the court jurisdiction, but also by the fact that in labour hearings the court may, on its own discretion, impute to the defendant's part a third party guilty of a gross violation of the labour laws. It happens that in the case under consideration, the court found misconduct of officials. In this case, the court, pursuant to Article 235.3 of the Civil Procedural Code, shall pass a special ruling to bring guilty directors to disciplinary and, sometimes, criminal liability.

The judge, when accepting an application on a labour dispute, shall solely decide on the acceptance or refusal of the application for consideration. The right to initiate legal proceedings is given not only to the employee or employer concerned, but also to the public prosecutor, as well as the trade union. An application filed with the court for consideration of a labour dispute is not treated as a complaint filed to a higher authority (abolishing the decision of a lower authority). Therefore, the court cannot cancel, modify or uphold the decision of the conciliation commission; it decides the dispute on merits. In accordance with the procedure provided for by the Labour Code, a labour dispute can be considered by the Conciliation Commission.

The most common types of labour disputes in Kazakhstan include the remedies of reinstatement in job, and salary recovery. Recent years (since 2011) show that this list has been added to, with other labour disputes such as a claim for salary indexation due to national currency depreciation, and a claim for the allocation of compensation for harm caused to the employee's health in the course of work performance.

To apply to authorities for the consideration of an individual labour dispute there is the following timing:

  1. reinstatement in a job − three months after the service of a copy of the employer's act on the termination of the employment agreement;
  2. other labour disputes − one year after the day when the employee or the employer knew or should have known about the infringement of his rights.

Collective labour disputes in Kazakhstan are usually based on the following requirements of employees:

  • inflation indexation of salary;
  • elimination of difference in salaries of foreigners and Kazakhstani employees; and
  • prevention of mass layoffs.

In this case, collective labour disputes based on the late payment of salaries are attributable mainly to the construction companies, while the dissatisfaction with the salary level takes place mainly in the oil and gas and mining sectors.

Claims for reinstatement in a job are considered in the court of first and appeal instances by judges individually, and in the courts of cassation and supervisory instances, by an odd-numbered panel of judges. Other labour disputes are considered by the judge solely. Upon the consent of the dispute parties, the court may solely consider cases for reinstatement in a job as well.

A dispute may be settled in court with an amicable agreement, but the terms thereof shall not violate the laws, employees' rights and interests of the company. In consideration of a labour dispute, the court settles it on the basis of all case files available. It is not bound by the prior decision of the committee on labour disputes, however it studies it to establish the truth in the case. The court may go beyond the framework of claims raised by the claimant, if it follows from the grounds of the same claim.

All labour disputes are considered in the court at the location of a defendant. In cases arising from labour relationships, the claimants are exempted from state duty. However, in the case of satisfaction of the claim, the court shall recover the state duty from the defendant to the budget. Any party may appeal the decision to a higher court within 15 days. Within the same period, the decision can be appealed by the prosecutor. Persons who miss the above terms are deprived of the right to file a claim. However, where there is good reason for missing the said term, the court may restore it. A higher court may uphold, change, or cancel the decision completely or partially in the appeal of cassation procedure. Court decisions, rulings and resolutions entered into force can be reviewed under the relevant protests.

According to court statistics, the number of labour disputes considered by the courts, although now showing a trend towards decline, still remains high. In this respect, the introduction of specialised labour courts is being discussed in Kazakhstani society.

Recent statutory or legislative changes

In recent years (in particular, in 2014), some amendments have been introduced to the labour laws. The basic regulatory legal act in this area – the Labour Code − has been amended many times since its adoption in 2007. Moreover, new versions of the Code of Administrative Violations (Administrative Code), Criminal Code, and Law on Trade Unions have been adopted; at the end of this year a new version of the Civil Procedural Code is expected.

Changes in the Labour Code made in 2014 concern some important aspects of business activity. The taxpayer registration number (TRN) and social individual code (SIC) have been excluded from the list of documents required for submission by an employee in signing the employment agreement. They have been replaced with the individual identification number (IIN). The collective agreement is now required to include the requirement to create the conditions for trade union activities and to monitor the performance of the collective agreement. The changes also introduce a provision on job retention for an employee, who is called to or engaged in military service.

The main innovation of the Trade Union Law is the vertical trade union system in Kazakhstan, which provides that each lower trade union is required to be a part of the higher trade union as a structural subdivision, and fully comply with the charter of the higher union. This actually reduces the independence of trade unions and prevents the creation of an independent trade union at an individual enterprise.

The Administrative Code and the Criminal Code establish liability for violations in the area of labour laws. A number of grounds allowing exemption from administrative liability (active repentance, minor violation, change of circumstances, illness) were excluded from the Administrative Code. An article of the former Administrative Code − 'Violation of Labour Laws of Kazakhstan' − is now divided into the elements of the violation such as access to work without an employment agreement, failure to provide leave, violation of the requirements on labour remuneration, and others.

An important innovation for the Kazakhstani system of labour laws and settlement of labour disputes is the Law 'On Mediation' adopted in 2011. In practice, however, mediation is rarely used due to a number of reasons, such as lack of awareness of a new type of out-of-court settlement of disputes, and some gaps in the laws. Moreover, Kazakhstani civil society is not ready yet for the independent development of this legal institution, since reforms in the area of dispute settlement are traditionally implemented at the initiative of the state, and with its participation and financial support. One of the main problems with introducing mediation is the lack of a specific governmental authority which would be responsible for mediation in Kazakhstan within a reasonable time, and have funds for that purpose. In addition, the question of how to enforce the conditions of an agreement entered into in the mediation procedure, where one of the parties is found to have acted unfairly, has not been settled yet.

Key case law affecting employers' decisions on dismissals, redundancy dismissal, etc

The procedure for termination of employment agreements in the Republic of Kazakhstan is governed by the Labour Code. This procedure involves: application by the employer of the ground; and procedure for termination provided for by the Labour Code.

In accordance with Article 51 of the Labour Code, grounds for the termination of an employment agreement are as follows:

  1. termination of an employment agreement upon agreement between the parties;
  2. termination due to the expiry of the validity term of an employment agreement;
  3. termination of an employment agreement at the employer's initiative;
  4. termination of an employment agreement at the employee's initiative;
  5. force majeure circumstances;
  6. refusal of the employee to continue the labour relation;
  7. transfer of an employee to an elective position or appointment thereof to a position which eliminates the possibility of continuing the labour relation, except for the cases provided for by the laws of the Republic of Kazakhstan;
  8. breach of the terms and conditions provided for the conclusion of an employment agreement; or
  9. grounds specified in the employment agreement concluded with the head of the executive authority of the employer.

As practice shows, the most challenging ground for the termination of an employment agreement is termination at the employer's initiative. Article 54 of the Labour Code provides for 19 grounds for the termination of an employment agreement by the employer. The complexity of this type of termination for the employer is the need to comply with the procedure for termination provided by the Labour Code. For separate grounds, this procedure includes a set of obligations of the employer.

In particular, in case of staff redundancy, the employer must:

  1. notify employment authorities of the redundancy at least two months in advance;
  2. notify the employee of the redundancy at least one month in advance;
  3. offer the employee another job, if any is available; and
  4. pay the employee compensation in the amount of an average monthly salary.

In case of staff redundancy, the employer must also take into account a number of limitations. In particular, the termination of employment agreements due to staff redundancy is not permitted:

  1. with pregnant women, women with children under the age of three, single mothers raising children under the age of 14 (disabled child − under the age of 18), or other persons who bring up this category of children without a mother;
  2. with employees who are members of a trade union, subject to the reasoned opinion of the trade union of the company provided in the procedure specified by the collective agreement;
  3. with employees aged from 55 years to retirement age without a positive decision of the committee formed of an equal number of representatives of the employer and employees; or
  4. with employees during a period of temporary disability and annual paid leave. In this case, an employment agreement is terminated after the recovery/end of the leave of the employee.

Another issue related to the termination of an employment agreement by the employer in terms of the termination procedure is the need to comply with the procedure for disciplinary sanctions (since termination of an employment agreement by the employer is regarded as a disciplinary action in some cases). In particular, the employer must follow the procedure for application of a disciplinary sanction upon the termination of an employment agreement on the following grounds:

  1. absence of the employee from work without a good reason for a period of three or more hours in a row during a single working day (work shift);
  2. repeated failure by the employee to fulfil or duly fulfil his job duties, without good reason, provided a disciplinary sanction has been imposed thereon;
  3. arrival of the employee at work in states of alcoholic, drug, psychotropic or inhalant intoxication (their analogue).

The procedure for applying a disciplinary action includes the following obligations for the employer:

  1. to apply a disciplinary action no later than one month after the discovery of a disciplinary violation;
  2. to demand a written explanation from the employee before applying the disciplinary sanction;
  3. in case of refusal by the employee to provide an explanation − to make the respective act; and
  4. to take into account the content, nature and severity of the disciplinary violation, the circumstances of its commission, prior and subsequent conduct of the employee, his (her) attitude to work, etc.

A certain challenge for employers is in the termination of an employment agreement due to the employee's alcoholic, narcotic, psychotropic, toxic (or similar) intoxication at work, since in this case, the employer must not only follow the procedure to apply a disciplinary sanction, but also arrange a medical examination of the employee. The procedure for a medical examination is governed by several legal acts involving certain requirements of the person who conducts the examination, equipment used thereto, examination procedure, etc.

In addition to the complexity related to the termination of an employment agreement based on Article 54 of the Labour Code, employers often have some difficulties with the termination of an employment agreement based on the refusal of an employee to continue labour relations due to changes in working conditions (change of the salary level/working hours). This ground includes the following:

  1. the employer, having the proper ground (reduction in the work volume, change in production, reorganisation), decides to amend the working conditions for the employee;
  2. the employer shall notify the employee of such a change at least one month in advance;
  3. if the employee refuses (in writing) the changes in working conditions/transfer to another job, an employment agreement is terminated; and
  4. if the employee agrees to the changes in working conditions, an additional agreement to the employment agreement shall be concluded with the employee; the labour relationship with the employee continues.

According to practice, in applying this ground, employers often make mistakes. In particular, often they do not have adequate grounds to change working conditions, or fail to notify employees, or change working conditions unilaterally, etc.

Failure of the employer to follow the termination procedure provided for by the Labour Code for any of the grounds leads (in case of employee's appeal to a court/employment department) to invalidation of the termination, to the reinstatement of the employee in a job, to the imposition of fines on the employer for violation of labour laws, as well as to the compensation of the employee for court costs and moral damage.

The above demonstrates the importance of employers meeting all of the procedural requirements in case of termination of an employment agreeement provided for by the Labour Code.

Originally published by Global Legal Group Ltd, London.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.