Types of Agreements with Employees in Armenia

Types of Agreements with Employees in Armenia

When it comes to hiring employees, having the right agreement in place is crucial. Understanding the types of agreements with employees in Armenia can help both employers and workers avoid disputes, ensure compliance with labor laws, and establish a solid working relationship from the start.

Armenian labor law is designed to protect the rights and interests of both parties, setting clear guidelines on employment conditions, benefits, and termination procedures. However, poorly drafted contracts—or worse, the absence of a proper agreement—can lead to legal complications, financial risks, and misunderstandings.

That’s why it’s essential to be aware of the different types of employment agreements and ensure they are legally sound. Whether you’re an employer looking to hire or an employee reviewing your contract, professional legal guidance can make all the difference in safeguarding your rights and responsibilities.

Now, let’s explore the various types of agreements with employees in Armenia and what each entails.

Overview of Employment Agreements in Armenia

Legal Framework

Employment agreements in Armenia are primarily regulated by the Labor Code, which outlines the rights and responsibilities of both parties, covering everything from working hours to termination procedures. In addition, the Civil Code plays a role when it comes to non-employment agreements—such as service contracts—where the relationship is more independent rather than employer-employee.

Several government bodies oversee labor regulations, including the Labor Inspectorate, which monitors compliance with labor laws, and the courts, which handle disputes if conflicts arise.

Types of Contracts: Employment vs. Civil Law Agreements

Not all work agreements are the same. In Armenia, the two main types of contracts are:

  1. Employment Contracts – These are formal agreements between an employer and an employee, providing rights like social security, paid leave, and workplace protections. They must be in writing, as verbal agreements generally don’t hold up legally.
  2. Civil Law Contracts – These are typically used for freelance or project-based work. Unlike employment contracts, they don’t provide benefits like paid leave or social security, since they fall under the Civil Code rather than the Labor Code.

Employer and Employee Obligations

Every work agreement comes with responsibilities for both sides:

  • Employers must provide a safe working environment, pay wages on time, and respect employees’ labor rights (such as proper rest periods and fair treatment).
  • Employees are expected to fulfill their job duties, follow company policies, and maintain professionalism in the workplace.

Key Differences Between Employment and Civil Law Contracts

When looking at the types of agreements with employees in Armenia, it’s important to understand the key differences between employment contracts and civil law (self-employment) contracts. While both define a working relationship, they have very different legal implications.

Employment Contracts: More Protections for Employees

Employment contracts fall under the Labor Code, meaning employees benefit from paid leave, social security contributions, and legal protections. These contracts regulate not only the final outcome of work but also the process—such as working hours, job responsibilities, and employer supervision.

Civil Law Contracts: Focused on the End Result

Civil law contracts, on the other hand, are regulated by the Civil Code and are typically used for freelancers, consultants, or project-based work. These agreements focus on the final product or service rather than the way the work is performed. They do not provide labor law protections like paid vacation, sick leave, or social security contributions.

How to Distinguish Between Employment and Self-Employment

Several factors help determine whether a person is truly self-employed or actually an employee under the law:

  • Ownership & Use of Goods – Self-employed individuals often use their own resources, while employees rely on company-provided tools and office space.
  • Frequency & Circumstances of Work – Employees work under a structured schedule, whereas self-employed workers decide when and how to complete tasks.
  • Payment Structure – Employees are paid for their working hours, while self-employed individuals are paid for the final result of their work.
  • Control & Supervision – Employers dictate how, when, and where employees work, while self-employed workers have more autonomy.

Classifying a worker correctly is crucial, as misclassification can lead to legal and tax complications. To make the right determination, UK law provides key assessment criteria, including the COFIRM and FAST methods. Learn more about these assessment methods here.

Legal Risks of Misclassifying Employees as Self-Employed

In Armenia, it is illegal for an employer to hire someone under a self-employment (civil law) contract if the person is actually working under employment conditions—such as being required to work from the employer’s office, follow a schedule, and receive hourly wages. Misclassification can lead to legal consequences for the employer, including fines and penalties.

For both businesses and workers, it’s essential to use the right type of contract to stay compliant with Armenian labor laws and avoid potential disputes.

Main Types of Employment Agreements in Armenia

When hiring or accepting a job in Armenia, it’s important to choose the right type of employment contract. Each has its own rules, benefits, and potential pitfalls. Here’s a breakdown of the most common ones:

Indefinite-Term Employment Contracts – The Standard Choice

This is the most common type of employment agreement, with no fixed end date. It provides long-term job security and includes key terms like job role, salary, working hours, benefits, and termination conditions.

Termination Rules:

  • Can be ended through mutual agreement, resignation, or dismissal for cause.
  • Notice period is usually one month.
  • Severance pay applies in certain cases, like company downsizing.

Common Disputes: Wrongful termination and unclear notice period rules.
ProFin Tip: Make sure your contract clearly outlines termination conditions and performance expectations to avoid legal issues.

Fixed-Term Employment Contracts – For Temporary Roles

These contracts are set for a specific time period or until a particular task is completed.

When to Use:
✔️ Project-based roles
✔️ Seasonal work
✔️ Maternity or sick leave cover

Legal Limits:

  • Cannot be used for permanent positions.
  • Maximum duration is 5 years (including renewals).
  • If renewed multiple times without a valid reason, it automatically turns into an indefinite-term contract.

Common Disputes: Employers misclassifying permanent roles as temporary, leading to legal issues.
ProFin Tip: Clearly define the contract duration and scope of work to prevent misunderstandings.

Part-Time Employment Agreements – Fewer Hours, Same Rights

Part-time contracts are for employees working fewer hours than a full-time position but still entitled to labor law protections.

Employee Rights:

  • Salary is pro-rated based on working hours.
  • Eligible for social security and benefits, adjusted to hours worked.

Common Issues: Employers misclassifying part-time employees as contractors to avoid benefits.
ProFin Tip: Always ensure part-time contracts clearly state working hours and benefits to stay compliant with labor laws.

Temporary Employment Contracts – Short-Term but Fully Protected

Temporary employment contracts are used when a company needs extra help for a specific, short-term need—such as a major project, an event, or covering for an absent employee. These contracts are common in industries like agriculture, tourism, and retail during peak seasons.

Duration Limits:

  • Typically lasts until the task is completed or for a fixed short-term period.
  • Cannot be used to fill a permanent role long-term.

Employee Rights:
✔️ Same protections as full-time employees (on a pro-rated basis).
✔️ Eligible for social security contributions and labor law protections.

Termination Rules:

  • The contract automatically ends once the agreed task or time period is completed.
  • If the employee continues working beyond the agreed duration without a renewal, it may legally turn into an indefinite-term contract.

ProFin Tip: Clearly define the temporary scope in the contract to avoid confusion and legal issues.

Internship and Apprenticeship Agreements – Learning While Working

Internships provide young professionals or first-time job seekers with practical skills and hands-on experience in a real work environment. Unlike regular employees, interns are there to learn, not just work.

Who is an Intern?

  • Typically students, recent graduates, or job seekers looking to gain experience.
  • Allowed to work up to 5 days per week, 4 hours per day, with a maximum of 20 hours per week.
  • Must have proper breaks for rest and meals.

Intern Rights & Employer Obligations

✔️ Interns receive a certificate confirming the skills acquired.
✔️ May be unpaid, but this must be agreed upon in advance.
✔️ Employers must sign a written civil-legal contract (not an employment contract).
✔️ Internship duration is capped at 2 months and cannot be renewed.
✔️ The number of interns cannot exceed 10% of the company’s workforce.
✔️ Special protections apply to interns under 18.

Key Differences from Employment Contracts

  • Interns don’t receive labor law protections like paid leave or social security.
  • Internship does not count as official work experience (seniority).
  • Their rights are regulated under the Civil Code, not the Labor Code.
  • Strict hour limits and no contract extensions beyond 2 months.

ProFin Tip: Clearly outline the intern’s role, responsibilities, and learning objectives to avoid confusion or misclassification as an employee.

Independent Contractor Agreements – Work Without Employment

An Independent Contractor Agreement is a civil law contract used for non-employee relationships, where the focus is on delivering a final result rather than following a specific work process.

Key Features:

✔️ Contractors work independently and are not under direct employer supervision.
✔️ They pay their own taxes and social security contributions.
✔️ No entitlement to paid leave, benefits, or labor law protections.

When to Use:

  • Freelancers (designers, writers, developers).
  • Consultants and experts offering specialized services.
  • One-time projects that don’t require ongoing employment.

Risks & Legal Concerns:

Misclassification—treating an employee as a contractor—can result in fines and legal penalties.

ProFin Tip: Always ensure the contract clearly defines the scope of work, deadlines, and payment terms to prevent disputes.

Probation Periods in Armenian Employment Agreements – A Trial Phase for Both Sides

The probation period allows employers to evaluate a new hire’s performance before confirming long-term employment. At the same time, employees get a chance to assess the work environment and decide if the job is the right fit.

Legal Duration:

  • Standard probation lasts up to 3 months.
  • Can be extended up to 6 months for certain roles.
  • Some absences don’t count toward the probation period, including:
    • Approved leave (paid or unpaid).
    • Sick leave or temporary incapacity to work.
    • Official duties assigned by state or local authorities.
    • Participating in a legal strike.
    • Military training or mobilization service.

Employee Rights During Probation:

✔️ Full labor law protections apply (working conditions, wages, and benefits remain the same).
✔️ Easier termination process for both sides, but a written notice is required.

Termination During Probation:

  • Employers can terminate with a shorter notice period (usually 3 days).
  • No severance pay is required.
  • Employees can also resign without the standard one-month notice.
  • Important Note: If the employee sets the probation duration, they must provide a 3-day notice before resignation. However, if the employer determines the probation period, the employee has the right to terminate the contract within one month.

ProFin Tip: Always clearly define probation terms in the contract, including expectations and evaluation criteria, to prevent misunderstandings.

Termination and Renewal of Employment Contracts in Armenia

When discussing the types of agreements with employees in Armenia, it’s important to understand how contracts can be terminated or renewed under the law.

Lawful Termination Grounds:

An employment contract can be legally ended in several ways:

  • Resignation – When an employee decides to leave.
  • Mutual Agreement – Both parties agree to terminate the contract.
  • Cause-Based Dismissal – Termination due to misconduct, poor performance, or legal violations.
  • Redundancy – The job position is no longer needed.

Notice Periods & Severance Pay:

  • Standard notice period is 1 month, but this may vary based on the contract type.
  • Severance pay depends on the reason for termination and the employee’s length of service.

Contract Renewal Rules:

  • Fixed-term contracts cannot be renewed indefinitely.
  • If an employer repeatedly extends a fixed-term contract without a valid reason, it may automatically convert into an indefinite-term contract under Armenian labor law.

ProFin Tip: Clearly define termination conditions in all types of agreements with employees in Armenia to prevent misunderstandings and ensure compliance with labor regulations.

Common Disputes Related to Employment Agreements in Armenia

When dealing with the types of agreements with employees in Armenia, legal disputes can arise if contracts are unclear or not properly followed.

Frequent Issues:

  • Unlawful termination – Dismissals without proper legal grounds.
  • Unpaid wages or overtime – Employers failing to compensate employees correctly.
  • Probation termination disputes – Wrongful dismissal during the trial period.
  • Misclassification – Treating employees as independent contractors to avoid labor law obligations.

Resolution Channels:

Disputes can be addressed through:

  • Armenian courts for legal rulings.
  • Labor Inspectorate for compliance enforcement.
  • Mediation services for out-of-court settlements.

ProFin Tip: Seeking legal consultation before terminating a contract or making major employment changes can help avoid costly disputes and ensure compliance with Armenian labor laws.

How to Draft a Legally Compliant Employment Agreement in Armenia

Creating a solid employment contract is essential for both employers and employees to avoid misunderstandings and legal issues. When drafting any of the types of agreements with employees in Armenia, it’s crucial to ensure clarity and compliance with labor laws.

Key Clauses to Include:

Job Title & Duties – Clearly define the role and responsibilities.
Salary & Payment Schedule – Specify the amount, frequency, and method of payment.
Working Hours & Leave Policies – Outline work schedules, breaks, and vacation entitlements.
Termination Conditions – State notice periods, grounds for dismissal, and severance pay rules.
Confidentiality & Non-Compete Clauses (if applicable) – Protect company information and prevent unfair competition.

Common Mistakes to Avoid:

Vague job descriptions – Leads to disputes over responsibilities.
Missing termination clauses – Can create legal uncertainty during disputes.
Misclassification of employment type – Using civil law contracts instead of employment agreements can result in fines.

ProFin Tip: Always have a legal expert review the contract before finalizing to ensure compliance with Armenian labor regulations and to prevent costly disputes.

FAQs About Employment Agreements in Armenia

●      Can an intern demand a salary in Armenia?

No, internships can be unpaid if both the intern and employer mutually agree. However, employers may choose to offer compensation.

●      What happens if a fixed-term contract is renewed multiple times?

If a fixed-term contract is repeatedly renewed without a valid reason, it may be legally reclassified as an indefinite-term contract under Armenian labor law.

●      Are verbal employment agreements legally binding in Armenia?

No, employment contracts must be in writing to be legally enforceable. The only exception is short-term jobs (under 30 days), where verbal agreements may be valid.

●      How long can a probation period last?

The standard probation period is up to 3 months, but it can be extended to 6 months for specific roles. Certain absences (e.g., sick leave, unpaid leave) do not count toward the probation period.

How Profin Consulting Can Help You with Employment Agreements

Navigating the types of agreements with employees in Armenia can be complex, but Profin Consulting is here to make the process seamless and legally compliant. Our team of experts specializes in Armenian labor laws and can help both employers and employees avoid costly mistakes.

Our Services:

Drafting & Reviewing Agreements – Ensuring contracts are clear, legally sound, and tailored to your needs.
Conflict Resolution & Legal Compliance – Helping resolve disputes and ensuring compliance with Armenian labor regulations.
Tailored Advice – Providing guidance on internships, civil law contracts, and employment agreements for international companies.

Why Choose Profin Consulting?

With our expertise, we help minimize legal risks, prevent disputes, and ensure compliance with Armenian labor laws.

Need expert advice? Contact us today for personalized support on drafting, reviewing, or managing your employment agreements.

Conclusion

At the end of the day, having a clear and legally compliant employment agreement isn’t just about paperwork—it’s about protecting yourself, whether you’re an employer or an employee. A well-structured contract prevents misunderstandings, protects rights, and keeps everything running smoothly.

If you’re an employer, having the right agreement in place means fewer headaches down the line. And if you’re an employee, knowing your rights gives you peace of mind.

Either way, why take chances with something this important? Let Profin Consulting handle the legal details so you can focus on what truly matters—building a successful and stress-free work relationship.

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