How to Hire Employees in Mongolia

The process of employing people located in Mongolia is bound by a procedure outlined in the Labour Law and other restrictions. The mechanics will rely on a sound understanding of the local market, legal obligations, and the culture surrounding the hiring process. When creating employee team vouchers, the first step involves finding candidates who may be possible through a few different methods. These methods can include seeking suitable candidates, using an online job site or a recruitment agency, and contacting people directly through networks, which can consist of personal networks or professional networks (such as LinkedIn). Next, interview and selection. This part of the process must be conducted cautiously to demonstrate fairness and non-discrimination.

After selecting a candidate, the next vital act is the definition of the employment relationship with an employment agreement in compliance with Mongolian laws. All employment contracts must be in writing and specify the terms of employment. The contract must also clearly state the conduct, title, and job description, remuneration, and hours to work, and all material aspects of the contract date. 

An employer must also ensure that all pre-employment checks have been completed and register the new hire with the relevant government agencies. All of the subscribing and monumental aspects of the hiring process must be handled prudently, promptly, and within the legal guidelines to mitigate the risk of contravening Mongolian laws.

Setting Up a Local Entity

To open a subsidiary in Mongolia, the employer needs to register the subsidiary with the State Registration Office and obtain any business licenses they may need. Companies are required to register articles of incorporation, appoint directors locally where applicable, and maintain their ongoing compliance with corporate governance. 

Registration takes months to finalize and requires an upfront investment. To maintain a local entity, the company has continual filings to do with the local authorities, ongoing taxes, and corporate governance that remains very local, which likewise has obligations in Mongolia.

Working with an Employer of Record (EOR)

A different and growing method of hiring in Mongolia is through an Employer of Record (EOR) partnership. An EOR service provides a full-service option for companies wishing to hire employees quickly and with limited effort in terms of creating a local legal entity. 

The EOR already has a local legal entity established in Mongolia and uses it to legally hire employees on behalf of its client company. In this scenario, the EOR is the legal employer in the eyes of Mongolian law, although the employee continues to work for and under the direction of the client company, including the activities that they perform.

Learn more about Employer of Record services

Hiring Independent Contractors

The Labor Department closely reviews contractor arrangements to prevent employee misclassification. Contractors need to provide evidence of independence by using their own tools, working with multiple clients, filing tax obligations to the General Department of Taxation, and many other independent practices. Misclassified employees could present significant liability under Mongolia’s Labor Code.

Learn about hiring contractors in Mongolia

Mongolia EOR vs Legal Entity in Mongolia

EOR services allow immediate entry into the local market and the ability to hire employees in approximately 2-4 weeks in Mongolia, as opposed to months for creating an entity. The EOR assumes the legal responsibilities of the employee under Mongolia’s Labor Code, which mitigates the compliance risk of the 40-hour work week, overtime, and minimum wage, particularly in Mongolia’s remote countryside.

Local entities offer greater control in the operation and are likely a cost-saving avenue for larger in-country and longer-term commitment to the economy in Mongolia. However, local entities require engagement with Mongolia’s corporate registration system, adherence to ongoing compliance in relation to Mongolian tax authorities, and an understanding of the obligations of local governance.

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Using an Employer of Record in Mongolia

An Employer of Record (EOR) in Mongolia is able to provide employment contracts that follow laws requiring a written contract and outline job duties, the compensation for the services rendered, and a standard workweek of 40 hours per week. 

The EOR conducts payroll at least bi-monthly in accordance with laws requiring you to pay your employees at least twice in a month, calculates employees’ overtime pay according to the minimum of 150% of their ordinary rate as required by law, and makes the social security payments to the various agencies of the Mongolian government for each employee.

The EOR will also ensure that the business complies with Mongolia’s minimum wage (MNT 792,000/month), manages annual leave entitlements of 15 days of vacation after 6 months of service, and conforms to 120-day paid maternity leave in compliance with Mongolia’s law.

How Much Does a Mongolia EOR Cost?

Generally, the cost of Mongolia EOR services can be $300-800 per employee per month since rates will depend on salary levels and sex complexity. The services provided to each employee would include, but are not limited to, complaints about the requirements of the Mongolian Labor Code.

In addition, employer service packages may include costs associated with work permit sponsorship for foreign employees in Mongolia or more complex compensation and benefits administration.

Therefore, employers should compare the cost of the EOR processes to what they would have to establish as a separate entity in Mongolia with regard to initial costs and recurring administrative costs for the business, including planning, administration, and local compliance.

Employers looking for a trusted and cost-effective EOR provider should consider partnering with Remote People. We offer the cheapest EOR services in the market, starting at $199 per employee.

Employment and Labor Laws in Mongolia

Employment and labor in Mongolia are governed by the Mongolian Labor Law. It protects workers while providing flexible benefits to employers. Mongolian labor laws apply to the risk and terms of employment based on established practices within Mongolian labor law.

Employment Contract Requirements

Employment contracts in Mongolia must be written and must include: the job title, job duties, compensation, working hours, and work location. The employment contract must follow Mongolia’s minimum wage of MNT 792,000 per month.

It must also include terms for overtime and any allowances for travel/transport/food costs applicable to the assignment. Additional considerations will be required for contracts for foreign employees, regarding the extra provisions that work permit regulations will also need.

Standard Working Hours

Normal working hours are 40 hours per week, usually 8 hours a day for five days. At least one hour of break time is provided per day. Overtime must be paid at least 150 per cent of normal pay. Weekend or holiday work is usually paid at 200% or given as time in lieu.

Social Security Contributions

Social insurance in Mongolia consists of pension insurance, health insurance, unemployment insurance, benefits and work-injury insurance. Employer contribution is between 12.5% to 14.5% of an employee’s gross salary, depending on the risk level of the employer’s industry. Employee contribution is 11.5% up to MNT 910,800 per month as of April 1, 2025.

Overtime

The Labor Code sets a maximum of four hours of overtime per day during the work week. Work needs to be approved by the employee to be considered overtime, and if it was performed at the employer’s initiative, it will be paid at 150% of the normal rate. 

If the work is performed on a public holiday in Mongolia, the employee must be paid at 200% of the normal rate. Employers are required to keep overtime records in compliance with Mongolian labor laws.

Probation Periods

An employee is entitled to severance when their termination is due to redundancy, liquidation, or medical incapacity, but not when they resign or are dismissed for misconduct. The minimum entitlement is one month’s average salary, but a greater amount may be required by agreement or company policy.

Pension System

Mongolia’s pension system operates on a pay-as-you-go system that is funded by compulsory social insurance contributions from both employers and employees, who each contribute 8.5% of the employee’s gross pay to the pension fund. 

The legally-mandated retirement age in Mongolia is 60 years of age for men and 55 years of age for women. However, as of 2023, this age is gradually being increased by cohort of birth, with the ultimate goal for both genders to reach an age of 65. 

From 2023, individuals must contribute for at least 21 years and 6 months to qualify for a full old-age pension, which is slowly being increased by three months to a maximum of 25 years until 2037. Likewise, workers who contributed less than 21 years and 6 months may still qualify for a partial pension.

Payroll and Employment Taxes in Mongolia

As of 2025, Mongolia has a progressive personal income tax. Tax rates range from 10% to 20% based on annual income. Employees receive an annual personal tax credit of MNT 84,000. Income tax is withheld by the employer from salary payments and must be paid to the tax authorities no later than the 10th day of the following month, and quarterly and annual reports are to be submitted.

In addition to income tax, employees must pay 11.5% of social insurance on their wages. The rate is capped at MNT 910,800 for a monthly income over MNT 7,920,000. Employers are responsible for withholding and depositing these taxes by the 5th of the following month. These deductions keep payroll simple and adhere to Mongolian tax law.

Payroll Cycles

According to the Labor Code of Mongolia, wages must be paid at least twice per month on fixed days specified in labor agreements.  Each month, the employer must provide the payslips electronically via website/PDF, or via paper payslips, which include gross pay, deductions, net pay, and year-to-date totals, in accordance with Mongolian requirements.

Minimum Wage

Mongolia’s Tripartite National Committee on Labor and Social Partnership increased the minimum wage by 20% on October 7, 2024. Based on this, the minimum hourly wage for Mongolia has been MNT 4,715 since April 1, 2025, and the monthly wage changed from MNT 660,000 to MNT 792,000.

All workers in Mongolia shall receive at least this amount, whether they are full-time, part-time, temporary, or contract employees.

Employer Tax Contributions

Employers in Mongolia have a monthly social insurance obligation that covers pensions, health, unemployment, maternity, sickness, and work-related accident compensation. 

The rate is between 12.5% and 13.5% of the employee’s gross salary, with only minor variation, depending on risk categories. The amount of contributions is capped at a prescribed ceiling; both employer and employee contributions are paid to the Social Insurance General Office.

Employee Payroll Tax Contributions

Employees in Mongolia pay a portion of their gross salary equal to 11.5% for social insurance, subject to a salary threshold. Employees will have these deductions made from their paycheck by the employer, and the employer will remit the funds to the appropriate entity, along with their own contribution. 

In addition, employees pay personal income tax at the rate of 10% on taxable income after accounting for any social insurance deductions, which is also withheld and remitted to the General Department of Taxation by the employer.

Bonus Payments

In Mongolia, bonus payments are typically common but not legally required. These payments depend on the employer’s policy, collective agreements or employment contracts. However, if a bonus scheme is defined within a contract or collective agreement, it will be a legal commitment. 

Bonus payments can be set based on performance, team results, business activities, or profitability, and conditions of suspension or cancellation can also usually be arranged. 

Some employers may provide their workers a “13th-month salary” as a bonus payment at the end of each (calendar) year. This bonus payment is at the employer’s discretion and is not mandatory. 

Tax Compliance and Payroll Reporting

Employers are additionally required to withhold and remit individual income tax at a rate of 10% on income not exceeding MNT 120 million, and 20% on income above MNT 120 million. Payroll and social contributions must be filed and reported in accordance with Mongolia’s fiscal year (Jan 1-Dec 31).

Employee Benefits in Mongolia

In Mongolia, social security benefits are mandatory, which creates an obligation for an employer to be subject to social security payments, healthcare insurance, and pension contributions for all employees, allowing access to minimum protections under Mongolia’s social security systems.

Examples of discretionary benefits could include added health insurance, transportation allowance, meal allowance, and education opportunities. They will vary by industry and employer in Mongolia.

Work Permits and Visas in Mongolia

Foreign nationals should not start working in Mongolia before having obtained the correct visa and work permit. The process is administered by the Immigration Agency of Mongolia.

Employers looking to hire foreign workers influence the process, as they are generally required to be a sponsor. The Government also has a quota system and restricts the defined number of foreign workers a business can hire. The quota system varies depending on the nature of the workplace (i.e. industry) and how many Mongolian employees are counted towards the given quota.

Critical Skills Employment Permit

While Mongolia doesn’t have an official “Critical Skills Employment Permit,” it does prioritize foreign employees with skills that cannot be found in the local labor market. The employer must prove to the Ministry of Labour and Social Protection that they tried to hire a Mongolian citizen first. 

The application is more likely to be accepted if the candidate has some sort of technical trade skills, management experience, or expertise in sectors such as mining, technology, and finance.

General Employment Permit

This is the basic work authorisation; however, it’s a process started by the sponsoring employer. It is obtained through the Ministry of Labour and Social Protection. The employer must provide the contract and proof of the candidate’s qualifications, and that no local worker is available for the job, so that the candidate is not within the company’s foreign worker limit. The permits last for one year and can be renewed annually. Permits are tied to the employer and the job.

Intra-Company Transfer Permit

This allows multi-nationals with a Mongolian entity to transfer employees who are already working for them abroad. This way of obtaining a work permit is similar to a general permit, but quicker because the employee is already an employee of the company. 

The Intra-Company Transfer permit is intended for senior managers or specialists, having worked with the multinational employer for at least one year. The permit is also one year and renewable.

Hiring Contractors in Mongolia

Hiring contractors can be a flexible choice for entrepreneurs. However, businesses that are hiring independent contractors may be at risk for misclassification. A contractor may be deemed an employee if their work is closely aligned with what an employee does (working controlled hours, using tools provided, or being part of a team) —and therefore subject to back taxes, social security contributions not paid and loss of benefits.

Time Off and Leave in Mongolia

Mandatory Leave Entitlement

In accordance with the Labour Laws of Mongolia, all full-time employees are entitled to at least 15 working days of paid annual leave, which increases based on length of service to 18 days after five years, and additional days after ten. 

Employees who work in hazardous jobs or are minors are entitled to more leave. Employees can request leave after they have been working for 6 months, and this leave will normally be scheduled at the convenience of the employee and employer. All unused leave is payable on termination.

Public Holidays

Employees in Mongolia also have paid time off to celebrate official public holidays. Generally, when there is a public holiday that falls on a Saturday or a Sunday, the following weekday is taken as a paid day off. Public holidays marked on the calendar reflect important national, cultural, and historical events.

Public holidays in Mongolia include:

  • New Year’s Day in Mongolia: January 1
  • Mongolian Lunar New Year (Tsagaan Sar): Varies (usually in January or February – this is a 3-day holiday)
  • International Women’s Day: March 8
  • Naadam Festival: July 11-15
  • Genghis Khan’s Birthday: Varies (this is celebrated on the first day of the first winter month of the lunar calendar – usually in December)
  • Republic Day: November 26
  • Day of Independence: December 29

Sick Leave

Paid sick leave is given to employees on presentation of a medical certificate. Sick leave benefits are paid by social insurance in an amount of a part of the average salary from the first day of illness during a legislatively established period of time. The employer manages the process, but payment is through social insurance.

Parental Leave

Women are allowed 120 days of maternity leave, with both pre- and postnatal leave. This leave is fully covered by social insurance (100% of the average wage). Paternity leave is 5 days to 10 days, depending on company policy or employment agreements.

Other Leave

Mongolia grants childcare leave for mothers and single fathers with children under three years of age, while employers continue their social insurance obligations. It also grants all additional leave, including compassionate leave and study leave, based on contracts.

Terminations and Severance in Mongolia

Termination of employment in Mongolia is subject to strict regulation. An employer can terminate an employee only on justified grounds (serious misconduct, redundancy, or poor performance), and in accordance with prescribed formalities (in writing and with an explanation).

Termination

Termination of employment in Mongolia is strictly regulated. The contract may be terminated by agreement of the employer and the employee, resignation by the employee, or by the employer on certain grounds. 

These grounds include misconduct by the employee, redundancy, or incapacity to work. The employer must follow due process when terminating a contract and provide written notice to the employee. The employer may also need to provide severance pay; otherwise, there may be claims for unfair dismissal.

Notice Periods

The employer must provide at least 30 days’ written notice of termination to give the employee a reasonable opportunity to secure other employment. Payment in lieu of notice is possible, but the minimum period is 30 days.

Severance Pay

An employee is entitled to severance when their termination is due to redundancy, liquidation, or medical incapacity, but not when they resign or are dismissed for misconduct. The minimum entitlement is one month’s average salary, but a greater amount may be required by agreement or company policy.

Expand into Mongolia Easily with Remote People’s EOR

As a business owner, if you are considering expanding to Mongolia but are not sure where to start, our EOR (employer of record) solution may be right for you. Remote People handles contracts, payroll, taxes, social security, and more, helping you follow all legal obligations while getting access to talent in Mongolia much faster. 

Partner with us to start growing your business in Mongolia without having to register a local entity.