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Setting Up A Subsidiary In Georgia

How To Hire in Georgia

Georgia is an exciting developing nation thanks to its pro-business policies and a plethora of technical talent. The country is home to numerous small-scale companies and startups, cementing its 7th place in the World Bank’s Ease of Doing Business report. 

Apart from the welcoming economic environment, Georgia also boasts of an attractive talent pool. The country produces 24,000 tertiary graduates per year, with 70% of students learning business administration, humanities, law and other skills relevant to the business-services sector. Furthermore, many local universities offer courses in more than 15 foreign languages. Hence, Georgian youths have a variety of skill sets lucrative to foreign companies.

However, hiring professionals in Georgia requires understanding of numerous regulations and in-depth knowledge of certain procedures. This guide helps you understand the various aspects of hiring in Georgia, so you do not fall into any legal troubles.

Things to Know Before Hiring in Georgia

There are a few aspects regarding recruitment and administration of employees that you should be aware of before hiring staff in Georgia:

Employment contracts

Employers must sign a written contract with their employees to establish a professional relationship. The employment contract must specify the following conditions:

  • The date of commencement of employment
  • Terms of labor relations
  • Working hours
  • Rest time
  • Workplace
  • The position
  • Responsibilities
  • Compensation, taxes, deductions and in-hand salary
  • Overtime pay
  • Number of paid leaves and the procedure to request them

Payroll

The following taxes are deducted from every payroll in Georgia

Tax type

Rate

Personal Income Tax

20%

Pension Contribution

2%

The employer must match the employee contribution towards the pension fund. Self-employed individuals must contribute 4% of their earnings to their pension account.

13th-month salary

The Georgian law does not mandate a 13th-month salary for the employees.

Working hours

The Georgia Labor Code states that an employee is only permitted to work a maximum of 40 hours each week. A full-time employee may work up to 48 hours per week in enterprises with special working conditions approved by the Georgian government.

The maximum number of hours for minors between 16 years and 18 years of age is 36. Furthermore, minors between the ages of 14 and 16 are permitted to work for a maximum of 24 hours per week.

If an employer requires their employee to work continuously for 24 hours, they must sign a shift labor agreement.

Overtime is legal in Georgia and the overtime pay must be higher than the regular pay. The amount must be discussed with the employee and mentioned in the employment contract. The employer can choose to provide time offs instead of compensating for overtime in the form of payment.

Public holidays

Georgia recognizes 17 public holidays. Employers must compensate for overtime if their staff works on any of these days.

Maternity leaves

Companies in Georgia offer 730 calendar days for leaves due to maternity leave.A mother can take 183 calendar days of maternity leave and 200 days of unpaid leave if there are complications or multiple births.

Termination

According to the Labor Code of Georgia, employers may terminate the contract under the following conditions:

  1. Finishing the job specified in the contract
  2. Expiration of the contract
  3. Violation of terms by either party
  4. A new agreement between the parties
  5. A court-mandated judgment prohibiting the work
  6. Long-term disability for more than 30 calendar days consecutively or 50 calendar days per 6 months
  7. Death of an employee or employer
  8. Liquidation of the legal entity of the employer

The Cost of Hiring an Employee in Georgia

Before hiring employees in Georgia, you must set aside a budget and consider the various costs. Businesses in Georgia have to cover the following costs while setting up their workforce:

Register the entity

The Georgian laws mandate businesses to register a local entity before conducting any operation. The cost of establishing a local entity varies depending on the structure.

Sign up for tax and pension funds: Georgian businesses pay a flat 15% corporate tax and contribute towards their employees’ pension funds. Hence, it is essential to register with the tax and pension authorities.

Partnering with an agency

Job portals and hiring agencies charge a fee for shortlisting candidates suitable for various job positions. You may choose to partner with such an agency to quickly set up your team in Georgia.

Running advertisements

Many interested candidates look for digital and paper advertisements while looking for vacancies. Investing in ads will help you collect relevant candidate information for setting up interviews.

Translate contracts

Georgian Labor Code accepts multilingual employment contracts. This is very crucial while dealing with candidates with a foreign native language. You will need to contact an expert to translate the contracts efficiently. 

Conduct background checks

Background checks before onboarding a candidate officially helps you understand their background and identify red flags. Consequently, your workforce will consist of trustworthy professionals who protect your intellectual property.

What Does a Company Need to Hire Employees in Georgia?

As per the laws and regulations in Georgia, you must accomplish the below tasks before hiring an employee:

Registered local entity: To avoid non-compliance and hefty penalties, you must establish a local entity in Georgia before hiring employees and running your business.

Register with the Georgian Revenue Service: The Georgian Revenue Service collects the relevant corporate and income taxes. Since businesses are mandated to match their employee contribution towards income tax, they must register with the authority.

Obtain permits: Companies operating in the gambling, electricity, natural resources, brokerage, and oil and gas industries must obtain a special license. Without the permit, you may risk non-compliance and significant legal issues.

Alternatively, you can partner with a PEO or an EOR in Georgia to onboard candidates quickly and legally. A PEO/EOR partner will also manage your compliance, payroll and benefits so you can grow your global team without stress.

Various options for Hiring Employees in Georgia

There are two ways you can hire employees in Georgia:

Via a local entity

In the traditional hiring method, you need to establish a local entity and onboard the candidates per the country’s regulations. Therefore, you will be investing a lot of time and resources to manage your workforce. This is a reliable option if you are willing to conduct business in Georgia and establish a local team.

Via an EOR

An Employer of Record service provider, like Multiplier, can assist you in onboarding candidates to your company without establishing a local entity. An EOR will help you manage various aspects of your global workforce, viz., payroll, benefits, leaves and contracts. This is a much faster method if you only want to set up a distant team in Georgia.

The Steps to Hiring in Georgia

Follow the given steps to hire employees in Georgia compliantly:

Step 1

Stay updated with the laws: The Labor Code of Georgia establishes the rules and regulations for compliant hiring. You must stay updated with the new rules and follow them precisely. Even slight deviations from the regulations can land you in legal trouble and impact your image.

Step 2

Advertise the vacancy: Partner with an agency and spread the word about open job roles to invite interested candidates. Sort out the applications and finalize their interviews.

Step 3

Conduct interviews

Conduct at least two rounds of interviews – HR and technical, to better judge the candidature of a professional. After the interview, choose the best candidate(s) out of the lot.

Step 4

Run background checks

Before finalizing a candidate for a position, run background checks with the help of an external agency to ensure they fit the bill and align with the company’s values.

Step 5

Offer a legal employment contract

Once you are sure of hiring a candidate, offer them a legal employment contract and cover all the necessary elements discussed above.

Let Multiplier be your EOR platform in Georgia

Hiring in Europe demands a lot of time, research and expertise. You must keep up with the ever-changing international and domestic laws and comply with them to avoid legal hassles. All these can be tedious and complex without the help of experts.

However, you can partner with Multiplier for EOR services and set up a global team legally without the need for a Georgia entity. Our digital platform allows you to onboard and manage your employees, offer employment contracts within minutes, add benefits, offer ESOPs and a lot more.

We help you grow beyond borders with minimum effort and total compliance. For more information, visit our website.

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